1. Three Levels of a product The concept of three levels of a
product actually comes in play when you are finalizing a product
for your business or when you want to analyze a product. Just like
any business, a product too has its hierarchy. A product can be
divided into a series of different features and benefits which
helps in its segmentation targeting and positioning. Thus the three
levels of the products are the ones which help to define the
product in a better manner. These three levels are 1) Core product
2) Actual product 3) Augmented product The terms Core product and
Actual product have a very slight differentiation between them but
it is vital that marketers understand this difference. Only by
defining your core product clearly, you can achieve marketing
excellence. Core product is also known as benefits and is general
intangible in nature. Lets take an example. Supposing you are
planning on launching your own car manufacturing unit. What would
be your core product? Would it be the car itself?
2. NO. The core product would be convenience to your customers.
Your customers can also travel by bus or taxi. But they prefer cars
because of convenience as well several times because of status
symbol. Thus the core product in case of Tata cars will be
convenience and value for money whereas in case of BMW it will be
Status symbol. Thus the concept of core product is simple. The
Actual product is the one which is manufactured after a decision
has been taken on what your core product is going to be. Thus, from
the above example, if your core product is a status symbol, your
actual product will be a very high quality product with high
pricing. On the other hand if the product is a convenience product,
the production would be on the basis of Value for money. Actual
products are quantifiable in nature and have properties like color,
branding, quality etc. The Augmented product, as the name suggests,
arises by themselves and are by products of the core and actual
products. These might be complete products within themselves. Again
taking the above example, if you are manufacturing a car, it needs
regular servicing, warranty etc. Thus these become tertiary
products or augmented products. There are business which are
dedicated completely in providing augmented products such as
service centers, AMC centers etc. Also remember that the three
levels of product are not only useful for Tangible products but for
Intangible product like services as well. For example If an IT
company makes software, the core product could be better operations
and management for their customers. The actual product may be
dedicated to multiple facets of the organization for which the
software needs to be programmed, and the augmented product may be
the maintenance of this software and regular up gradation. Thus
even the service products have their own three levels. These three
product levels play a vital part in product management and are also
important while deciding the marketing mix of a company.
3. This is mainly because, if there was an augmented product
attached to the actual product, then the promotions, placing and
pricing of even these augmented products needs to be decided. Thus
product decisions are generally the primary decisions of the
marketing mix. New Product Development In business and engineering,
new product development (NPD) is the complete process of bringing a
new product to market. A product is a set of benefits offered for
exchange and can be tangible (that is, something physical you can
touch) or intangible (like a service, experience, or belief). There
are two parallel paths involved in the NPD process: one involves
the idea generation, product design and detail engineering; the
other involves market research and marketing analysis. Companies
typically see new product development as the first stage in
generating and commercializing new product within the overall
strategic process of product life cycle management used to maintain
or grow their market share 8 Stages Idea Generation is often called
the "NPD" of the NPD process[1].
4. Ideas for new products can be obtained from basic research
using a SWOT analysis (Strengths, Weaknesses, Opportunities&
Threats). Market and consumer trends, company's R&D department,
competitors, focus groups, employees, salespeople, corporate spies,
trade shows, or ethnographic discovery methods (searching for user
patterns and habits) may also be used to get an insight into new
product lines or product features. Lots of ideas are generated
about the new product. Out of these ideas many are implemented. The
ideas are generated in many forms. Many reasons are responsible for
generation of an idea.
5. Idea Generation or Brainstorming of new product, service, or
store concepts - idea generation techniques can begin when you have
done your OPPORTUNITY ANALYSIS to support your ideas in the Idea
Screening Phase (shown in the next development step). Idea
Screening The object is to eliminate unsound concepts prior to
devoting resources to them. The screeners should ask several
questions: Will the customer in the target market benefit from the
product? What is the size and growth forecasts of the market
segment / target market? What is the current or expected
competitive pressure for the product idea? What are the industry
sales and market trends the product idea is based on? Is it
technically feasible to manufacture the product? Will the product
be profitable when manufactured and delivered to the customer at
the target price? Concept Development and Testing Develop the
marketing and engineering details Investigate intellectual property
issues and search patent databases Who is the target market and who
is the decision maker in the purchasing process? What product
features must the product incorporate? What benefits will the
product provide? How will consumers react to the product? How will
the product be produced most cost effectively?
6. Prove feasibility through virtual computer aided rendering
and rapid prototyping What will it cost to produce it? Testing the
Concept by asking a number of prospective customers what they think
of the idea - usually[citation needed] via Choice Modelling.
Business Analysis Estimate likely selling price based upon
competition and customer feedback Estimate sales volume based upon
size of market and such tools as the Fourt- Woodlock equation
Estimate profitability and break-even point Beta Testing and Market
Testing Produce a physical prototype or mock-up Test the product
(and its packaging) in typical usage situations Conduct focus group
customer interviews or introduce at trade show Make adjustments
where necessary Produce an initial run of the product and sell it
in a test market area to determine customer acceptance Technical
Implementation New program initiation Finalize Quality management
system Resource estimation Requirement publication Publish
technical communications such as data sheets Engineering operations
planning
7. Department scheduling Supplier collaboration Logistics plan
Resource plan publication Program review and monitoring
Contingencies - what-if planning Commercialization (often
considered post-NPD) Launch the product Produce and place
advertisements and other promotions Fill the distribution pipeline
with product Critical path analysis is most useful at this stage
New Product Pricing Impact of new product on the entire product
portfolio Value Analysis (internal & external) Competition and
alternative competitive technologies Differing value segments
(price, value and need) Product Costs (fixed & variable)
Forecast of unit volumes, revenue, and profit These steps may be
iterated as needed. Some steps may be eliminated. To reduce the
time that the NPD process takes, many companies are completing
several steps at the same time (referred to as concurrent
engineering or time to market). Most industry leaders see new
product development as a proactive process where resources are
allocated to identify market changes and seize upon new
8. product opportunities before they occur (in contrast to a
reactive strategy in which nothing is done until problems occur or
the competitor introduces an innovation). Many industry leaders see
new product development as an ongoing process (referred to as
continuous development) in which the entire organization is always
looking for opportunities. For the more innovative products
indicated on the diagram above, great amounts of uncertainty and
change may exist which makes it difficult or impossible to plan the
complete project before starting it. In this case, a more flexible
approach may be advisable. Because the NPD process typically
requires both engineering and marketing expertise, cross-functional
teams are a common way of organizing projects. The team is
responsible for all aspects of the project, from initial idea
generation to final commercialization, and they usually report to
senior management (often to a vice president or Program Manager).
In those industries where products are technically complex,
development research is typically expensive and product life cycles
are relatively short, strategic alliances among several
organizations helps to spread the costs, provide access to a wider
skill set and speeds up the overall process. Also, notice that
because both engineering and marketing expertise are usually
critical to the process, choosing an appropriate blend of the two
is important. Observe (for example, by looking at the See also or
References sections below) that this article is slanted more toward
the marketing side. For more of an engineering slant, see the
Ulrich and Eppinger, Ullman references below.[2][3]
9. People respond to new products in different ways. The
adoption of a new technology can be analyzed using a variety of
diffusion theories such as the Diffusion of Innovations
theory.[citation needed] A new product pricing process is important
to reduce risk and increase confidence in the pricing and marketing
decisions to be made. Bernstein and Macias describe an integrated
process that breaks down the complex task of new product pricing
into manageable elements.[4] The Path to Developing Successful New
Products[5] points out three key processes that can play critical
role in product development: Talk to the customer; Nurture a
project culture; Keep it focused. Product life cycle Product Life
Cycle The Product Life Cycle (PLC) is used to map the lifespan of a
product. There are generally four stages in the life of a product.
These four stages are the
10. Introduction stage, the Growth stage, the Maturity stage
and the Decline stage. The following graph illustrates the four
stages of the PLC: Image copyright www.mba.com There is no set time
period for the PLC and the length of each stage may vary. One
product's entire life cycle could be over in a few months. Another
product could last for years. Also, the Introduction stage may last
much longer than the Growth stage and vice versa. The Four Stages
of the Product Life Cycle 1. Introduction: The Introduction stage
is probably the most important stage in the PLC. In fact, most
products that fail do so in the Introduction stage. This is the
stage in which the product is initially promoted. Public awareness
is very important to the success of a product. If people don't know
about the product they won't go out and buy it. There are two
different strategies you can use to introduce your product to
consumers. You can use either a penetration strategy or a skimming
strategy. If a penetration strategy is used then prices are set
very high initially and then gradually
11. lowered over time. This is a good stategy to use if there
are few competitors for your product. Profits are high with this
strategy but there is also a great deal of risk. If people don't
want to pay high prices you may lose out. The second pricing
strategy is a skimming strategy. In this case you set your prices
very low at the beginning and then gradually increase them. This is
a good strategy to use if there are alot of competitors who control
a large portion of the market. Profits are not a concern under this
strategy. The most important thing is to get you product known and
worry about making money at a later time. 2. Growth: If you are
lucky enough to get your product out of the Introduction stage you
then enter this stage. The Growth stage is where your product
starts to grow. In this stage a very large amount of money is spent
on advertising. You want to concentrate of telling the consumer how
much better your product is than your competitors' products. There
are several ways to advertise your product. You can use TV and
radio commercials, magazine and newspaper ads, or you could get
lucky and customers who have bought your product will give good
word-of-mouth to their friends/family.
12. If you are successful with your advertising strategy then
you will see an increase in sales. Once your sales begin to
increase you share of the market will stabilize. Once you get to
this point you will probably not be able to take anymore of the
market from your competitors. 3. Maturity: The third stage in the
Product Life Cycle is the maturity stage. If your product completes
the Introduction and Growth stages then it will then spend a great
deal of time in the Maturity stage. During this stage sales grow at
a very fast rate and then gradually begin to stabilize. The key to
surviving this stage is differentiating your product from the
similar products offered by your competitors. Due to the fact that
sales are beginning to stabilize you must make your product stand
out among the rest. 4. Decline: This is the stage in which sales of
your product begin to fall. Either everyone that wants to has
bought your product or new, more innovative products have been
created that replace yours. Many companies decide to withdrawal
their products from the market due to the downturn. The only way to
increase sales during this period is to cut your costs reduce your
spending.
13. Very few products follow the same cycle. Many products
don't even make it through all four stages. Some stages even bypass
stages. For example, one product may go straight from the
Introduction stage to the Maturity stage. This is the problem with
the PLC. There is no set way for a product to go. Therefore, every
product requires a great deal of research and close supervision
throughout its life. Without proper research and supervision your
product will probably never get out of the first stage. Product
life cycle strategies Done in ppt see Brand A type of product
manufactured by a company under a particular name. Definition of
'Brand' A distinguishing symbol, mark, logo, name, word, sentence
or a combination of these items that companies use to distinguish
their product from others in the market. Investopedia explains
'Brand' Once a brand has created positive sentiment among its
target audience, the firm is said to have built brand equity. Some
examples of firms with brand equity - possessing very recognizable
brands of products - are Microsoft, Coca-Cola, Ferrari, Sony, The
Gap and Nokia. Legal protection given to a brand name is called a
trademark.
14. Branding The process involved in creating a unique name and
image for a product in the consumers' mind, mainly through
advertising campaigns with a consistent theme. Branding aims to
establish a significant and differentiated presence in the market
that attracts and retains loyal customers. Branding Definition: The
marketing practice of creating a name, symbol or design that
identifies and differentiates a product from other products 5 9 An
effective brand strategy gives you a major edge in increasingly
competitive markets. But what exactly does "branding" mean? Simply
put, your brand is your promise to your customer. It tells them
what they can expect from your products and services, and it
differentiates your offering from that of your competitors. Your
brand is derived from who you are, who you want to be and who
people perceive you to be. Are you the innovative maverick in your
industry? Or the experienced, reliable one? Is your product the
high-cost, high-quality option, or the low-cost, high- value
option? You can't be both, and you can't be all things to all
people. Who you
15. are should be based to some extent on who your target
customers want and need you to be. The foundation of your brand is
your logo. Your website, packaging and promotional materials--all
of which should integrate your logo--communicate your brand. Your
brand strategy is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages. Where you
advertise is part of your brand strategy. Your distribution
channels are also part of your brand strategy. And what you
communicate visually and verbally is part of your brand strategy,
too. Consistent, strategic branding leads to a strong brand equity,
which means the added value brought to your company's products or
services that allows you to charge more for your brand than what
identical, unbranded products command. The most obvious example of
this is Coke vs. a generic soda. Because Coca-Cola has built a
powerful brand equity, it can charge more for its product--and
customers will pay that higher price. The added value intrinsic to
brand equity frequently comes in the form of perceived quality or
emotional attachment. For example, Nike associates its products
with star athletes, hoping customers will transfer their emotional
attachment from the athlete to the product. For Nike, it's not just
the shoe's features that sell the shoe.
16. Defining your brand is like a journey of business
self-discovery. It can be difficult, time-consuming and
uncomfortable. It requires, at the very least, that you answer the
questions below: What is your company's mission? What are the
benefits and features of your products or services? What do your
customers and prospects already think of your company? What
qualities do you want them to associate with your company? Do your
research. Learn the needs, habits and desires of your current and
prospective customers. And don't rely on what you think they think.
Know what they think. Once you've defined your brand, how do you
get the word out? Here are a few simple, time-tested tips: Get a
great logo. Place it everywhere. Write down your brand messaging.
What are the key messages you want to communicate about your brand?
Every employee should be aware of your brand attributes. Integrate
your brand. Branding extends to every aspect of your business--how
you answer your phones, what you or your salespeople wear on sales
calls, your e-mail signature, everything.
17. Create a "voice" for your company that reflects your brand.
This voice should be applied to all written communication and
incorporated in the visual imagery of all materials, online and
off. Is your brand friendly? Be conversational. Is it ritzy? Be
more formal. You get the gist. Develop a tagline. Write a
memorable, meaningful and concise statement that captures the
essence of your brand. Design templates and create brand standards
for your marketing materials. Use the same color scheme, logo
placement, look and feel throughout. You don't need to be fancy,
just consistent. Be true to your brand. Customers won't return to
you--or refer you to someone else--if you don't deliver on your
brand promise. Be consistent. This tip involves all the above and
is the most important tip on this list. If you can't do this, your
attempts at establishing a brand will fail.