MODULE IN PRODUCT MANAGEMENT

BY:

PERLA B. PATRIARCA
Assoc. Prof. 1
Faculty, CBA-Department of Marketing Management

PREFACE

This is a module compiled by PERLA B. PATRIARCA from the following references: “Marketing Shift” by: Go, Josiah; “In Depth: A Guide
to Successful Business Planning”, by: Agustin-Acierto, Marife, et.al.” Product Strategy and Management” by: Baker, Michael and Hart,
Susan and “Marketing Management” in the Philippine Setting by Edgar P. Del Val

OVERVIEW

The cover page used are brand marks and brand names under University IPs. These are copyrighted researches from students during
the second semester of School year 2019-2020.

These are the three product entries : (1) Chiwarma Chicken Pita); (2) Branana Rice bran cupcakes and cookies and (3) Beeda Honey
bagoong; from the University IPs which was launched in the market during the SUC-CHED Product Expo-2020 held last March 9-
11, 2020 at the Trinoma Mall, Quezon City. The IPMO Team from the Office of the Vice-President for Research, Extension and
Development accepted the challenge for the very first time in the history of the Polytechnic University of the Philippines (PUP) to produce
University-owned products; a test marketing strategy to determine its acceptability. After the 3-days product expo-it was a positive
result—there is product acceptance, so what we need at the moment is to further enhance the taste, package and label design of all
three products and be ready to such towards commercialization, but—the University must collaborate with industries, look for
partnership to sustain production like spin-offs to address financial needs moving towards small scale (phase 1) production, this is the
sad but challenging part since the University do not have enough resources to produce such products, hence conceptualizing
“Technology Business Incubator” TBI is one factor to possibly reach the commercialization stage.(Commercialization shall be discussed
in the next chapters of this module)

TABLE OF CONTENTS

I. Review and Introduction

II. Review: Understanding examining Consumer Behavior
III. The New Product Development
IV. The Idea on Management for New Product Development
V. Screening of New Product Ideas
VI. The Business Analysis
VII. The Product Testing
VIII. Product Management and Strategy on Product Introduction (initiate a successful product launching)
IX. The 7-Product Life Cycle
X. Understanding the decision to delete the product in the market
XI. Public health issues (Covid-19 Pandemic)

………Simple Outline of Marketing Plan…………….

CHAPTER 1 Review and Introduction

Chapter Objectives: At the end of the chapter students will be able:

• To review the basic and fundamental aspects of marketing

• To match innovative products to available resources and identify its target market
• To review and fully understand the Product Life Cycle

NOTE: this illustration shall be discussed on the next chapter.

During the ancient time, the essence of “exchange” like the “barter trade” plays
significant role in business even in the absence of monetary value, and that is already
marketing—“making transactions” to another over a product or service in accordance
with individual needs towards their convenience and satisfaction.
Marketing is said to be a “way of life”, part of our daily routines. From its fundamentals,
we learned the Marketing mix, its importance and significance as well as the basic
functions listed below:

• Buying
• Selling
• Distribution
• Research
• Pricing
• Product management
• Promotion

Figure -1

Figure-1 shows that product management is a continues process, it the product

does not perform well in the market, research to find out reasons in order to
match it with your target market hence, innovation and changes must be done,
then go back to market, make necessary assessment and establish good rapport
with the consumer by applying the “push” strategy , observe their behavior, talk
to them, ask their findings about your product, it will help.

Identifying the needs of consumers in the community, their purchasing power affects the business of marketing people in determining
target market through market segmentation, develop pricing strategy that match the financial capability of the target market other
than product and services below which are considered “marketable products”:

• Tangible products, example: food

• Intangible products (service) (Additional presentation on this part)
• Persons/famous personalities (being paid for product endorsements)
• Ideas (Facebook of Mark Zuckerberg)
• Places/area/location
• Professionals services
• Software applications

DEFINITIONS OF TERMS

According to William J. Stanton, “Marketing is a total system of business activities designed to plan, price, promote and distribute want-
satisfying products and services to present and potential customers.” but, I added from its definition after the last sentence, “in order to
achieved organizational objectives, which is to gain profit”. On the part of company, their intention is to distribute their “produced”
product towards dealer/distributors and moving such towards final buyers and that is their main objectives of producing products.

PRODUCT

• is defined as “anything that satisfies” human being.

• An item offered for sale. It can be physical or in virtual or cyber form. It is made at a cost and sold for a price, “which is
equal to its value “depending on its quality, quantity, size, value, and the satisfaction it provides to consumer.

CHAPTER TEST

1. Define Product based on your own understanding.

Differentiate tangible from intangible product
2. What will be the effect to the seller if before product launching—seller already identifies its target market-according to their
behavioral pattern? please list down.
3. What are the functions of Marketing you remember the most significant in our daily life, why?
CHAPTER II Review on Understanding and examining Consumer Behavior

Chapter Objectives:

At the end of this chapter, you should be able to:

• Learn brief introduction about Consumer Behavior

• Understand and define Consumer Behavior
• Identify and differentiate types of Consumer
• Identify Models of consumer behavior
• Determine how do attitudes and values influence consumer behavior
•

In a glimpse, many brands of different product categories becomes available in store shelf space, point-of-purchase (POPs ) creatively
displayed in supermarket, malls, retail stores, these strategy dominates specifically the “No-buying-buyers” into “yes-buying-buyers”.
These are only some motivational factors that might change consumer mind and their buying perspective. At the present time,
Consumers buying decision become complex as compared before, where people live on a simple life, having less “wants and needs”.
Now, “Consumers feel almost an assault to their visual senses when walking down supermarket aisles and seeing all the wide different
brands properly displayed on racks. This scenario has become a challenge for many brand people hence, made marketers realize that
marketing and selling are an exercise in futility if one is not able to win the buyers positive response.

Decades back, a marketer’s life was a lot simpler. Having a superior product or service and making it available everywhere were the
key ingredients to successful marketing. Products and services with huge advertising budgets scored better than others with less
budget. But those with lesser budget still stood a good chance for as long as their products and services were made available at the
point of sale, at this point logistics and product placement and distribution played a very important role in reaching wherever
consumers are. There were fewer choices back then unlike today, a lot of products with different brands are available anytime,
anywhere.

Today, the obstacles are much greater. The battlefront is not just at the point of purchase. There is a huge battlefield outside the
retail area. What is imperative is for the marketer to win over the consumer while still outside the selling are

Dr. Karen V. De Asis, “Color Folders in the Mind: A Branding Story”, prologue, page 11, 2007

Consumer Behavior defined

• The study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of
goods and services, including the consumer's emotional, mental, and behavioral responses that precede or follow these
activities.
• According to Jacob Jacoby (1976), consumer behavior reflects the totality of consumers’ decisions with respect to the
acquisition, consumption and disposition of goods, services, time, and ideas by decision making.
• Is the study of how people make decisions about what they buy, want, need, or act regarding a product, service, or company?
It is critical to understand consumer behavior to know how potential customers will respond to a new product or service. It
also helps companies identify opportunities that are not currently met.

With these definitions, according to Williams (Consumer Behavior, 1982) has the following significant findings not only
on price elasticity but to the Marketing Mix:

1. “Consumers tend to be more price-elastic towards an impending price increase than what actually takes place when the
price increase happens.” Claimed price elasticity tends, therefore, to be greater than realized price elasticity.
2. “Consumers appear to be more sensitive to price decreases than to price increases. They are more ‘downside elastic’
than being ‘upside elastic’.”
3. “The consumer’s price elasticity is observed to diminish when shopping with a friend or when being persuaded by a
salesman perceived as an expert.” Consequently, it seems to increase when shopping alone and when the consumer
feels self-confident about her own buying decision. Josiah Go, Chiqui Escareal-Go, “Fundamentals of Marketing in the
Philippine Setting” p.304, 2nd ed. 2010

Two (2) General Classifications of Buyers:

1. Ultimate buyers – Consumers who make a purchase for their immediate and/or personal consumption. The transfer of
goods or services ends up.

2. Industrial buyers/Business Market – Those who make a purchase with the intention of re-selling goods/services for profit.
More transfer of goods is expected through different channels (channels members) with the use of effective means of
transportation, as such, price of the product/service increases.

Types of Consumer (According to their behavioral pattern):

• Hot temper
• Argumentative
• Low thinker
• Choosy
• Brand loyalists
• Sophisticated
• Pickle-minded
• Intelligent
• Comparative
• Bargain hunter
• Decided/sure buyer
• Undecided
 • Understanding

Buying Motives (Reasons Why do People Buy)

• Needs and Wants

• Motivation
• Attitudes
• Family Orientation
• Culture
• Social Class
• Group Influence
• Innovation
• Environment
• Peers
• Nature of work

CHAPTER TEST

1. Describe yourself as to what type of buyer? If you are the seller, what do you think would be the best and effective strategy
to get your “Yes” and therefore convinced you to buy the product.
2. What are the common reasons why you involved into buying? List down types of product you usually purchase, why?
3. How does the present situation “pandemic” affect your buying behavior?
4. What makes you satisfy after or in buying a product?
CHAPTER III The New Product Development

This chapter intended to provide overview to identify tasks required to generate new product ideas and how to successfully launch the
product in the market.

Chapter objectives:

• Understand various approaches to modelling the development of new products

• Appreciate the more recent developments in thinking about how to model new product development
• Be able to present a product plan for the organization of people involved in the development of new product.

NEW PRODUCT DEVELOPMENT PROCESS

STRATEGIES

• Observe the present situation

• Adopt to available resources
• Extend product lines
• Envision the future needs and demand in the community
• Adopt product and brand stretching if needed
• Change, improve and innovate existing products

IDEA GENERATION

First is to determine what product/service has a great need in your chosen location, by an identified segment of target market

Example: Nowadays, there is high demand for the following products/services:

• Healthcare services
• Alcohol
• Germicidal hand washing (bar soap, liquid soap)
• Face mask
• Face shield

There are internal and external sources of product ideas:

Internal sources:

• R & D team
• Technical department
• Product design and engineering work on developing applications and technologies which will be translated into new product
ideas
• Collaboration with other companies
• Brainstorming

External sources:

• Competitors
• Customers
• Distributors
• Inventors and Universities are fertile repositories of information from which new product ideas come
However, all sources of ideas, may have to be organized in such a way as to extract ideas. In short, the sources must be
activated. “Product Strategy and Management “Michael Baker and Susan Hart, pp.162

SCREENING AND EVALUATION

Brainstorming is the key to screen and evaluate different ideas generated by the researchers and/or inventors.

This is the stage where an assessment from the team as to the extent of demand for the ideas generated and of the capability by
company must make the product. Having said the first several evaluative stages, only a rough assessment can be made of an idea,
which will not yet be expressed in terms of product and label design, materials, sales ,marketing, finance and production, to assess
whether the idea has potential, is practical, would fit a market demand and could be produced by existing plant, and to estimate the
payback period. The net result of this stage is a body of ideas which are acceptable for further development. Product Strategy and
Management” Michael Baker and Susan Hart, pp.162

At this point, meetings and brainstorming is needed to further discuss findings during the evaluation stage.

BUSINESS ANALYSIS

Analyzing the general business condition basically is a must to make a wise financial forecast for your product. Below are the three
approaches on financial analysis:

1. Review basic financial concepts (profit projection also included)

2. Explore techniques to determine potential financial performance of new product (which never exist/manufactured)
3. Introduce the specialist research-based techniques which have been developed to help decision makers to decide whether to
go or not-to-go in the development of the new product concept.

Basic Financial Concepts:

1. Unit sales (expected)

2. Revenues (Net sales value)
3. Production costs (fixed and variable)
4. Direct marketing costs
5. Incremental profit (expected)

DESIGN AND DEVELOPMENT

Product design- is conceptualizing a new kind of product idea and for the inventors and company’s R & D to develop such idea into
creating a new product provided it is supported by complete resources hence, product development stage is set.

This is the part where an identity for the product is given from the following:

• Brand name
• Label
• Label design
• Package type
• Package design
• Colors
• Brand marks
• Quantity
• Pricing
• And other basic marketing and business strategy

TESTING

Test Marketing is defined as” the process which follows product development and testing and precedes launch and commercialization”.
“Product Strategy and Management “Michael Baker and Susan Hart, pp.358

Test Marketing as described in most texts is focused on the launch of some popular brands. Despite the absolute importance of such
launches, some company constitutes a minority of the instances when an organization is launching a new product or service into
marketplace.

As a result, accelerating technological change and increased competition, time to market has become a critical success prompting some
firms to avoid the loss of time implicit in a test marketing activity.

With a clear understanding of markets, effective marketing research and the benefits of information technology, with the more
professional approaches to the NPD process, many innovators/inventors do not expect to acquire sufficient benefit from a test market
to warrant the expense and delays for the product to be distributed in the market.

Test Marketing (Two Primary Objectives)

1. Mechanical-to assess arrangement for handling and storing of materials, producing, and distributing the product in good
condition and monitoring a distributor/retailer performance’. Most concern is to monitor the “pilot run for production” and if
found to be successful, then the distribution will gear up to “full-scale manufacturing and sales”. It seems that the product
trial depends very much on the novelty of the product and/or market in terms of the innovator’s experience.
2. Commercial-Deals in the selling and moving the product towards the consumer.

With these two objectives, some of the purposes may also have to considered:

• Providing forecasts of national sales

• Evaluating the mix elements working together (packaging, price, merchandising, retailing, distribution, advertising, sales
promotion)
• Assess the speed of gaining distribution
• Assess the speed of gaining trial
• See how competitors react
• Provide evidence for or against full launch
• Enable the training of production, sales, and distribution personnel
• Provide proof of financial viability for investment
GUIDE FOR EFFECTIVE TEST MARKETING:

1. Design the test to find an answer to a single major issue

2. Incorporate the test into an overall marketing plan
3. Set target at the same level as national expectations
4. Be completely objective in evaluating results
5. Benefit from comparative testing where possible
6. Profit from professional advice
7. Select a representative area
8. Allow sufficient time to set up the test properly
9. Establish a test base against which to measure subsequent changes
10. Carefully analyze competitors market shares
11. Welcome exposure to competitive retaliation during the test
12. Examine retailer cooperation and support
13. Examine repeat sales pattern
14. Coordinate advertising and promotion
15. Avoid using methods during the test which will not be repeated during the expansion period
16. Evaluate all possible factors which influence sales
17. Avoid interference with the test once it is launched
18. Adjust result to changes which may occur in the market prior to expansion or market launch
19. Allow sufficient time for the test to mature and for the results to be analyzed
20. Employ proper research procedures, and budget to allow sample size and design indicated by the test problem

COMMERCIALIZATION

This is the last stage of the New Product Development Process but does not mean that the work of the researchers ends here.

• Commercialization” refers to the process of deriving income or profit from a technology, such as the creation of a spin-
off company, or through licensing, or the sale of the technology and/ or IPRs. (Section 4(p) of Republic Act 10055 or
the Philippine Technology Transfer Act of 2009

NOTE: PowerPoint presentations will be shown and discussed on this part about the University IPs and the strategies on how to move
such IPs towards commercialization

CHAPTER TEST
1. What are the two sources of product ideas in the NPD process
2. Do you think brainstorming is effective during the NPD process? Why?
3. List down the significant aspects of conducting business analysis before or during the product development process NPD
4. How important is product design towards product acceptance in the market?
5. Which among the things discussed in Chapter -3 you related the most? Why?
CHAPTER IV The Idea Management for New Product Development

Chapter Objectives:

• To introduce the concept of idea management rather than idea generation

• To describe sources of new ideas
• To describe methods of activating sources of ideas
• To introduce the notion of creativity in idea management

Learning Objectives: This chapter will help you

• Be able to gather internal sources of new product ideas from within the company
• Be able to apply techniques associated with idea generation for new product development
• Appreciate the role of creativity in idea generation for new product development

As discussed from the previous chapters, product ideas can be generated from:

• Meetings
• brainstorming
• formal and informal discussion,
• interview,
• observation and other sources and proper screening of all data gathered is needed.

Many ideas are available at the start of the process and all of which can be subjected to evaluation, further development, and
further evaluation from a variety of perspectives, such as:

• Marketing
• Design
• Manufacturing
• Pricing
• Distribution
• Purchasing
• Target market segmentation
• And others….

According to business experts, the setting of clear innovation goals within separate strands on development, defined “newness” which
is also means “novelty”-quality of being new, original, unusual, or never been introduced in the market before. (Please refer to Chapter
III - where internal and external sources of product ideas have been discussed)

CHAPTER TEST

1. What is “Novelty” product

List down examples
2. What do you think are the basis of product concept evaluation based on the given variety of perspectives given above?
3. What is target market segmentation? How is it being done to make it effective?
CHAPTER V Screening of New Product Ideas

At the end of this chapter, students should be able to:

• Define screening in its place in the NPD process

• Discuss the errors and risks in screening
• To put forward a new simplified screening procedure
• Know the limitations of screening

“Screening” as defined: process of evaluating new products ideas, and the product itself, but to simplify, “Screening” could be a way
to provide the conceptual and physical developments that the new product undergoes moving on its full product launch.

Screens for new product types

• New to the world

• New to the market
• New to the company
• A new (additional) product line item

Reasons for Screening and Evaluation of product ideas

1. Technical development
- Assessment of design
- Production
- Functional feasibility
- Specifications
- Market/commercial viability

2. Identifying ideas
- Develop concept out of the identified ideas
- Determine technical feasibility
- Determine market potential

Screening is important to determine the future success or failure of a new product introduced in the market

Risks in Screening: result of the screening depends on how top management view the risks like:

- Killing off product ideas which may have potential in the market
- Developing product ideas which might fail in the mark

Types of Screening Strategy

• Growth role
- enter a new category of business that represents a ‘net addition’ to the company’s portfolio
- expand a company’s global market share within a product category
- deliver price advantage which will allow the company to increase market share at the expense of the competition
- create a whole new category of product-market, strategically expanding sales
• Category
- has proven consumer attractiveness
- is not dominated by one or two major players
- demonstrate growth potential
- has room for additional products which might offer benefits to the consumer
• Strategic role
- technologically superior to products currently available
- capitalize on existing distribution and delivery systems
- allow the company to develop technical or marketing skills in a new sphere
- are aimed at growth markets
- will use up excess capacity
• New product role (as discussed previously)
- new to the world
- new to the market
- new to the company
- a new (additional) product line item
• Internal strength
- makes use of patented technology (Note: power point lecture will be presented focusing on copyrights, trademark,
licensing, etc.)
- increases the use of an ‘efficient manufacturing system’
- capitalizes on existing marketing and sales effort
- exploits technological, engineering, design, or marketing skills
• Financial risk
- comprehensive
- expected revenue
- ROI
- pre-tax profit contribution
- gross margin
- return on net assets
 NOTE: Clearly, a comprehensive financial analysis must occur and the earlier in the process, the better.

To sum up, it has been suggested that, despite the relative unreliability of the screening stage, still… it is an important step
in the new product development process.

ILLUSTRATION: A Simplified Screening Procedure

Stages in Development

New Product Strategy Statement Evaluation Pattern

Idea Generation
Checklist on key areas

Must be situation-specific
Screening

Concept development

Concept Testing
Internal (functional) and external (customer)

Evaluation of Non–defined dimension

Business Analysis Comparison of costs, demand, appeal

And competition to evaluate precise
Payback, break-even and so on

CHAPTER TEST

1. Among the stages in the NPD, which do you think the most important and why?
2. Do you think as a marketer, are you capable of preparing a comprehensive financial analysis? If yes, why, and why not?
3. What is the best way of removing/killing off a product/brand from the market, why?
4. Differentiate the following based on your own understanding:
a. New to the world product
b. New to the Market product
c. New to the Company product
d. Additional product line

NOTE: Optional, you may or may not give examples

CHAPTER VI The Business Analysis

At the end of this Chapter, students should be able to:

• Understand the key components of a business analysis for new product development
• Be aware of problems associated with business analysis techniques
• Know how to distinguish the basic financial analysis from the entire evaluation required to make the Go-No go decision
• Be able to do the basic financial calculations for NPD

In the previous chapters, you have learned the screening strategy, the development process, the launch, marketability, product appeal,
and the customer. Most likely…analyzing the general business condition is another very important aspect during the NPD stage.
Determining the costs of the entire product development process, such as:

• Product costs
• Production and design costs
• Market adoption
• Eventual profitability

Considerations on Business Analysis:

1. Fixed and variable costs

2. Direct marketing costs
a. Advertising
b. Sales and promotional materials
c. Other sales-related extraordinary items (sales conference, meetings, etc.)
3. Incremental profit-the profit gain or loss associated with a given managerial decision. When incremental profit is negative
total profit declines. Similarly, incremental profit is positive (and total profit increases) if the incremental revenue associated
with a decision exceeds the incremental costs. (please see illustration below for an easy understanding)

Basic financial summary for new product X (000)

Year 1 Year 2 Year 3 Year 4 Year 5

Net sales value 1,000 1,500 2,000 3,000 4,000
Fixed costs 1,000 200 50
Variable costs 500 750 1,000 1,500 2,000
Marketing costs 200 300 350 300 300
Incremental costs (700) 250 600 1,200 1,700
Cumulative profit contribution (700) (450) 150 1,350 3,050

This illustrates several factors which are typical of financial issues in NPD. First, note the relationship between NSV and
VC,VC are shown to be half NSV, for purpose of clarity, but the important issue is that VC represent a constant proportion
of sales, precisely because they do vary with the increase in sales volume. A second issue worth noting is the high FC in the
first few years of the product’s life. Since FC are “written down” year by year, they become, over time, less important in the
profit profile of the product. Looked at another way, the first few years of a products profitability are bound to be affected by
a ‘disproportionately’ high level of FC. Therefore, competent financial analysis must go further than the launch and immediate
post-launch period if it is to serve as a useful decision aid.

Financial Techniques for New Product Development

1. Sales Forecasting – with (2) categories:

1.1 before test marketing- sales forecast will be based on the data collected during the screening, concept evaluation
phases: estimation of market size, market growth rate, market share of current product, market segments
1.2 after test marketing-forecast where is data are already available, compared to before test, less estimated data is
expected
2. Sensitivity analysis
3. Cannibalization assessment
4. Break-even analysis

CHAPTER TEST

1. What is meant by the following acronyms?

a. NSV
b. FC
c. VC
2. Give at least (2) sales forecast for a hypothetical product in the next 2 years for the following products, choose only one:
a. Face shield
b. Face mask
c. Multivitamins
3. What is meant by cannibalization? Give example
CHAPTER VII The Product Testing

At the end of this chapter, students should be able to:

• Discuss the importance of realism, sensitivity, and validity in concept testing

• Understand the various objectives of concept testing
• Be able to take the necessary decisions to design and implement a concept test
• Appreciate the specific issues of Beta testing

In the planning stage of development of physical products, once the major “GO” decision has been taken, the actual product will be
developed. A team will be assigned to work for it, feasibility studies, cost analysis, alternative designs as discussed in the previous
chapters. The length of time to be devoted to the physical development of the new product depends on its complexity.

• First version – prototype- it must test whether it works in the way intended by earlier design specifications. This requires
functional testing.

Product Testing – must address not only whether the attributes have been physically delivered s intended, but also whether the same
promise of benefits results from the collection of attributes. In other words, product testing must assess whether the new product does
deliver the benefits that were identified at the concept testing stage. (Example for discussion or to be given as assignment for research)

• Train developed by 10 Filipino engineers from DOST

• Medicine/vaccine to cure Covid-19 (from Russia, China, USA, etc.)
• ABS-CBN black box
• GMA-7 Affordabox

(Please refer to the illustration below in relation to the previous lesson)

Purpose of Product Testing

The purpose of Product testing is to reduce risks further in the decisions leading to the product launch. This is done by:

• Examining the extent to which the new product fulfils the promises encapsulated in the concept statement
• Comparing the new product with its targeted competitive products
• Assessing how the product might be improved to conform better to buyer expectations
• Evaluating the effect of changes to the product (content, materials, design, positioning, price, etc.) on customer preference
levels
• Reassessing the purchase intent (PI) for the new product, given its actual attributes
• Testing the proposed advertising, selling, and packaging associated with the new product

Major Considerations during Product Test:

As with other stages in the NPD process, the product test encompasses several subsidiary decisions, such as:

• Objectives setting: what purposes will the test satisfy?

Example: (1) to contribute to the positioning of the new product
(2) to contribute to the final selection of product features
(3) to contribute to market launch strategy
• Product-related decisions
(1) Presentation of the product may vary “single best” or “product variants”
(2) Blind or brand tests
(3) Explanation and supervision of tests
• Sample selection
(1) Identification of testers
(2) Panels or adhoc surveys
(3) Sample size (as previously discussed)
• Location of the product test
(1) Own laboratory
(2) Central location
(3) Location of use-could be in consumer house or workplace
• Data collection method-previously discussed in the concept testing, however, to further recap, please refer to the following:
(1) face to face collection method
 (2) malls/streets intercept tests
(3) hall tests and laboratory tests (all require the presence of the tester)
(4) and other strategies of data gathering
• Measurement technique
(1) Monadic and comparative approaches in product testing-we can relate the monadic/comparative choice to the issues of:
a. realism
b. sensitivity and validity
(2) Scaling techniques in product testing – this refer to the nature of scaled used (could be small or large or full production
batch) depending on the quantity of production during the testing

Results of Product Testing:

With the type of information collected, the developers should be able to know:
o Whether or not the new product appeals to the target market
o Whether or not the new product compares favorably with competitive or substantive offerings
o How the product might be improved
o The proportion of testers who have expressed purchase intention

CHAPTER TEST

1. Assignment for research, please conduct a research in any (2) of the following product/invention listed below:
a. Train developed by 10 Filipino engineers from DOST
b. Medicine/vaccine to cure Covid-19 (from Russia, China, USA, etc.)
c. ABS-CBN black box
d. GMA-7 Affordabox
2. After being familiar with any 2 of the listed products, discuss the most effective product testing strategy/ies, and why do you
say so?
3. What are the various purposes of product testing in NPD?
CHAPTER VIII- IX (Combined all stages of Product Life Cycle)

Chapter VIII Product Management and Strategy on Product Life Cycle

(A look at Commercialization: test marketing and launching the new product)

a) 4 Stages of PLC
b) 7 Stages of PLC

At the end of this Chapter, students should be able to:

• Understand the role and nature of test marketing

• Know how to set up an effective test marketing operation
• Be familiar with the advantages and disadvantages of test marketing
• Know why accelerating the new product development process (time to market) is vital to competitive success
• Understand the importance of identifying potential early adopters of a new product and be familiar with factors involved in
this process
• Recognize the importance of communication in introducing new products to the marketplace

The Product Life Cycle: (4-stages)

NOTE: The 7-Stages of the Product Life Cycle

A separate file of PowerPoint Presentation shall be shown on “share screen”

TEST MARKETING - a phase in the process which follows product development and testing and precedes launch and
commercialization. It must be best to combined with the “product launch”

Its Objectives: (mechanical objective and commercial objective)

• Mechanical objective-to assess arrangements for handling and storing materials, producing and distributing the product in
good condition, and monitoring a distributor/retailer performance; hence it can be seen as a pilot run for production and
distribution prior to gearing up for full-scale manufacturing and sales. It would seem that whether one requires such a trial
run depends very much upon the “novelty” involved and the innovator’s experience of producing or distributing the
product/service in question is little or none, then a trial run would seem more necessary or beneficial than in cases where
the firm is launching a brand extension into existing market.
• Commercial objective-Commercial refers to activities of commerce-business operations intended for an exchange on the market
with the goal of earning profits. www.investopedia.com

If you are to be asked, how and when to use either of these objectives, in mature markets where consumer behavior is well
understood and market share, particularly of the major suppliers, is strongly established, the second Commercial objective of test
marketing is more likely to prevail. Under these circumstances two major sub-objectives or purposes may be distinguished:

1. Providing forecast of national sales (forecasting already discussed previously)

2. Evaluating the mix elements working together
• Packaging
• Price
• Retail merchandising (now online selling/distribution)
• Advertising
• Sales promotion

As such, these two major sub-objectives provide the opportunity to:

• Assess the speed of gaining product distribution

• Assess the speed of gaining product trial
• See how competitors will react
• Provide evidence for or against full launch
• Enable the training of production, sales, and distribution personnel
• Provide proof of financial viability for investment
In seeking to assess the impact of each of these variables, the tester will wish to measure three main kinds of reactions:

1. Consumer
2. Competitors
Known as the 3 Cs
3. Company (the trade)
Of Marketing

Guidelines for effective Test Marketing

Below are 20 steps taken from ACNielsen (A major international research company) for the conduct of an effective test market
summarized as follows:

1. Design the test to find an answer to a single major issue

2. Incorporate the test into an overall marketing plan
3. Set targets at the same level as national expectations
4. Be completely objective in evaluating results
5. Benefit from comparative testing where possible
6. Profit from professional advice
7. Select a representative area
8. Allow sufficient time to set up the test properly
9. Establish a test base against which to measure subsequent changes
10. Carefully analyze competitors market share
11. Welcome exposure to competitive retaliation during the test
12. Examine retailer cooperation and support
13. Examine repeat sales pattern
14. Coordinate advertising and promotion
15. Avoid using methods during the test which will not be repeated during the expansion period
16. Evaluate all possible factors which influence sales
17. Avoid interference with the test once it is launched
18. Adjust results to changes which may occur in the market prior to expansion or market launch
19. Allow sufficient time for the test to mature and for the results to be analyzed
20. Employ proper research procedures, and budget to allow sample size and design indicated by the test problem

Its Limitations:

• Cost/budget
• Time

Time to Market:

• The time length of commitment

• Product line implications
• The need for secrecy
• The position of the competitors

Launching the New Product:

• Selection of launch strategy

• Timing
• Monitoring the launch

Selecting a Launch Strategy:

• The degree of novelty embodied in the new product or service

• The firm’s existing familiarity with the position in the intended market
• The current status of competition and the response anticipated to the launch of the new product
• The resources available to the launch organization

COMMERCIALIZATION

This final stage of the initial development process is very costly. Decisions such as when to launch the product, where to launch it,
how and to whom to launch it will be based on information collected throughout the development process. Regarding timing, important
considerations such as:

• Seasonality of the product/service

• Whether the launch should fit any trade or commercial event
• Whether the new product is a replacement for the old one
• Whether it is advantageous to be first to market (much debate exists regarding this decision between product managers)

Note: A separate power point presentation shall be presented separately.

CHAPTER TEST

1. What are the primary objectives of Test Marketing?

2. What is “time to market”? Why has it become increasingly important to firms developing new products?
3. Review the factors to be considered when deciding whether to launch a new product.
CHAPTER X Understanding the decision to delete the product in the market

Reasons for Product Deletion in the market:

• Low brand recall

• Low product acceptance
• Low sales
• Ineffective counterstrategy for competitors
• Etc.

Individual Activity/for research:

Please research on the previously existed product but finally, deleted in the market, example:

• Mr. Clean – a detergent bar soap

• Lifebouy- a body/fragrance soap
• Etc.

CHAPTER TEST

1. What is Commercialization?
When do you think is the proper time to commercialize a new or improved product?
2. List down the Causes of product failures
3. List down the causes of product success
ADDENDUM:

Outline of a Simple Marketing Plan

I. Introduction
Could be a page or two, it is the brief statement/rationale about the launching of the brand
Example:
“This is a marketing plan for “Algae juice drink” which is made up out of “Spirulina platensis” … a cultured spirulina
where….so forth and so on……

II. Business Analysis

This is the “environmental analysis” or environment scanning. It should be stated in a few paragraphs and discuss
business environment aspects which could affect the brand positively or negatively: economic conditions, financial
condition, politico-legal, socio-cultural forces and other pressures or trends perceived. Also, the relevance of the
environmental pressures to the product launch should be explicitly stated.
III. Competitive Situation
Highlights of the total market potential, specific industry condition as well as distribution strengths and weakness of
competitors are briefly discussed by geographical area, including the known deployment of the sales force of different
competitors.
IV. Market research results
This part presents the findings of the market research projects undertaken by the firm for the brand. Assuming the firm
has used almost all the market research tools available the major findings in the following projects are presented in
capsule form:
• Focused group interviews
• Consumer attitude survey
• Trade survey
• Blind product tests
• Brand name test
• Package design test
• Advertising campaign studies (that may include)
a. Copy test
b. Print Ad Comprehension test
c. TV storyboard comprehension test
d. Advertising recall survey
V. Sales and Distribution Strategy
This part covers the proposed selling and distribution strategies of the firm. Sales targets by area are quantified, and
timing of sales by either, quarter, or monthly or annual is specified.
Here, sales forecasting is applied.
VI. IMC Strategy
It depends on the product being launch and the company resources, segmented target market, you can design and choose
which of the following is necessary:
a. Advertising
b. Sales promotion
c. Publicity
d. CSR
e. Etc.
VII. Profitability
This part of marketing plan presents the net income targets for the brand, based on the sales targets, contribution to
overhead and profit and projected selling, advertising, and other marketing costs.