MARKETING PROJECT
New Product Development & Pricing
“CHANGE IS THE ONLY CONSTANT IN TODAY'S MARKETPLACE”
New Product Development & Pricing “Launch of NEW PRODUCT ” Members: Faseeh Ur Rehman Nousherwan Nousherw an Akbar
-----
Umer Farooq Muhammad Waqas
BAF-07-39 BAF-07-34
Javeria Zia Ayesha Siddiqui
-----
-----
BAF-07-60 BAF-07-14
BAF-07-17 BAF-07-18
Instructor: Mr. Khurram Javed Paracha
1
Students of BS A/F (HONS) Session (2007-2011) Department of Commerce, Bahauddin Zakariya University Multan
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MARKETING PROJECT
New Product Development & Pricing
Executive Summary Report is the practical part of the theoretical subject marketing of our BS Accounting & Finance (Hons) Program. The sole objective is to familiarize the students with the practical manipulation of business organization. This report has been written to know about the causes that lead to the launching new Product. In the first phase of the report there is the general introduction about the New Product Development. In the next part; we took into account the objectives that are behind this. We illustrate the objective one by one according to their priority. To understand and specify the objectives is necessary to understand the variable, which affect this issue. We define only the key variable. After this we collect the data from different sources and analyze it, interpret it, i t, and show the diagrammatical representation for easy understanding. More over this we make some conclusion and offer our suggestions for improvements with some limitations that we face. In the next phase the feasibility report of A.G Detergent with the SWOT analysis, target market, market segmentation and the detail of 7ps of marketing mix etc.
Authors
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MARKETING PROJECT
New Product Development & Pricing
Acknowledgment We are very thankful to Almighty Allah who has all the powers in the world and who also give us power to perform the assigned task, which otherwise we can't perform.
We are great full to Hazrat Muhammad (S.A.W.W) who remains an example in every aspect of life
We are also very thankful to our parents. We are very thankful to our honorable instructor Mr. Khurram Javed Paracha for providing us with such an opportunity to explore the practical aspects of the Marketing that refined our theoretical concepts and would help us in the practical field.
We are also thankful to all of our respondents especially Mr. Allah Ditta who co-operated with us in conducting the research and sorting out the cause of the problem. We are especially thankful to our class fellows who help us from every aspect.
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MARKETING PROJECT
New Product Development & Pricing
Table of Contents Introduction……………………………………………………………… Major Stages in New-Product Development
Idea generation ……………………………………………….….. Idea screening ………………………………………………..…... Concept Development and Testing ……………………………… Product Idea …………………………………….. ….. Product Concept …………………..…………… ..…. Product Image………………………………….……. Marketing strategy development ………………………………… Business analysis…………………………………………………. Test marketing……………………………………………………. Commercializatio n………………………………………………...
Key success factors in New Product Development
Operating Philosophy….……………………………………………. Organization Structure……………………………………………… . The Experience Effect……………………………………………….. Management Style …………………………………………………... The Product Life Cycle
Product development ……………………………………… .………… Introduction ……………………………………………………….….. Growth ………………………………………………………………... Maturity…………………………………………………………….…. Decline …………………………………………….…………………..
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MARKETING PROJECT
New Product Development & Pricing
New-Product Failures 1. 2. 3. 4. 5.
Faulty Product Idea ……………………………………………... Distribution Related problems ………………………………….. Poor Timing of Launch …………………… ………………….... Improper Positioning …………………………… ……………… Others …………… …………………….………………………..
Pricing Objective Profit oriented goal ……………………………………………….. Sale oriented goal …………………………………………………. Maintain & increase market share ………………………………... Status Quo goals …………………………………………………… Pricing Decision Cost-orientated …………………………………………………….. Demand-orientated ………………………………………………… Competitor-orientated ……………………………………………… Influences on Pricing Decisions Company Objective ……………………………………………….. New Competitors ………………………………………………….. Suppliers / Distributers ……………………………………………. Cost ………………………………………………………………… Existing Competitor ……………………………………………….. Customer …………………………………………………………… Management Culture ……………………………………………….. Company Market Stance ……………………………………………
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MARKETING PROJECT
New Product Development & Pricing
Pricing Strategies
Market Skimming …………………………………………………… Penetration Pricing ………………………………………………….. Value Pricing ………………………………………………………... Going Rate (Price Leadership) …………………………………….... . Captive Product Pricing ……………………………………………... Product-bundle pricing ……………………………………………… Promotional pricing …………………………………………………. Geographical Pricing ………………………………………………… Contribution Pricing …………………………………………………. Pricing Variations……………………………………………………... Premium Pricing ……………………………………………………… Ten ways to „increase‟ prices without increasing price
Case Study Self Made
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MARKETING PROJECT
New Product Development & Pricing
Introduction What is a new product?
•
A product that opens an entirely new market.
•
A product that adopts or replaces an existing product.
•
A product that significantly broadens the market for an existing product.
•
An old product introduced in a new market.
•
An old product packaged in a different way.
•
An old product marketed in a different way.
Types of new product
•
Innovative products
•
New product lines – lines – to to allow the firm to enter an existing market
•
Addition to product line – line – to to supplement the firm‟s existing product pro duct line
•
Improvements and revisions of existing product
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MARKETING PROJECT
New Product Development & Pricing
New product can be used to……
•
Increase/defend market share by offering more choice or updating older products
•
Appeal to new segments
•
Diversify into new markets
•
Improve relationship with distributors
•
Maintain the firm‟s reputation a leading edge company
•
Even out peaks and troughs in demand
•
Make better use of the organization's resources
Why develop New Product?
•
To create stars and cash cows for the future
•
To replace declining product
•
To take advantage of new technology
•
To defeat rivals
•
To maintain/increase market share
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MARKETING PROJECT
New Product Development & Pricing
There are two parallel paths involved in the NPD process: The idea generation, product design, and detail engineering; Involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.
OR Development of original products Product improvements Product modifications New brands through the fi rm‟s own R & D efforts
OR New product development is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organization.
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MARKETING PROJECT
New Product Development & Pricing
Major Stages in NPD There are 7 Stages of New Product Development
IDEA GENERATION “The "fuzzy front end" of the New Product Development process”
Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:
Ideas for new products can be obtained from basic research using a SWOT analysis (OPPORTUNITY ANALYSIS), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies.
IDEA SCREENING “Process to spot good ideas and drop poor ones”
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MARKETING PROJECT
New Product Development & Pricing
OR The screeners must ask these questions:
Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? prod uct? Will the product be profitable when manufactured and delivered to the customer at the target price? Then, the idea is evaluated against a set of general company criteria cr iteria .
Concept Development and Testing e ngineering details” “Develop the marketing and engineering
co mpany can see itself Product Idea: Idea: idea for a possible product that the company offering. Product Concept: detailed version of the idea stated in meaningful consumer terms. Product Image: the way consumers perceive an actual or potential product. Purposes of Concept Testing
To identify very poor concepts co ncepts so that they can be eliminated. To estimate (at least crudely) the sales or trial rate the t he product would enjoy e njoy
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MARKETING PROJECT
New Product Development & Pricing
Procedure for a Concept Test
Prepare concept statement Clarify specific purposes Decide format(s) Select commercialization Determine price(s) Select respondent type(s) Select response situation Define the interview Conduct trial interviews Interview, tabulate, analyze
Marketing Strategy Development “Essentially a pattern or plan that integrates your organization's major goals”
Includes development of three part strategy plan
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MARKETING PROJECT
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Business Analysis “Estimate likely selling price based upon competition and customer feedback ”
Business analysis is the discipline of identifying business needs and determining solutions to business problems. Solutions often include a systems development component, but may also consist of process improvement or organizational change or strategic planning and policy development. The person who carries out this task is called a business analyst or BA There are a number of techniques tec hniques that a Business Analyst will use when facilitating business change & in NPD there are two important techniques used names MOST & SWOT MOST
This is used to perform an internal environmental analysis by defining the attributes of MOST to ensure that the project you are working on is
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MARKETING PROJECT
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There come two Conditions after reviewing this analysis If No If No,, Eliminate Product Concept If Yes If Yes,, Move to Product Development
Test Marketing se lected areas” “Involves placing a product for sale in one or more selected
Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings
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MARKETING PROJECT
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Commercialization “Considered post-New Product Development”
Commercialization is the Introduction of the New Product into the Marketplace Must decide on timing (i.e., when to introduce the product). Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally). Must develop a market rollout plan. Each successive set of consumers behaves differently New Product Adoption Process is also known as the “Diffusion Process ”. The Consumer-Adoption Process/ Innovation diffusion process pr ocess
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MARKETING PROJECT
New Product Development & Pricing
Key Success Factors in NPD • • • •
Operating Philosophy Organization Structure The Experience Effect Management Style
Operating Philosophy
Successful companies are more committed to growth through new products developed internally. They are more likely to have had a formal new product process in place for a longer period of time than unsuccessful companies. They are more likely to have a strategic plan that includes a certain portion of company growth from new products.
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MARKETING PROJECT
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Management Style
Successful companies appear not only on ly to select a management style appropriate to immediate new product development needs but also to revise and tailor that approach to changing new product opportunities
The Product Life Cycle There are five main Strategies of PLC
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MARKETING PROJECT
New Product Development & Pricing
Introduction
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New Product Development & Pricing
Maturity Stage of PLC
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New Product Development & Pricing
NEW PRODUCT FAILURE In this era of tight competition from domestic and global firms the firm who don't come out with new products are putting themselves at great risk because their existing products are prone to changing customer needs, shorter product life cycles, new technologies and increased competition. Despite years of research and huge capital being pumped in to understanding the consumer, making a launch successful is still a difficult task. The new product largely depends on the product quality and the
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New Product Development & Pricing
Eg: when NESTLE launched its new chocolates the product and promotion was ok but the product failed in the distribution side because the company stipulated the product to be stored in refrigerators. The product faced two problems in the distribution side because it meant excluding a number of retail outlets as they didn't have this facility and secondly the chocolate was not picked by the customers as it was not seen upfront in the retail shops. Finally Nestle had to reformulate the product according to channel requirements. Poor timing of launch
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New Product Development & Pricing
Pricing
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Factors to Consider When Setting Prices
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New Product Development & Pricing Marketing Mix Strategy
Product Design & Quality
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