Steps in New Product Development Process - Management Duniya

Steps in New Product Development Process

Idea Generation: New product development starts with Idea generation. Company typically has to generate many ideas in order to find a few good ones. The sources of new product ideas are born from customer needs & wants, scientists, competitors, sales representatives, dealers, agents, trade persons, top management etc…

Idea Screening: The purpose of idea screening is to create large no.of ideas. The first idea reducing stage is idea screening, which helps to spot good ideas and drop poor ones as soon as possible. Many companies require their executive to write up new products ideas on a standard form that can be required by a new product committee. The write up describes the product, the target market & the competition. It makes some rough estimates of market size, product price, development time & costs & rate of return. The committee then evaluate the idea against criteria. The committee asks questions as is the product truly useful to the consumer & society? Is it good for our particular company?  Do we have the people skills & resources to make if succeeded? Is it easy to advertise & distribute? Many companies have well designed system for rating & screening new product ideas.

Concept Development & Testing: A detailed version of the new product idea stated in meaning full Consumer term.

Concept Testing: Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or physically.

After being exposed two concepts consumers may be asked to react to it by answering questions such as

Do you understand the concept?

What are the benefits?

What improvements in the features

What is the reasonable price?

Would you buy such type of Product?

Marketing Strategy: Suppose Toyota find new concept and tests are success. The next step is marketing strategy development designing an initial marketing strategy for introducing this car to the market. The marketing strategy statement consists of three parts. The first describes the target market, the planned product positioning & the sales, market share & profit goods for the first few years.

The second part of the marketing strategy statement out lines to product planned price, distribution & marketing budget for the 1^st year.

The third part of the marketing strategy statement describes the planned for  long term sales, profit, goals & marketing mix strategy.

Business Analysis: Once management has decided on its product concept & market strategy, it can evaluate the business attach fineness of the proposal.

  It involves a review of the costs & profit projections for a new product to find out whether these factors satisfy the company Objectives. If they do the company can move to the product development.

To estimate sales, the company might look at the history of similar products & conduct surveys of market opinion. After preparing the sales forecast management can estimate to expected costs & profit for the product, including marketing, R&D, manufacturing, Accounting & finance costs.

Product Development: If the product concept passes the business test it moves in to product development. Here R&D or engineering develops the product concept in to physical product.

Developing the product concept in to a physical product in order to assure that the product idea can be turned in to a workable product.

Test Marketing: The stage of new product development in which the product & marketing programs are tested in more realistic marketing settings. Test marketing gives the marketer experience with marketing the product before going to the great expense of full introduction. It lets the company test the product & its entire marketing program, positioning strategy, advertising, distribution, pricing, branding & packaging & budgets levels.

 When using test marketing consumer products companies usually choose one of three approaches.

Standard Test Markets: Using this test market, the company finds a small no.of representative test cities, consumer and distributor surveys & other measures to gauge product performance. The results are used to forecast national sales & profits discover potential product problems & fine time to marketing program.

Controlled Test Markets: Several research firms keep controlled panels of stores that have agreed to carry new products for a free controlled test marketing system.

Simulated Test Markets: Companies can also test new products in simulated shopping environment.

The company or research firm shows ads & promotions for a variety of products including the new product being tested to sample consumers. It gives consumers a small amount of money & invites them to a real & laboratory store where they may keep the money or use it to buy items. The researchers note how many consumers buy the new product & competing brands. The researches then ask consumers the reason for their purchase or non purchase some weeks later, they interview it consumers by phone its determine product attitudes, usage, satisfaction & repurchase intention.

If the results are very poor, the product might be dropped or substantially redesigned & retested.

Commercialisation: Test marketing gives management the information needed to make a final decision about whether to launch the new product. If the company goes ahead with commercialisation to introduce the new product in to the market, it will face high cost. The company will have to build or rent a manufacturing facility. It may have to spend lot of money for advertising sales promotion & other marketing program efforts in the first year.

The company launching a new product must first decide on introduction timing, next company must decide where to launch the new product in a single location, a region, national market or international market.

For Steps in New product development process chart please click here

Source: Books & Notes

Tags: Consumer Behaviour, Consumer Buying Bahviour, consumers market, Human Resource, Indian consumer, Management, Marketing Management, MBA Career, MBA Finance, MBA Management, MBA Marketing, MBA Notes, MBA Projects, New Product Development, Organisation, organisational Behaviour, PRODUCT, Steps in New Product Development Process
By: Management Duniya

Steps in New Product Development Process. - Management Duniya

Steps in New Product Development Process.

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By: Management Duniya

NEW PRODUCT DEVELOPMENT PROCESS - Management Duniya

NEW PRODUCT DEVELOPMENT PROCESS

Companies must develop a steady stream of new products and services because of the rapid changes in consumer. (Tastes, technology & Competition)

A firm can obtain new products in two ways

Acquisition by buying a whole company, a patent or a license to produce someone else’s product, the other is through new product development.

New Product Development:

It is the development of original products, product improvements, product modifications & new brands through firm’s own R&D efforts.

Reasons to failure of a new product

The market size may be over estimated.

The actual product cost not designed so well

It was incorrectly positioned in the market.

Price is too high.

Poor Advertisement

Poor Marketing Research

Bad timing of introducing a new product

Failure of product to fill the customer needs

Technical & Production Problems

Too many products (New) entering in to the market

Failure to estimate the strength of the competitor

Product problems & its defects

Failure to recognise rapidly changing marketing environments

 To create successful new products a company must understand its consumers, market , competitors and develop products that deliver superior value to customers.

The success of new product depends on systematic new product development process is require for finding & growing a new product.

Source: Books & Notes

Tags: Consumer, Consumer Behaviour, Consumer Buying Behaviour, finished products, Human Resource, Human Resource Management, Marketing Strategies, MBA Career, MBA Exam Study material, MBA internet materail, MBA Notes on Internet, MBA on Internet, MBA Projects, New Product, NEW PRODUCT DEVELOPMENT PROCESS, Organisation, organisational Behaviour, Product Development, Product display contests, purchase department, purchase order, Purchase Power, purchase price, purchasing strategies, semi-finished products
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Product Mix Decision - Management Duniya

Product Mix Decision

Product Mix Decision:

The set of all product lines & items that a particular sellers offers for sale.

A company’s product mix has four important dimensions i.e. Width, Length, Depth and Consistency.

Product Mix Width: It refers to the total no.of different product lines the company carries. Ex: AVONs product mix consists 4 major product lines. Cosmetics, Jewellery, Fashion, Household Items etc…

Product Mix Length: It refers to the total no.of items the company carries in its product line.

Ex.

Co. Name: AVONs;    Line: Cosmetics;  Items: Lipstick, Powder, Eye Liner and Nail Polish.

 Product Line Depth: It refers to the no.of versions offered of each product in the line. Ex. P&G crests tooth paste comes in three types Paste, Gel, Herbal .

Product Mix Consistency:  It refers to how closely relate the various product lines are in end use. Product on requirements, distribution channels or some other ways. Ex. P& G product lines are consistent in so far as they are consumer products that go through the same distribution channels.

 

Source: Books & Notes

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By: Management Duniya

Product Line Decision - Management Duniya

Product Line Decision

Product Line Decision: A group of products that are closely related they function in a similar manner are sold to the same customer group are marketed through the same type of out lets fall within given price ranges.

The company must manage it product line carefully. It can systematically increase the length if its product line in two ways.

Line Stretching

Line Filling

Line Stretching: It occurs when a company lengthen its product line beyond its current range. It may be in 3 ways Downward, Upward and Both Directions

Line Filling: Adding more items with in the present range of the line.

Source: Books & Notes

Tags: Consumer Behaviour, Consumer Buying Behaviour, finance, Financial management, Human Resource Management, Indian consumer, Management, Management Accounting for MBA, Marketing, Marketing Management, MBA, MBA Career, MBA Marketing, MBA project, MBA Projects, Organisation, organisational Behaviour, Product Line Decision
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Industrial Products - Management Duniya

Industrial Products

Products bought by Industrial & organisations for further processing or for use in conducting a business. Industrial products can be classified in to 3 goods.

Raw material & Parts

Capital Items

Supplies & services

 Raw material and Parts: Raw Material consist of form products (wheat, cotton fruits & vegetables etc…) and natural products (Crude oil, Iron, Ore).

Capital Items: Capital Items are industrial products that are in the buyers production operations including installation & accessory equipment. Installation consists of major purchases if such as building, factories, offices & fixed equipments. (Generators, Large computer system etc…) Accessory includes affordable factory equipment & tools (Lifts, Trucks) & office equipment (Fax Machines, Desks)

Supplies & Services: The final group of business product is supplies & services. Supplies include operating supplies (Lubricant Oil, coal, Stationery etc…) & repairs & maintenance items (Paint, broom & etc…)

Source: Books & Notes

Tags: Buying Behaviour, Capital Items, Consumer Behaviour, Consumer Buying Behaviour, Consumer Buying process, finance, Financial management, Human Resource, Human Resource Management, Industrial Products, Management, Marketing Management, MBA Accounting, MBA Career, MBA Finance, MBA Marketing, MBA Notes, MBA Part Time, MBA Part Time Jobs, MBA project, MBA Projects, Organisation, organisational Behaviour, Raw material and Parts, Supplies & Services
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Product Classification - Management Duniya

Product Classification

Product & services fall in to two broad classes based on the types of consumers that use them.

Consumer Product

Industrial Product

Consumer Product:

Consumer Products are those bought by final consumers for personal consumption.

Marketers usually classified these goods based on how consumers go about buying them. Consumer product includes convenience Product, Shopping Product, Special product.

 Convenience Product: Consumer product that the consumer usually buys, frequently, immediately and minimum of comparison & buying effort. Ex: Soaps, New papers etc…

Shopping Product: Consumer goods that, the customer in the process of selection & purchase characteristically compares on such habits as suitability, quality, price & style.

Ex. Furniture & clothing

Special Product: Consumer with unique characteristics or brand identification for which a significant group of buyers are willing to make a special purchased effort. Ex. Car, Luxury Goods etc…

Source: Books & Notes

Tags: Buying Behaviour, Consumer Behaviour, Consumer Product, convenience Product, finance, Financial management, Human Resource, Human Resource Management, Industrial Product, Management, Marketing Management, MBA Career, MBA Finance, MBA Marketing, MBA Notes, MBA project, Organisation, organisational Behaviour, organisational Theory, Product Classification, PRODUCT MANAGEMENT, Shopping Product, Special product
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PRODUCT MANAGEMENT - Management Duniya

PRODUCT MANAGEMENT

PRODUCT MANAGEMENT:

Product: Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.

Levels of Product: Product planners need to think about products and services on 3 levels.

Core Product

Actual Product and

Augmented product.

Core Product:

The most basic level in the core product which address the question what is the buyer really buying as shown in the above figure the core product ends at the centre of the total product. It consist of the core problems following benefits that consumer seeks when they buy a product or service. Ex. A woman buy lipstick buys more than lip colors.

Actual Products:

The product planners must next build an actual product around the core product. Actual product consists of 5 characteristics i.e. quality, Features, Designs, Branding and Packaging.

Ex: A sony TV is an actual Product. It name, parts, styling, features, packaging & other attributes are combined, carefully to deliver core benefit.

Augmented Product: Finally the planner must built an Augmented product around the core & actual product by offering additional consumer service benefits.

Ex: After sale:  service, warranty, delivery and credit.

Source: Books & Notes

Tags: Actual Produc, Augmented product, Consumer, Consumer Behaviour, Core Product, finance, Financial management, Human Resource, Management, Marketing, Marketing Management, MBA Career, MBA Finance, MBA HR, MBA Marketing, MBA Notes, MBA Projects, Organisation Behaviour, organisational Behaviour, PRODUCT MANAGEMENT
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Difference between Consumer and Organisational Buying Behaviour - Management Duniya

Difference between Consumer and Organisational Buying Behaviour

Difference between Consumer and Organisational Buying Behaviour:

There are no.of reasons that can be identified to differentiate the process of buying for an individual consumer and Industrial consumer.

Organisations buy products in to services to reach their organisational goals. These goals should be profit maximisation, cost reducing, meeting employee needs and satisfy legal obligations. Therefore organisations are more rational during the purchase; however individuals by goods & services for their own satisfaction & other factors could influence the buying behaviour to very small extent. Hence, consumer buying process could be more spontaneous.

 More people are involved any organisation buying. There may be wide range of influences in the decision making process which could be from the various levels in the organisation. In consumer buying behaviour also they exists many roles played by different individuals. However, the extent or degree of people participation is very less in individual buying process.

  Organisation purchases are more likely to be based on formal routing like purchasing policies, constraints & requirements established by the organisations. This is not applicable to individual purchases and hence is more informal.

The poor performance of a product might cause annoyance to a customer & may not result in the repurchase of the same product. But in case of business buyer it could need to financial loss non achievement of goals.

In the process of reducing risk of the organisational buyer, the manufacturers face a greater attention to the development of product for organisational buyer, because he would seek for a longer relationship between buyer and seller with the organisation. However he may not resort to such measures for individual buyer.

Since the organisational is more formal, therefore the complexity of the process also increases. It could be a time consumer product & lot of people & various level & departments could be involved in the organisational purchase. However this is not the case in individual purchase.

Source: Books & Notes

Tags: Buying, Buying Behaviour, Consumer and Organisational, Consumer Behaviour, Difference between, Human Resource, Management Accounting for MBA, MBA Career, MBA Finance, MBA Marketing, MBA Notes, MBA Projects, organisational Behaviour
By: Management Duniya

ORGANISATIONAL BUYING - Management Duniya

ORGANISATIONAL BUYING

The organisational buying process is more formal than that of the consumer buying behaviour. It involves various levels of participants of the organisation.

Participants in the organisational buying process:

Initiator

Influencer

Gate Keepers

Decision Maker

Purchasers

Users

 Problem Recognition:

The buying process stands with the recognition of the problem which is to be met by purchase of a product. The organisation does so because due to some reasons like to develop new product, where in equipment & material are required or the malfunctioning of the currently available the machinery which require new party or the unsatisfactory results of the already purchased products.

General Need Description:

The buyer then describes the general charismatic of the materials required in terms of the standards, quality, quantity, etc… In this process the helps of technically qualified manpower could be takes for the description of the need. The general description could also include reliability, durability & various other attributes.

 Product Specifications:

The product required to meet the needs are clearly specified. Technical specification & the quality expected are also specified.

Product Value analysis:

It is an approach adopted by organisations for cost reduction in which the various components are thoroughly an analysed in order to extract maximum utility out of it.

Supplier Search: In this stage the organisation tries to identify the most appropriate suppliers/vendors. The suppliers are notified about the requirement through advertisements or some notification. The vendors try to get listed in the various catalogues regarding the suppliers of the market place. This listing helps the supplier to have a reputation in the market. So that buyers would have a good impression about them.

Proposal Solicitation:

The buyer will, in this stage, invite, qualified suppliers to submit proposals which comprises of all the details regarding the products under consideration. The buyer goes through these proposals & selects a few which he feels is the most appropriate one. These proposals are further asked for presentations.

Supplier Selection

After the presentations being given the buyer selects for the most appropriate vendor.

Order Routine Specification:

After the selection of the supplier negotiation of the final order takes place between the buyer & the supplier. Technical specification, quality specification, quantity required, delivery time, warranties etc…, are discussed during these negotiation. In case of maintenance & repair buyers are employing blanket contract concept rather than periodic purchase order.

A blanket contract establishes a long term relationship which supplier promises to re supply the products at agreed up on prices over a specific period of time.

Performance Review:

The buyer keeps reviewing the performance of the suppliers at regular intervals in order to ensure there is maximum profit attain from the present supplier.

Source: Books & Notes

Tags: Buying, Buying Behaviour, Consumer Buying Behaviour, Decision Maker, finance, Financial management, Gate Keepers, General Need Description:, Human Resource, Influencer, Initiator, Management, Marketing, Marketing Management, MBA Career, MBA Finance, MBA HR, MBA Management, MBA Marketing, MBA Notes, MBA Online Notes, Order Routine Specification:, Organisation, ORGANISATIONAL BUYING, Organisational Management, Performance Review:, Problem Recognition, Product Specifications:, Product Value analysis:, Proposal Solicitation:, Purchasers, Users
By: Management Duniya

Role of an Individual in the Purchase Process - Management Duniya

Role of an Individual in the Purchase Process

Role of an Individual in the Purchase Process:

Initiators:  The initiators are those who initiate the purchase idea.

Influencer/ Gate keeper: An influencer helps the initiator to move forward the decision maker or purchaser. A gate keeper however, stops the idea from being passed on higher level.

Decider: Listening the initiator & influencer along with his own pre dispositions the decider makes a decision regarding the purchase.

Purchaser: Those who actually purchase the product are known as purchaser. The decider & purchasers may or may not be the same person.

Source: Books & Notes

Tags: attitude, Consumer, Consumer Behaviour, Decision, Employee, Employee Behaviour, finance, Finance Management, Management Duniya, Managment, Marketing Management, Organisation, Perception, Role of an Individual in the Purchase Process
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MODELS OF CONSUMER BEHAVIOUR - HOWARD SHETH MODEL - Management Duniya

MODELS OF CONSUMER BEHAVIOUR - HOWARD SHETH MODEL

HOWARD SHETH MODEL:

This model was proposed by keeping both the industrial & consumer products, in order to give an understanding about great variety of behaviours. It shows the rational brand choice behaviour by buyer under conditions of incomplete information. It proposes levels of decisions making.

Extensive Problem Solving:

In this the customer does not have any basic information about the band and any preferences for any product. Then he will find information about all brands from the market before purchase.

Limited Problem Solving:

In this, customer has little knowledge about brands and market. This is an advance stage where the choice criterion is defined but the exact solution of the problem is unknown to the customer.

 There are four components describe in the model which causes the actual purchase behaviour.

Input Variables

Out Put variables

Hypothetical Constructs

Exogenous Variable

The input variable consists of some stimulate which serves as the information to the consumer.

1. Significative Stimuli: This is the elements of the brands which the consumer comes across.


2. Symbolic Stimuli: This consists of the stimuli which the producer shows about the various attributes /benefits of his product.


3. Social Stimuli: This consist of those environmental factors which can act as the source of input.

Output variable: This output is the ultimate response of the consumer. In order to come to a conclusion regarding the purchase consideration he follows sequential order.

Attention —– Comprehension —– Attitude—– Interruption—- Purchase Behaviour

The consumer first is attentive towards the various stimuli which help him in comprehensive about various brands. He then develops an attitude for the product due to which he has same intention regarding the purchase decisions.

Hypothetic Construct: These are the interviewing variables which influence the customers output decision. It consists of major variables.

1. Perceptual Constructs


2. Learning Constructs

Perceptual Constructs: This helps in the information processing for the selecting of a brand. It consists of three steps.

Sensitively to information: Where in the customer is open to the options available to him

Perceptual Bias: The consumer then has a biased opinion regarding the various brands, because he perceives each brand differently.

Search for Information: The consumer further searches for information in order to come to a conclusion.

Learning Constructs: This involves the formation of concepts regarding various brands. This consist of various factors like motive, brand potential of evoke set, decision mediators, pre – dispositions, inhibitors satisfaction.

Exogenous Variables: These are the External factors which influence the decision making process. This could include the importance of purchase, personality, social class., culture, organisation, financial status.

Therefore, this model gives on overall views regarding consumer purchases keeping in view all the factors influencing the organisation as well as the end consumer.

Source: Books & Notes

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MODELS OF CONSUMER BEHAVIOUR - Freud Theory or Model - Management Duniya

MODELS OF CONSUMER BEHAVIOUR - Freud Theory or Model

Freud Theory or Model:

The Psychological forces shaping the consumer behaviour is mostly unconscious & their individual himself may not be able to given an explanation for his own preferences of a product. Sometimes he himself cannot fully understand this motivation to buy a product. Where an individual sees a product, he is not only analyses its features but also looks for the less conscious features like the size, color, shape, brand name & etc…, all these can act as factors of motivating him to buy the product, at the same time this consumer ins unaware of the preferences he has for it. Motivation researches conduct in depth service or interviews in order to find the effect of such unconscious factors.

Recent research has given result that each product is capable of bringing out a certain set of motives. For ex. An insurance policy will be opted by one who meets security for him and his family.

Different brands use this unconscious consumer behaviour to trap customers by giving different appeals. This is often termed as motivational positioning.

Source: Books & Notes

Tags: Behaviour, Consumer, Consumer Behaviour, employees, finance, Finance Management, Freud Theory or Model, Human Resource, Human Resource Management, Management, Management Accounting for MBA, Marketing, Marketing Management, Maslow Theory, Maslow's Model, Maslow's Theory, MBA Accounting, MBA Career, MBA Exam Study material, MBA Finance, MBA internet materail, MBA on Internet, MBA project, MBA Study Material, Models of Consumer Behaviour, Motivation, Organisation, organisational Behaviour
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MODELS OF CONSUMER BEHAVIOUR - Marshallain Economic Theory - Management Duniya

MODELS OF CONSUMER BEHAVIOUR - Marshallain Economic Theory

Marshallain Economic Theory:

Alfred Marshall and other classical economists bare the first professional groups to construct a specific theory of buyer behaviour. This theory holds that purchasing decisions are the result of largely ration of & conscious economic calculation. The individual buyer seeks to spend his income on those goods that will deliver the more utility.

Marketers have dismissed this model as an observed one as it is not applicable to the real world situations. This model is also often called as economical model. In this four main effects where discussed according to which the customers where supposedly taking decisions regarding purchases. The effects are

Price Effect: According to this the lesser price of the product, the more the sale would take place.

Income Effect: The higher the real income the more the buyer would spend on the products.

Substantial Effect:  The lower of the price of the substantial products the higher the sales would be, therefore declining the sales of the other product.

Communication Effect: The more the product feature is communicated to the consumer. The more sales it would be.

However, these four effects are not always employed by consumer during their purchase. Further, nothing is specified regarding the relation between the product features and consumer preferences. This model gives only a very narrow view of the purchase pattern & this cannot serve as a perfect model for understanding consumer preferences in buying behaviour.

 

Source: Books & Notes

Tags: Consumer Behaviour, Economic Theory, economics, Employee, Human Resource, Management, Management Accounting for MBA, management economics, Marketing, Marketing Management, Marshallain Economic Theory, MBA Accounting, MBA Career, MBA Exam Study material, MBA HR, MBA internet materail, MBA Marketing, MBA Notes on Internet, MBA on Internet, MBA project, MBA Study Material, Models of Consumer Behaviour, Notes for MBA Students, Organisation, Organisation Behaviour
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MODELS OF CONSUMER BEHAVIOUR - Maslow's Theory - Management Duniya

MODELS OF CONSUMER BEHAVIOUR - Maslow's Theory

Abraham Maslow

Abraham Maslow suggested a model based on which consumer markets their decisions. According to him motivation is the prime factor, which is divided in to various levels & this essentially dictates the behaviour of individual. According to him there are five levels of motivation which the consumer tries to satisfy in a sequential order.

Any individual would satisfy the level 1 and then only proceeds to level 2 and so on. The pressing need is satisfied in the order of these levels. A hungry person would not be interested in satisfying his esteem needs; rather he would try to satisfy the basic needs i.e. to purchase something which would satisfy his hunger. Immediately after this stage he will not try to satisfy any other need other than level 2.

Maslow’s theory helps marketers’ to understand how various products fit in to the plans, goals & lives of the customers. This serves as an important model in understanding the consumer behaviour because markets can anticipate / forecast the needs their customers & can cater to their needs depend up on their existence level.

 

Source: Books & Notes

Tags: Career, Consumer, Consumer Behaviour, finance, Financial management, Human Resource, Management Accounting for MBA, Marketing, Marketing Management, Maslow's Model, Maslow's Theory, MBA Accounting, MBA Career, MBA Exam Study material, MBA Finance, MBA HR, MBA internet materail, MBA Marketing, MBA Notes on Internet, MBA on Internet, MBA project, MBA Study Material, Models of Consumer Behaviour, Notes for MBA Students, Online Notes for MBA, Online notes for MBA finance Students, Organisation, Projects
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