Unit 2

Developing Product Strategy

Product Characteristics
A product characteristic (PC) is an attribute or
property of the product that describes the product's
ability to satisfy its purpose in a larger system.
PCs describe what a product ought to be, but not what
the product ought to do.
1. Size
2. Shape
3. Weight
4. Colour
differentiation
Form
Features
Performance quality
Durability
Reliability
Style
Delivery
Order ease
Installation
Packaging
All the activities of designing and producing the container for
product.
Packaging contains, protects, preserves, transports, informs, and
sells.
Physical protection
Barrier protection
Marketing
Convenience
Information
Security
Promotion
Packaging must Achieve objectives
like
Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at home storage
Aid product consumption
Aesthetic considerations
Size
Shape
Material
colour
Text
Graphics
Labeling
Identifies the product or
brand
Grading of product
Describe the product
 Promote the product
Warranties and Guaranties
Warranties are formal statements of expected product
performance by the manufacturer.
Guaranties reduce the buyers perceived risk.
Guaranties are most effective in 2 situations-
1. Company or product is not well known
2. Where the product’s quality is superior to
competition.
What do you mean by New Product?
New to the world products
New product lines
Additions to existing product line
Improvements of existing products
Repositioning
Cost reduction
Causes of New Product Failures

Overestimation of Market Size

Product Design Problems
Product Incorrectly Positioned, Priced or Advertised
Costs of Product Development
Competitive Actions
To create successful new products, the company
must:
 understand it’s customers, markets and competitors
 develop products that deliver superior value to
customers.
Stages of new product development
Idea Generation and Screening
Concept Development and Testing
Marketing Strategy
Business Analysis
Product Development
Test Marketing
Commercialization
Step 1 – Idea Generation
Is the idea worth considering?
Systematic Search for New Product Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
Stage 2- Idea Generation
Process to spot good ideas and drop poor
ones
Criteria
 Market Size
 Product Price
 Development Time & Costs
 Manufacturing Costs
 Rate of Return
Step 3. Concept Development &
Testing
1. Develop Product Ideas into
Alternative
Product Concepts

2. Concept Testing - Test the

Product Concepts with Groups
of Target Customers

3. Choose the Best One

Step 4. Marketing Strategy
Development
Part
PartOne
One--Overall:
Overall:
Target
TargetMarket
Market
Planned
PlannedProduct
ProductPositioning
Positioning
Sales
Sales&&Profit
ProfitGoals
Goals
Market
MarketShare
Share

Part
Part Two
Two -- Short-Term:
Short-Term:
Product’s
Product’sPlanned
PlannedPrice
Price
Distribution
Distribution
Marketing
MarketingBudget
Budget

Part
Part Three
Three -- Long-Term:
Long-Term:
Sales
Sales&&Profit
ProfitGoals
Goals
Marketing Mix Strategy
Marketing Mix Strategy
Step 5. Business Analysis
Step 6. Product Development

Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives

If No, Eliminate If Yes, Move to

Product Concept Product Development
Test Marketing
Standard
Standard Controlled
Controlled
Test
TestMarket
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign AAfew
fewstores
storesthat
thathave
have
in agreed
agreedto
tocarry
carrynew
new
inaasmall
smallnumber
numberof of products
productsfor
foraafee.
fee.
representative
representativecities.
cities.
Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleofof
consumers.
consumers.