npd & product mix

7/30/2019 Npd & Product Mix

1/24

New Product Development

Product Mix


2/24

What is new product?

Original products

Product improvements

Product modifications New brands that the firm develops through

its own research and development efforts


3/24

Causes of New ProductFailures

Overestimation of Market Size

Product Design Problems

Product Incorrectly Positioned, Priced or

Advertised Costs of Product Development

Competitive Actions

To create successful new products, the

company must: understand its customers, markets and

competitors

develop products that deliver superior

value to customers.


4/24

New Product DevelopmentProcess

IdeaGeneration

ConceptDevelopmentand Testing

MarketingStrategy

Development

IdeaScreening

BusinessAnalysis

ProductDevelopment

MarketTesting

Commercialization


5/24

Systematic Search for NewProduct Ideas

Internal sources

Customers

Competitors

Distributors

Suppliers


6/24


7/24

Concept development &Testing

1. Develop Product Ideas intoAlternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

3. Choose the Best One


8/24

4. Marketing strategydevelopment

Part Two - Short-Term:Products Planned Price

Distribution

Marketing Budget

Part Three - Long-Term:Sales & Profit Goals

Marketing Mix Strategy

Part One - Overall:Target Markets size & structure

Product PositioningSales Goals

Market Share


9/24

Business analysis & ProductDevelopment

Business Analysis

Review of Costs and Profits Projections to See ifThey Meet Company Objectives.

Business Attractiveness (estimating total salesand costs and profits

If Yes, Move toProduct Development -

Physical prototypes and

customer tests

If No, EliminateProduct Concept


10/24

Consumer-Goods MarketTesting

Sales-

WaveResearch

Test offering trail toa sample of

consumers in

successiveperiods.

SimulatedTest Market

Test in a simulated

shopping environmentto a sample ofconsumers.

Standard

Test Market

Full marketing campaignin a small number ofrepresentative cities.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.


11/24

Product mix

The set of all products and items that aparticular company offers for sale.

All the products a given companyproduces comprise the product mix, orproduct assortment

A companys product mix has a certainwidth, length, depth, and consistency.


12/24

Product Mix

Width - number ofdifferent product

lines

Length - totalnumber of itemswithin the lines

Depth - number ofversions of each

product

Product Mix -all the product

lines offered


13/24


14/24

Product mix

Width: the number of different product lines.

Product width is the number of differentproducts a company makes (Apple- Nano,

touch, shuffle, iPhone etc...)

Length: the total number of items within theline.


15/24

Depth: how many variants are offered of eachproduct in the line or the different versions ofeach product that are produced (iPhone 3G/4,8mb..)

If lux has 4 variants in 2 sizes then depth is 8.


16/24

Consistency: how closely related the variousproduct lines are in end use, production

requirement, distribution channels, or some

other way.


17/24

Product line

A product linerefers to a number of products thatare related and developed by the same

manufacturer.

Items within a product line generally share thesame basic theme.

Frequently, a product line includes different

products that are offered to the public at varying

price points. This way, a manufacturer orcompany can ensure that all products within a line

will be purchased by all kinds of people.

Product line extension refers to any additional

roducts that ma be added to a current roduct


18/24

Product-Line Length

Line Stretching- Line stretching is a strategyapplied by a company to add new flavors, newcolors, new varieties, new strategy used by thecompany minimize the costs and leverage thebrand equity.

Products are introduced into a product line isknown as line stretching

Down-marketUp market

Two-way


19/24

Line stretching

Down-market stretch- In down stretch market,companies apply the strategy of low market for high

growth opportunities.

It looks for the higher margins and positionsthemselves as downscale .

They basically focus on the mass retail such asSpencer, Wal-mart, Big Bazaar that attract millions of

customers and they make a strong growth by thisstrategy.

These are for that customer who believe in value and

also gives value price for the products.


20/24

Upmarket stretch- In up stretch market,companies apply the strategy of high market

for high growth.

It looks for the higher margins and positions

themselves to upscale segment e.g ice cream

Hagen Daaz is in up market stretch.


21/24

Two-way stretch- Companies in the middlerange of the market might decide to stretchtheir lines in both directions.

Titan introduced its first watches in themedium price /quality segment and graduallyadded watches in the premium segment underthe brand names Nebula & Xylus and Sonata

for economy segments. This has helped Titan gain market dominance

in watch category.


22/24

Line Filling

A firm can lengthen its product line by adding

more items within the present range for

Incremental Profits

Satisfy Dealers who complain about lost salesbecause of missing items in the line

Utilize existing capacity

Try to become a full-line company Try to plug holes to keep the competitors away


23/24

One of the critical factor that a firm should

consider while line filling is the Differentiation.There has to be a just-noticeable difference

between the offerings other wise consumerswill get confused .

In the case of Maruti brands, there is a clear

differentiation either in terms of design or

performance between these brands.

Line Filling is the strategy adopted by Maruti

Suzuki to retain its grip in the Indian market


24/24

npd & product mix

Documents