What is Product

“ A Product is a bundle of physical services and

symbolic particulars expected to yield satisfaction or
benefits to the buyer”
By Philip Kotler
 Product Concept

The product concept is different form production

concept. It proposes that consumers favour products
that offer the most quality, performance, or
innovative features. It also emphasis on quality
assurance. In general, the product concept tries to
achieve marketing success through product
attributes.
Organisations concentrate on product excellence
they spend their time and money on research and
development which bring out many new products.
 Components of products

The Core or the Basic constituent

The associated features
Brand Name and Logo
The package and Label
 INTRODUCTION

New product-any product which is perceived by

the customer as being new . This could be
repositioning of existing products, e.g- Britannia
marie or offering the existing products at low
prices, e.g- Automobiles ,blackberry etc. or making
improvements in existing products , e.g- bournvita,
horlicks etc. or adding new products to existing product
line ,e.g-it or taking up a product line which is totally new
to the organization /world. e.g. m&m , reliance etc.
 INTRODUCTION

Product development means making changes in the

size, design, color, shape, characteristics, packing etc. of
the product. It may include addition of a new product
line, addition of a new product item in a particular
product line, elimination of existing product or product
line & changes in the size, color, design, packing,
characteristics, and prices of the product &
discontinuation of the unprofitable item or product line.
A new product is any product which is perceived by
the customer as being new.
 REASONS FOR NEW PRODUCTS

There are at least 3 reasons for which new

products should be developed.

 1st, new products become necessary for meeting

the changes in consumer needs.
 2nd, new products become necessary for making
new profits.
 3rd, new products become necessary for combating
environmental threats.
 FACTORS OF NEW PRODUCT DEVELOPMENT:

New product development is a continuous function of

marketing management in the present day highly competitive
environment. In the process of new product development, a
company should keep in mind the following considerations:
Adequate market demand.
The product should fit into company’s present market
structure.
The idea should fit into the company’s present
production structure.
The product should fit as per the financial resources
available.
Adequate distribution in depth & breadth.
 Need for Product Development

 New Products are required for filling the strategic planning gap
of an organization:
 The development of New Products is a part of firm’s corporate
strategy. Existing products/product lines give the income and
profits to the organization. The companies operate in certain
markets having certain market share. As organizations aim for
faster and sustained growth there is requirement to add new
products to their existing portfolio .The critical issues for a firm
are-how much the firm wishes to grow/how much of desired
growth can come from the firm’s present business/what is the gap
that the firm can plug their’ new business/new products. This is
the strategic planning gap.
 Need for Product Development

New products are required to make new profits.

Through New products the firm can decide the ‘value’

factor and that can be associated with the products
because ‘value’ for money is the key expectation of any
consumer.
 Need for Product Development

 New Products are important for making new profits

 Growth of a firm and profits are the basic objectives of any firm.
Established products have limitations as far as profits are
concerned. Profits of existing products decline as they reach the
maturity/decline stage of PLC. Therefore it becomes important
for the firm to bring new products to replace the declining
products.
 Need for Product Development

 New Products are required for meeting consumer expectations-

The world today is a world of ‘change’. This is due to

technological breakthroughs. This change is seen in food
habits, comforts, convenience, expectations and
requirements. Any firm is sensitive to this and responds to
these changes through new products/services.
 Need for Product Development

 New products are introduced for countering threats in

environment-

Technological changes, problems in supply of raw

material, legal restrictions, competition, political
situations, changes in social, political conditions give
rise to changes in the environment. New Products are
introduced for overcoming these changes
NEW PRODUCT DEVELOPMENT PROCESS
 STEP 1:IDEA GENERATION

The new product development process starts with the search for
ideas. Consumer’s problems are the most fertile ground for the
generation of new product ideas. New product ideas come from
interacting with various groups & from using creativity generation
techniques like BRAINSTORMING, SYNECTICS etc.
BRAINSTORMING is a process, where a small group of people
are encouraged to came up with their ideas on a specified
problem.
Whereas in SYNECTICS, the real problem is kept away initially
from the group & only a broader framework of the problem is
given to them. The group is encouraged to think in all possible
dimensions and slowly the problem will be made clear to them, &
their ideas would get refined.
 STEP 2: IDEA SCREENING

The purpose of screening stage is to drop poor ideas as early

as possible. Thus an idea committee is formed to classify the
proposed ideas into 3 categories, such as: promising, marginal &
rejects. Every promising idea is kept together for rigorous
screening by product evaluation committee.
In screening ideas, the companies normally face 2 serious
errors & they must try to avoid these mistakes as far as possible,
those 2 serious errors are: DROP ERROR & GO ERROR. Let’s
clarify:
DROP ERROR: error which occurs when the company rejects
one really good idea having potential.
GO ERROR: error which occurs, when the company permits &
facilitates a poor idea to move onto further development stages &
commercialization.
 STEP 3:CONCEPT DEVELOPMENT & TESTING

A concept is an elaborated version of a product idea expressed in meaningful

consumer terms. Example: a leading soft drink company, if wants to add a new
product, i.e. fruit juice to its product lines, then the following concepts can
came across:
CONCEPT 1: FRUIT JUICE FOR YOUNG & GROWN UPS AS A FUNNY THIRST
QUENCHING ITEM.
CONCEPT 2: FRUIT JUICE FOR CHILDREN AS A HEALTH SUPPLEMENTS.
CONCEPT 3: FOR ADULTS AS A NUTRITIONAL ENERGY SUPPLEMENTS.
From the above 3 concepts, the 1st one looks to be attractive &
promising.After the product concept has been developed, the stage is now set
for testing them. It is here the prospective consumer understand the product
idea. Here whether they are receptive towards the idea & their willingness to
try out such product is tested.
 STEP 4: BUSINESS ANALYSIS

This stage will decide whether from financial as well as

marketing point of view, the project is beneficial or not.
The projects overall impact on the corporation’s
financial position with & without the new product are
estimated & compared.
Here management needs to prepare sales as well as
cost & profit projections to determine whether they
satisfy company objectives.
 STEP 5: MARKET TESTING

At this stage the company will determine whether the product idea
can be translated into technically & commercially feasible
product. Its goal is to find a prototype that consists the key
attributes described in the product concept & that performs safely
under normal use & conditions and that can be produced within
the budgeted cost.
Here the companies conduct 2 types of major testing’s, such
as: ALPHA TESTING & BETA TESTING.
ALPHA TESTING: testing within the firm to see its function.
BETA TESTING: It includes listing a set of customers to use the
prototype & give feedback.
 STEP 6: TECHNOLOGICAL IMPLEMANTATION

It involves technical feasibility, search for new available

technologies & its economic alternatives if available. It
also includes the technological relevance of current
technologies, the firm’s knowledge & experience of the
techniques, manpower in handling those technologies etc.
 STEP 7: COMMERCIALISATION

At this stage the company takes decision to go in for large scale

production & marketing of the new product. Various marketing
strategies are employed by the company at this stage, when it
starts commercialization of a new product idea.
The important factors to which strategists should focus here
are:
 Market entry timing period.
 Whether to lunch the product in a single locality, a region, several
regions, nationally or internationally, i.e. geographic strategy.
 To whom the new product should target for i.e. targeting &
segmenting.
 CONCLUSION

Every year millions of rupees are being spent on R&D for new
products development. Such a huge investment is necessary as
new products are the only means of survival of a firm.
New product development provides a number of
advantages to the enterprise.
 It helps in producing goods & services of best quality.
 It helps in providing maximum customer satisfaction, because it
is developed in the view of customer specification.
 It helps in expanding the market of the products of the enterprise.
 It helps in achieving stability in product demand.