Principles of Marketing
Page_1
Mashal Institute of Higher Education
Principles of Marketing
Source person: Kamran Khan
M.Com, B.Com…
Lecturer at Mashal Institute of Higher Education
Mashal institute of Higher Education, Shar-e-New Part, Kabul
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_2
Topic: Product Innovation
What is innovation?
Innovation can be defined as the application of new ideas to the products, processes, or other
aspects of the activities of a firm that lead to increased “value.”
Product innovation:
Product innovation: the introduction of a new product, or a significant qualitative change in an
existing product.
Example: Uniliver Company has done the following innovation with its personal care product
“Sunsilk”
1. Thick & Long shampoo
3) Anti Dandruff Shampoo
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
2. Hairfall Solution Shampoo
4) Black shine
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_3
Importance of product innovation:
A company exists to satisfy customers’ needs and wants while making a profit. A company
fulfills this dual purpose through its product. New product planning and development is very
important for the organization to earn and to satisfy customers’ needs and wants. A head of the
P & G Company said; “The core business is innovation, if we innovate well, we will win”.
In short product innovations-changes in the existing product as well as introducing new
products are essential for:
1.
2.
3.
4.
5.
To survive
To earn
To satisfy customers needs and wants
To grow
To compete
Topic: Development of New Product
What is a new product?
There are three categories of new product.
a. Truly unique product: these are the product completely new to the market.
b. Different product: these are the products out of the existing products having extra
features and benefits as compared to the existing products.
c. Imitative products: these are the products that are not new to the market but new to
the company. These are the products on the company’s idea that “me too”
Product Development Process:
When we start to launch a new product in any market from zero or when we present any
innovation in existing product the following factors are necessary.
Idea generation
The first step in the product development process is the generation of idea. The idea is
generated through the systematic search. Sources of getting information or idea are.
a. Internal Sources
Many new-product ideas come from internal sources within the company. The company can
find new ideas through formal research and development. It can pick the brains of its scientists,
engineers, designers and manufacturing people. Or company executives can brainstorm newproduct ideas. The company's salespeople are another good source of ideas because they are in
daily contact with customers. Formal or informal suggestion schemes can also be used to tap
staffs ideas. Toyota claims that employees submit two million ideas annually - about 35
suggestions per employee - and that more than 85 per cent of these ideas are implemented.
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_4
b. External Sources
1. Customers
Almost 28 per cent of all new-product ideas come from watching and listening to customers.
The company can conduct surveys to learn about consumer needs and wants. It can analyze
customer questions and complaints to find new products that better solve consumer problems.
Company engineers or salespeople can meet with customers to get suggestions. General
Electric’s Video Products Division, Sony, Toyota and many other effective innovators are known
to have their design engineers talk with final consumers to get ideas for new products. Many
new ideas come from simply observing consumers.
2. Competitors
About 30 per cent of new-product ideas come from analyzing competitors' products. The
company can watch competitors' ads and other communications to get clues about their new
products.
3. distributors, Suppliers and Others
Resellers are close to the market and can pass along information about consumer problems and
new-product possibilities. Suppliers can tell the company about new concepts, techniques and
materials that can be used to develop new products.
Other idea sources include trade magazines, shows and seminars; government agencies; newproduct consultants; advertising agencies; marketing research firms; university, commercial
laboratories and science parks; and inventors.
2. Idea screening
Screening new-product ideas in order to spot good ideas and drop poor ones as soon as
possible. A good manager compares different ideas and never relies on only one idea screening
in the selection of one best idea.
3. Business Analysis
Once management has decided on its product concept and marketing strategy, it can evaluate
the business attractiveness of the new product. Business analysis involves a review of the sales,
costs and profit projections for a new product to find out whether they satisfy the company's
objectives. If they do, the product can move to the product development stage.
4. Prototype development or Product development
Developing the product concept into a physical product in order to ensure that the product idea
can be turned into a workable product is called prototype or product development. It is the
process of a trial model development.
5. Market Testing
Offering the product to the market as a sample to check the response of the customers is called
market testing.
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_5
6. Commercialization
Offering the product in bulk to the market is called commercialization. In this step now the
organization has come to know that the customers have liked their product, now they produce
the product in large scale and offer to the market in large scale as well.
Topic: Product Life Cycle (PLC)
A new product passes through set of stages known as product life cycle. Product life
cycle applies to both brand and category of products. Its time period vary from product to
product. Modern product life cycles are becoming shorter and shorter as products in mature
stages are being renewed by market segmentation and product differentiation.
Companies always attempt to maximize the profit and revenues over the entire life cycle of a
product. In order to achieving the desired level of profit, the introduction of the new product at
the proper time is crucial. If new product is appealing to consumer and no stiff competition is
out there, company can charge high prices and earn high profits.
Stages of Product Life Cycle
Product life cycle comprises four stages:
1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_6
Product Life Cycle (PLC)
1. Introduction
This stage is also called pioneering stage. It is that stage in which a product is newly
launched in the market, this is very expensive stage of product because consumer is
unaware of your product and for the awareness of consumer, we have to advertise our
product and due to advertisement it becomes much expensive, the sales are very low in this
stage.
2. Growth
When after the passage of time consumer started knowing your product they start
accepting your product is the growth stage. This is the most exited time for the producer,
because he started enjoying the profit. And the sales started increasing at a very rapid rate
in growth stages the product grows in a great volume.
3. Maturity
When mostly consumers are well informed about your product, it becomes maturity stage,
sales increases at a slower rate means the sales are increasing but at a slow rate.
4. Decline
When people start getting fed up and new competitor arrive in the market the sales started
decreasing and this is a decline stage. No producer wants his product to go at the decline
stage do he provides products innovation or provide new feature to attract the customer.
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education
Principles of Marketing
Page_7
Topic: Product Adopter Categories
Researchers have identified five categories of individuals based on the relative time when they
adopted a given innovation.
1)Innovators
A venturesome group, constitute about 3% of the market and are the first to adopt an
innovation. In relation to later adopters, the innovators are likely to be younger, have higher
social status and be in a better financial position. Innovators also tend to have broader, more
cosmopolitan social relationships. They are likely to rely more on impersonal sources of
information, including those external to their own social system, than on sales people or other
word of mouth sources.
2) Early adopters
This is the second fastest category of individuals about 13% of the total market who adopt an
innovation. These individuals have the highest degree of opinion leadership among the other
adopter categories. Early adopters are typically younger in age, have a higher social status, have
more financial lucidity, advanced education, and are more socially forward than late adopters.
This category gives opinions to others and on their opinions other people purchase/adopt the
new product.
3)Early majority
The more deliberate group, the early majority, represents about 34 percent of the market. This
group tends to accept an innovation just before the average adopter in a social system. This
group is a bit above average in social and economic measures. Its members rely quite a bit on
advertisements, sales people and contact with early adopters.
4) Late majority
This is the group which adopts an innovation as their necessity of life.
5) Laggards
This is the group which adopts a product at the last, these are mostly the older and are of low
social class. The product which this group adopts may discarded by the innovators.
Lecturer: Mr. Kamran Khan
M.Com, B.Com, D.Com…
MIHE
Mashal Institute of Higher Education