Module in MM 1-Marketing Management

Module 7

PRODUCT STRATEGY

Learning Objectives:

At the end of this module, you must be able to:

 Evaluate product characteristics and classifications;

 Critique on product differentiation;
 Differentiate between product and brand;
 Illustrate packaging, labeling, guarantees and warrantees;
 Appraise service as a product; and
 Recommend on new product development.

Product is one of the significant elements of marketing mix. A marketer can satisfy consumer needs and wants
through product. A product consists of both good and service. Decisions on all other elements of marketing mix are
based on product. For instance, price is set for the product; promotional efforts are aimed at selling the product; and
distribution network is planned for the product. Product is in the center of all marketing programs. Therefore, product
has a chief role in determining general the success of marketing efforts.

A marketer attempts to manufacture and sell such products that satisfy needs and wants of the target market.
Other words commonly used for product are good, commodity, service, article, or object. In marketing literature,
product has broad meaning.

PRODUCT CHARACTERISTICS AND CLASSIFICATIONS

Product is a package of benefits both physical and psychological that a marketer wants to present, or a pack of
expectations that consumers desire to realize. A marketer can gratify needs and wants of target consumers by means
of products. Product includes both good and service. Normally, product is considered a tangible object, such as pen,
television set, bread, book, vehicle, table, and the likes. However, tangible product is a set of services or benefits.

Marketers should consider product benefits and services, instead of just product itself. Importance depends in the
services delivered by the product, and not tangible object itself. People are interested not just in owning the products,
but the services provided by the products.

Three Levels of a Product

Three levels of product are involved in any buying activity. The levels of product consist of the core customer value,
the actual product and the augmented product. What customers buy is a comprehensive package of benefits that
mean to satisfy customers’ needs. Basically, when marketers create products, they primarily must find out the core
customer value. Afterward, they should draw the tangible product and as well as discover ways to supplement it to
generate customer value and the most gratifying experience.

There are three levels of product that can be identified. Each level adds more customer value. They are the
following:

Core Customer Value

The first one of the levels of product is the core customer value which the buyer is really buying. When a marketer
plans a product, he must initially reflect of the core problem. For example, if an individual is buying a car, the most
basic core value he seek is transportation. For others, it might be status symbol or prestige. If someone buys a
Smartphone, the core customer value may be communication.

Similarly, if a person buys an iPad, he buys more than a mobile computer or a personal organizer. The core customer
value being bought is freedom and active connectivity.
Actual Product

Marketers should twist the identified core customer value into an actual product. This means building up on product
features, design, a quality level, a brand name and even a packaging. The Smartphone and the car customers finally
buy are actual products. They purchase the phone, the packaging, the functionality and so on. All these factors are at
the second one of the levels of product that is related to the core customer value. This discloses that the levels of
product develop on each other. The Smartphone’s name, parts, styling, features, packaging and other attributes have
all been cautiously merged to convey the core customer value of continuing to be connected.

Augmented Product

The augmented product rounds of the three levels of product are built around the core value and the actual product.
It merely provides extra consumer services and benefits. If one buys an iPad, he gets more than the core customer
value (like communication), and also in excess of the actual product. These are merely two levels of product. The
augmented product a customer gets is the comprehensive answer to the customer’s connectivity problems as
described by the core customer value. This whole solution may be given in the form of a warranty, after-sale service,
product support, instructions on manner to apply the device and so on.

Types of Products

A company sells different products ( goods and services ) to its target market. These products can be classified into
two big groups, namely consumer and industrial:

Consumer Products

Consumer products are those items which are used by ultimate consumers or households and they can be used
without further commercial and engineering processes. Consumer products can be divided into seven types as under:

1. Convenience Products - Convenience products entail items that do not need much effort or planning from
customers. Such products improve users’ convenience. They are used in a day-to-day life and are frequently
required and can be easily purchased. Good examples of convenient products are soaps, biscuits, toothpaste,
razors and shaving creams, newspapers, and food staples. They are purchased spontaneously, nearly
everywhere from nearby shops or retail malls and at roughly the same prices.
2. Shopping Products – These products require special time and shopping efforts. They are purchased
purposefully from special shops or markets. Customers are willing to invest time and effort to buy shopping
products. Quality, price, brand, fashion, style, get up, color, and others are essential standards to be
considered. They are to be chosen among various alternatives. Gold and jewelries, footwear, clothes, and
other durables ( including refrigerator, television, wrist washes, etc.)
3. Durable Products – Durable products can be used for an extended time and can be repetitively made us of by
one or more persons. Television, computer, refrigerator, fans, electric irons and vehicles are few examples of
durable products. Brand, company reputation, price, qualities ( such as safety, ease, economy, convenience,
durability, and others), features and after sales services are significant characteristics most customers think
about while purchasing these poducts.
4. Non-durable Products – In contrast with durable products, the non-durable products have short span of life.
They should be used within small time once they are manufactured. Fruits, vegetables, flowers, cheese, milk,
and other provisions are non-durable items.
5. Specialty Products – Specialty products need significant thought or effort. For example, a well-known luxury
car model might be available just a few local dealerships, meaning an interested customer has restricted
options. Specialty products tend to be costly, durable goods, often involving authorized dealerships and
personal selling.
6. Unsought Products – Unsought products are items customers are not aware of or do not often think about.
New Products that have no brand recognition fall under this classification. Insurance is an example of this type
of products. The marketing problems presented by an unsought product are as follows. First, a company must
convince customers they need the product or service. Second, a company must persuade customers to
purchase the product or service from a particular company and not from its competitors.
7. Services – Services are different than tangible objects. Intangibility, variability, inseparability, and
perishability, are some of the main features of services. Services make people’s life protected and relaxed.
Trust, reliability, costs, regularity, and timing are significant issues. The police, the post office, the hospital,
the banks and insurance companies, the cinema, the utility services by local body, the transportation
facilities, and other helpers (like barber, cobbler, doctor, mechanic) are example of services. All marketing
basic are equally applicable to services. Marketing of services is the promising feature of contemporary
marketing.

Industrial Products
 Industrial products are used as the inputs by manufacturing companies for further processes on the products, or
manufacturing other products. Some products are both industrial as well as consumer products. Machinery,
components, certain chemicals, supplies and services are some examples of industrial products.

Industrial products consist of:

1. Materials and parts – These are goods that enter the manufacturer’s product completely. They fall into two
classes which are raw materials and manufactured materials and parts. Raw materials fall into two major
groups which include farm products and natural products. Wheat, cotton, livestock, fruits and vegetables are
examples of farm products. Natural products include fish, lumber, crude petroleum, and iron ore. Natural
products are restricted in supply. They usually have large bulk and low unit value and must be transported
from producer to user.
2. Manufactured materials and parts – They fall into two categories which are component materials and
component parts. Component parts include small motors, tires, and castings. Component materials are
typically manufactured further such as pig iron turned into steel, and yarn is woven to become cloth.
3. Capital items – These are lifelong goods that facilitate developing or managing the finished product. They
include two groups which are installations and equipment. Installations consist of building for factories,
offices. While heavy equipment includes generators, drill presses, mainframe computers, and elevators.
4. Supplies and business services – These are short-term goods and services that make easy developing or
managing the finished product. Supplies are of two kinds which are maintenance and repair items and
operating supplies (lubricants, coal, writing paper, pencils). Maintenance and repair items consist of paint,
nails, and brooms: Operating supplies may include lubricants, coal, writing paper, and pencils. Business
services include maintenance and repair services (like window cleaning, copier repair) and business advisory
services (such as legal, management consulting, advertising).

Product Mix

Product mix or product assortment is the total number of product lines a company provides to its customers. The
product mix is a division of the marketing mix and is a vital part of the business model of a company. For instance, a
company may sell several lines of products. Its product lines may be quite related, such as dish washing liquid and bar
soap, which are both for cleaning purpose and apply the same technologies. Or its product lines may be very much
different, for example diapers and razors. There are four dimensions to a company’s product mix which consist of
width, length, depth and consistency.

1. Width – The width of the mix is the number of product lines the company has to offer and sell to customers.
For instance if a company like Coca-Cola produces soft drinks, juices and mineral water, this means its mix is
three products wide. Or if ABC Tool Company sells hammers and wrenches, then its product mix width is two
since it has two product lines. Small and startup businesses usually have a narrow product mix. It is more
realistic to begin with some basic products and create market share. Afterward, the company’s technology
may permit the company to branch out into other industries and put up the width of the product mix.
2. Length – Length of the product mix is the total number of products or items in the company’s product mix. In
other words, if a company has 5 product lines and 10 products each under those product lines, the length of
the mix will be 50 ( 5 product lines x 10 products).
3. Depth –The depth of the product mix is the total number of variations for each product within a product line.
These variations consist of size, flavor and any other distinguishing characteristic. For example, if a company
offers three sizes and two flavors of toothpaste, that means particular line of toothpaste has a depth of six.
There can be variations in the products of the same product line.
4. Consistency – Product mix consistency describes how closely are linked to each other in terms of use,
production and distribution. Less the variation among products more is the consistency. For example, a
company in the field of dairy products has more consistency. For example, a company in the field of dairy
products has more consistency than a company in the industry of all types of electronics. Company’s product
mix may be consistent in distribution but very much different in use. For instance, a company may sell health
bars and a health magazine in retail stores. However, one product is suitable for eating and the other is not.

Product Line

A product line is the distinctive product a company offers. For example, Procter & Gamble deals in various categories
of products which consist of shampoo, soap, hair conditioner, and others. These various products are different product
lines for the company and collectively form the mix of the company.

A product line is a group of products that are closely related to each other by function, customer group, market, or
price range. A product line is usually handled by a product line manager, who may oversee a number of product
managers who are in-charge for individual products in the line. Product line managers typically have the duty of
determining whether the product line should develop and whether products should be detached from the line. They will
also study the effect of the product expansion or slimming down on the profitability of other products in the line. A
product line manager in addition will apportion marketing pesos for each product in the line. Brand identification is
frequently vital in product lines. Brand Identification is basically creating an optimistic consumer reaction to the
product brand, which should cause loyalty and repeat purchases in customer. There are four various types of branding.
Individual brand names offer product identification without dependence on the product line or company name. Family
brand names position all products in the line under one family name. Product-line brand names may be applied if a
company has more than one product line.

Corporate brand names are applied when the company’s name is influential and can be utilized to assist the product
line.

Expanding a product line is an essential growth strategy for small businesses that desire to boost revenue or market
share. Product-line expansion can have numerous forms, consisting of new versions of a current product, improves
current products or entirely new products.

1. Life Cycle – Product-line expansion is vital to companies that have products in the late stage of its life cycle.
Products normally progress through four stages which are introduction, growth, maturity and decline.
Products are in the decline stage when they do not anymore satisfy customer needs or when their
performance turns substandard to products that have taken gain of newer materials or technologies.
2. Market Opportunities – Product-line expansion facilitate companies to take advantage of opportunities in
various market areas. A pet food manufacturer, for instance, might discover money-making opportunities to
market pedigree versions of its present offerings. An IT support consultancy might discover a lucrative niche
sector in troubleshooting domestic broadband services. Those companies can make bigger their product lines
through customize current products and services or launching fresh products that go with customer needs in
the target sectors.
3. Customer Needs – Introducing products that satisfy shifting customer needs are central driver of product-line
expansion. Through feedbacks coming from surveys or focus group discussion (FGD), or checking comments
from social media such as Facebook, Twitter and Instagram customer’s needs and wants can be discovered
by companies. A lot of favorable comments on a specific product feature that competition provides are
excellent signs of big opportunities for line expansion.
4. Customer Loyalty –Expanding a product line can help result to enhance customer loyalty. An additional new
products or even variants of current products help companies to sell more to current customers easily and in
lesser costs. In order to pinpoint the particular products being sold by competitors, most companies make
research of the of the buying records of current customers.

Product Line Extension Strategies

When a company extends to a new product that has slight differences from its current product lines, it is an element
of a product line extension. The purpose of a product line extension is adding in customers who may not know the
standard product line. Companies with an unbeaten product line in one field can use a product line extension to make
new geographic territories, attract different audiences or satisfy definite price points.

1. Products in New Areas – Companies can gain from launching their winning products in new geographic areas.
When a product satisfies the needs of customers in one city or region, the company is able to extend that
product line to meet up the needs of customers in other places. For instance, Agencia Cebuana, the famous
pawnshop started at Libertad Street in Pasay, but later extended in almost all places in the country under a
new name Cebuana Lhuillier. Besides pawning, it now offers money transfer, microinsurance, microloan, and
banking to its Filipino customers.
2. Products for New Demographics – A product line that proves that it satisfies the needs of one group of
customers a lot can be extended to meet up similar requirements of a new group. A good example is the
popular Dove beauty products for women. Unilever, had extended this product line to a new demographic
with Dove for men.
3. Products at New Price Points – Companies also can create demand from new customers by means of making
the same products at various price points. The product line extension can be applied as a down-market
stretch or an up-market stretch. A down-market stretch is a new product line that appeals to budget-minded
shoppers.
4. Products for New Needs – The prevalent basis for a product line extension is satisfying customer needs that
prior products have not provided. For instance laundry detergent manufacturers created product line
extensions with detergents that consisted of added scents, combined fabric softeners and bleach.

PRODUCT DIFFERENTIATION
 Product differentiation is a marketing strategy of making product inimitable, distinctive and uniquely valuable to be
noticeable compared with competitors. Companies made use of this strategy to gain an advantage in industries with
many competitors selling the same products. Companies may apply and gain advantages with offering a low-cost
strategy and advertising intensively. Though these are legitimate marketing strategies, still product differentiation is
special. Product differentiation is a way of making substantive uniqueness in some feature, physical attribute or other
components of a product as compared with all other choices.

Advantages of Product Differentiation as a Strategy

Product differentiation is a marketing strategy that businesses use to distinguish a product from similar offerings on
the market. For small businesses, a product differentiation strategy may provide a competitive advantage in a market
dominated by larger companies. The differentiation strategy that business uses must target a segment of the market
and deliver the message that the product is positively different from all other similar products available.

1. Creates Value – When a company uses a differentiation strategy that centers on the cost value of the product
against other comparable products on the market, it establishes a perceived value among consumers and
would-be customers. A strategy that centers on value emphasizes the cost savings or durability of a product
compared with other products.
2. Non-Price Competition – The product differentiation strategy in addition allows business to fight in areas
besides price. For instance, a candy business may set apart its candy from other brands in flavour and quality.
A car manufacturer may distinguish its line of cars as an image booster or status symbol while other
companies concentrate on cost savings.
3. Brand Loyalty – A successful product differentiation strategy produces brand loyalty amongst customers. The
identical strategy that wins market share by means of perceived quality or cost reductions may generate
loyalty from customers. The company has to keep on delivering quality or value to consumers to continue
customer loyalty. In a cutthroat market, when a product is not able to maintain quality, customers may resort
to buying from a competitor.
4. No Perceived Substitute – A product differentiation strategy that centers on the quality and design features of
the product may form the perception that there is no alternate obtainable in the market. Even though
competitors may have the same product, the differentiation strategy centers on the quality or design features
differences that other products do not include. The business wins an advantage in the marketplace, as
customers regard the product as something distinctive.

Types of Product Differentiation

Product differentiation handle making changes in the marketing mix of a product for differentiation purpose for
anything the competition is offering. In product differentiation, companies may also offer a product which is striking in
the market. Product differentiation is a vital strategic marketing process. A differentiation strategy is a significant
input to establishing a competitive advantage.

Differentiating a product could happen on core, actual or augmented level. There are a number of means to attain
product differentiation, namely:

1. Product form – A product can be differentiated on the basis of product form such as physical structure, size
and shape. Take an example of any medicine. A medicine can be differentiated from that of its competition by
the means of its potency, its usability, the way it can be taken (intravenous or oral) so on and so forth.
2. Product features – Any extra features being given besides the product becomes a bonus point for the
customer. The best model for differentiation based on features is mobile phones, handsets or any technology-
based product. They are differentiated primarily by the quantity or customizations or the added features that
they present.
3. Performance quality of the product – BMW is very much expensive than other cars, because it has superior
performance. However, Formula 1 racing car is far expensive than a BMW because it has an even higher
performance compared to a BMW. Therefore performance boosts price. Likewise, competition can present a
product which does not perform but is offered at half the price.
4. Product durability – In the strong and cutthroat laptop market, there are some laptops which are noticeable.
These are the ones made for mountaineers and insensitive environment researcher. Their price is very
elevated as compared to typical laptops. However by making such a product, they have totally differentiated
themselves from the marketplace. Kitchen equipment, vehicles, sometimes even the shoes people wear,
people want things which are durable and can be used for a long term.
5. Product reliability – A good example here is Volvo. The name of Volvo is almost identical with safety. Volvo
manufactures the most secure and reliable vehicles in the world. Volvo’s buses are so famous. Therefore, it is
not surprising that Volvo also sells at a first-rate price.
6. Product style – Product styles of Harley Davidson, Gucci, Tommy Hilfiger, Lamborghini, and Ferrari exactly
reveal quality. Each brand has a distinct style of its own and that is why each brand has a differentiation of its
own. It is hard to find a Harley Davidson guy wearing a Tommy Hilfiger. These two brands do not go together
in a style.
 7. Service – The above examples are all tangible products. Even the services as tangibles require to be
differentiated. This is chiefly made through the use of people, physical evidence and the processes used in a
service organization. For more knowledge on these, read the article on service marketing mix.

PRODUCT AND BRAND

A product is prepared by a company and can be bought by a consumer in return for money while brands are created
via consumer perceptions, expectations, and experiences with all products or services under a brand.

Brand Equity

Competition made a lot of changes to the buying habits and decision making process of consumers. Consumers
place more importance on brand rather on product features. Besides making brand as a company asset, more and
more marketers take effort to build strong positive brand equity.

Brand equity is the total value of the brand as a distinct asset. It is the combined assets and liabilities linked to the
brand name and symbol which results in the connection customers have with the brand.

Brand Awareness

Building the awareness of the brand is the first step of the equity building process. Brand Awareness is the
likelihood that consumers are acquainted about the life and accessibility of the product. It is the degree to which
consumers correctly relate the brand with a particular product category. Awareness activates the other components of
the brand equity building process.

Brand recognition and brand recall are indicators of brand awareness. Brand recognition is the ability of the
consumers to precisely distinguish the brand because of prior knowledge about it.

Brand Associations

Brand association is whatever thing which the customers bring to mind or be connected with the brand. It is
anything which is deep-rooted in customer’s mind concerning the brand. Brand associations are those brand features
which come into consumers’ mind when the brand is discussed. It is linked with the unspoken and spoken meanings
which a consumer relates with a particular brand name.

Branding Strategies

There are numerous types of branding strategies in marketing that may build brand equity. A brand strategy has the
possibility to make any company grow significantly and get into its target market. Here are some of the branding
strategies commonly used by companies.

1. Product line extension- A product line extension is launching a new product that is comparable to what the
company already offers and targeting a current market by using the existing brand name.
2. Multi brand – A multi brand is running a several brand strategy within an identical market. It involves having
more than one brand competing in the same product category. The main reasons for this strategy is that
these brands can have different positioning in the market, lead the overall shelf space, and lessen
opportunities for competitors to penetrate the market or to gain market share.
3. Brand extension – A brand extension is broadening the market’s understanding of the brand by offering more
products of different categories under the current brand name. It works best if the new product category has
some association to the brand’s present product category and apparent area of expertise.
4. New brand – A new brand happens when the company is increasing its offering by means of developing a new
product line which previously was not offered.

PACKAGING, LABELLING, GUARANTEES AND WARRANTIES

Most tangible products have to be boxed up and labelled. Most marketers regard packaging and labelling as a
component of product strategy. Warranties and guarantees can also be essential elements of the product strategy,
which are often shown on the package.

Packaging

Packaging consists of all the activities of designing and producing the container for a product. Packages when well-
made can produce convenience and promotional value. It is also a styling weapon, particularly in food products,
cosmetics, toiletries, medicines and small consumer appliances. Packaging comes into various forms as such as boxes,
bottles, jars and other containers. It is also designed in different colors, shapes, and sizes.

Here are some benefits of packaging, namely:

 1. Protect products – Packaging makes certain that product is safe when transported to stores and shipped to
customers. A product should also be protected when placed inside shelves of stores. Companies always see to
it that customers accept their products with intact packaging.
2. Attract consumers – Visually attractive product packaging magnetizes consumers and influence them to pick
and try it. Consumers become interested about its use and find out its value. Design of packaging is a lot
reliant on the needs and wants of the company’s target market. Everything from color to size to shape is
tailor-fitted to what is considered by consumers an ideal product.
3. Provide information – Information about the product could be communicated by means of product packaging.
This information is about the ingredients used, how to use the product , its features and benefits which may
be written on the packaging. In order to contact those manufacturing companies for feedbacks and queries,
customer service information may also be shown on packaging. This manner of communication connecting
companies and their consumers may aid businesses on making decisions on making decisions on highlighting
benefits and making improvements to market products.
4. Reinforce branding and logo – Brand elements such as logos, product characters and tag lines are also
contained on product packaging. These brand elements which companies worked hard to achieve help for
easy brand recognition of consumers when placed on store shelves and when advertised.

Labeling

Most products are labelled. A label can be in the form of a simple tag that is fastened to the product. Or it can be a
more richly designed graphic that is placed as component of the product package. Some labels only hold the brand
name, however, there are labels that contain a lot of information about the brand. Most of the times, companies
comply with the law in placing numerous information on the label.

Guarantees and Warranties

Basically, warranties and guarantees are assurance of good quality products given by manufactures to protect the
interest of customers. Warranties and guarantees also serve as competitive uniqueness for the consumer as well as
brand image enhancer. A warranty is an assurance of a manufacturer that the product it produces is defect-free and it
functions optimally within the warranty period. While, a guarantee is a commitment given by a manufacturer to its
customers that the product it produces is of high-caliber and will last for a longer period of time. Guarantee may come
in “money back” promise to customers. Hence, both of them give customers the “word of honor” that the products
being offered are high-caliber and defect-free.

SERVICE AS A PRODUCT

A service is the performance of a vital intangible benefit, either in its own right or as a major ingredient of a tangible
product, using some form of exchange that satisfies a need. A service is intangible because a customer experiences
does not hold or preserve.

There are four distinctive service characteristics that greatly affect the design of marketing programs.

1. Intangibility – Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they
are bought.
2. Inseparability – Services are typically produced and consumed simultaneously.
3. Variability – Services are highly variable because the quality depends on who provides them, when and
where, and to whom.
4. Perishability – Services cannot be stored, so their perishability can be a problem when demand fluctuates.

At times services are complicated to recognize because they are very much related with a good. Some good
examples of services are telecommunications, saunas, massages, lawn care and even the simple haircut. The service
ingredient can be a main or negligible part of the whole offering.

Five types of service offerings are:

1. Pure tangible good – It is a tangible good such as toothpaste, with no associated services.
2. Tangible good with accompanying services – It is a tangible good, like a cell phone, that comes with one or
more services.
3. Hybrid – It is an offering, such as a restaurant meal with equal parts of goods and services.
4. Major service with accompanying minor goods and services – It is a major service, such as air travel with
additional services or supporting goods like beverages.
5. Pure service – It is principally an intangible service, for instance babysitting or psychotheraphy.

Service Differentiation
 The key to competitive success may be in the form of added-value services and improved quality when the tangible
product cannot be distinguished easily.

Here are some differentiators of service:

1. Ordering Ease – This is how simple it is for the customer to make order with the company. A healthcare
company may lighten its ordering process by delivering hospitals with computer terminals by which they send
order straight to said company.
2. Delivery –This is how sound the product or service is brought to the customer. It consists of speed, precision
and care attending the delivery process. Today’s customers have grown to wait for delivery speed like pizza
which comes into the hands of customers in a matter of 20 minutes with no payment if delayed.
3. Installation – It is the work made to create a product operational in its designed location. Buyers of heavy
equipment suppose good installation service. For example, for customers longing to connect to the internet
using a high speed digital subscriber line (DSL), a well-known telephone company developed installation kits
that integrated an interactive software setup program so that DSL setup which could be installed in less than
an hour.
4. Customer training – It refers to training the employee’s use to the vendor’s equipment correctly and
proficiently. An electric company, besides selling and installing costly x-ray equipment in hospitals, also
provides extensive training to consumers of this equipment.
5. Customer consulting – This refers to data, information systems and advice services that the seller provides to
buyers.

Service Marketing Strategies

A service marketing strategy concentrates on delivering processes, experiences, and intangibles to customers rather
than physical goods and transactions. Here are various strategies for service marketing:

1. Referrals – Through word of mouth, services could be marketed. A satisfied customer is more than willing to
share his experience with friends. When asked he will surely tell them why he likes the service.
2. Education – Giving customer education is another way to market a service. This could be in the form of
seminars, lunch-and-learns or other educational meetings.
3. Demonstrations – Customers might have second thoughts about trying a service if they are not confident
what they are getting. Providing free demonstrations helps ease their concerns and can effect in instant sales.
4. Industry Specialization – Every company should have marketing plans to be noticeable amidst competition.
With limited market but so many service companies, each company should identify which skill sets to
specialize and highlight those skills.
5. Social Media – Social media are difficult to escape, with millions of people sending texts and emails to friends
when they notice interesting items they desire to share.

NEW PRODUCT MANAGEMENT

New product development (NPD) is a process of producing a product or service from idea to bringing it to the
market. Product development is at all times a developing and flowing process.

Types of New Products

The term new product can signify different things. The following are the six categories of new products which are:

1. New-to-the-world products – These products are genuinely new because they form a completely new market
and are merely a small fraction of the new product category.
2. New product lines – When a company presents a product from a new category, that has never been
developed or sold before, it would be a new product line. Often these products are similar to competitors’
products which previously obtainable in the market but with some point of difference.
3. Additions to existing product lines – These take place when a company includes a new product that
strengthens its area of product offerings. These are plain line extensions, intended to fill out the product line
as offered to the company’s existing markets.
4. Improvements and revisions to existing products – These products provide improved quality, features or
performance of a current product to make it better.
5. Repositioned products – These are current products targeted to new markets or changed slightly to increase
sales. Or current products are retargeted for new application intended for new market.
6. Lower-priced products – Cost reductions refer to new products that simply replace existing products in the
line, providing the customer similar performance but at a lower cost.
New Product Process

In order to succeed when confronted with maturing products, companies have to create new ones and undergo
cautiously the process of new product development. There are a lot of challenges however, when developing new
product which most of times weigh heavily against success. Only a handful reaches the market of all the thousands of
products entering the process. Here are the eight common steps in the new product development process:

1. Idea generation – The process of new product development begins with idea generation. Idea generation
means the methodical exploration for new product ideas. Usually, a company breeds thousands of ideas only
to find a few of good ones in the end. There are two prime sources of new ideas that can be identified:
a. Internal idea sources – This is when the company discovers new ideas within. That means Research and
Development and also contributions from employees. Many organizations lose out in their most
productive source for innovative ideas, their employees.
b. External idea sources – This is when the company discovers new ideas on the outside. This includes all
types of external sources, such as distributors and suppliers, and even competitors.
2. Idea screening – Idea screening is the second step in the new product development process. It means sorting
out the ideas to select good and drop poor ones as soon as possible.
3. Concept development and testing – In order for attractive ideas to be developed into a product concept,
companies must continue the process. A product concept is a comprehensive description of the new product
idea declared in significant consumer terms.
4. Marketing strategy development – The marketing strategy development is the next step in the new product
development process. When a good concept has been developed and tested, planning for the opening
marketing strategy of the new product is prepared.
5. Business Analysis – An evaluation on the business attractiveness of the proposed new product by
management is done after finally deciding for the product concept and marketing strategy.
6. Product development - This step is the actual product development. Once the product concept is able to pass
the business test, it is time to develop the physical product. This step makes certain that the product concept
could become a feasible offering in the marketplace.
7. Test marketing – In this step, the newly developed product and its planned marketing program are tested in
real market situations. Test marketing offers factual market experiences of selling the product prior to its full
launch.
8. Commercialization – This last step is the introduction of a new product into the market. During this time, the
company would surely incur highest costs due to advertising, sales promotion and other marketing efforts in
the initial year.

REFERENCES:

Angelita Ong Camilar-Serrano, PhD-BM,MBA, CMC , Marketing Management Copyright 2019

Prepared by: Instr. Janet F. Satajo, MBA