Product Planning and
Development
CHAPTER 3
Definitions
 Product

Anything offered to a market for attention, acquisition, use, or
consumption that might satisfy a need or want.
 Service

A form of product that consists of activities, benefits or
satisfactions offered for sale that are essentially intangible and
do not result in the ownership of anything.
Goal 1: Understand products and their classifications
Product
Services
Levels of a product
Levels of Product

Core Product
what the buyer really buying. For example a woman buying
lipstick she buys more than lip color, or a person buying
Nokia N97, is buying more than a wireless mobile phone,
like email, internet, web browsing, pictures etc.

Actual Product
the product planner must turn the core benefits into actual
product. That is design, quality level, a brand name, and
packaging.

Augmented product
when consumer buy the Nokia N97, the company and its
dealer also might give buyers a warranty on parts and
workmanship, instruction on how to use the device
What are the three levels of this product?
Classification of product
 Consumer product
Product that are bought by the consumers for personal use. Consumer
products include Convenience, Shopping, Specialty and Unsought
Products.
 Industrial Product
Product bought by individuals and organizations for further processing
or for use in conducting a business.
Consumer products
Industrial products
Types of Consumer Products
 Frequent purchases bought


 Convenience
 Shopping
 Specialty
 Unsought



with minimal buying effort and
little comparison shopping
Low price of product
Producer made widespread
distribution of product.
Mass production and
promotion by producer
For Example.
Soap, candy, newspaper and
fast food.
Goal 1: Understand products and their classifications
Types of consumer products
 Convenience products
Types of Consumer Products
 Consumer product that the


 Convenience

 Shopping

 Specialty

 Unsought

consumer, in the process of selection
and purchases, characteristically
compares on such basis as
suitability, quality, price and style.
Less frequent purchases
More shopping effort for
comparisons.
Higher than convenience good
pricing
Selective distribution in fewer
outlets
Advertising and personal selling
For example. Furniture, clothing,
cars, major appliances, hotel and
airline services.
Goal 1: Understand products and their classifications
Types of consumer products
 Shopping products
Types of Consumer Products
 Consumer product with unique
 Convenience
 Shopping
 Specialty
 Unsought




characteristics or brand
identification for which a
significant group of buyers are
willing to make a special
purchasing effort.
High price
Exclusive distribution
Carefully targeted promotions
For example, specific brand types
of cars, like Lamborghini, designer
clothes, and services of a medical
or legal specialist.
Goal 1: Understand products and their classifications
Types of consumer products
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 Specialty products
Types of Consumer Products


 Convenience

 Shopping
 Specialty

 Unsought


Unsought Products are products you
haven't actively been looking for.
These are products whose purchase is
unplanned by the consumer but occur as
a result of marketer’s actions. Such
purchase decisions are made when the
customer is exposed to promotional
activity, such as a salesperson’s
persuasion or purchase incentives like
special discounts offered to certain online
shoppers.
Consumer product that the consumer
either does not know about or knows
about but does not normally think of
buying
Little product awareness and knowledge
(or if aware, sometimes negative interest)
Aggressive advertising
and personal selling by producers and
resellers
For example. Blood donation, life
insurance. gravestone.
Goal 1: Understand products and their classifications
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Industrial product
 Three groups of
industrial product and
services.
1. Material and parts
2. Capital items
3. Supplies and services.
Industrial product
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 Material and parts
 Material and parts include
raw material and
manufactured material
and parts used for
reprocessing in industries.
 For example material
parts, fruit, vegetables,
example of manufactured
parts are, iron, cement,
wires
Industrial product
 Capital parts
 Supplies and services
 Capital parts are industrial
products that use in the
production or operations,
including installation and
accessory equipment.
 For example Generators, drills,
large computer systems.
 Supplies include operating
supplies (lubricants, paper,
pencil) and repair and
maintenance items (paint)
 Business services include
maintenance and repair
services (window cleaning,
computer repair)
Product and Service Decisions


Key Decisions
 Individual
Product
 Product Line
 Product Mix



Product attributes (benefits)
(Quality, features, style and design)
Branding( a brand is a name, term,
sign, or design or combination of these)
that identifies the maker or seller of a
product or services and differentiate
them from those of competitors.
Packaging-the activities of designing
and producing the container or
wrapper for a product.
Labeling-label range from simple tags
attached to products to complex
graphics, label indentifies the product
or brand. Label might also describe
several things about the product, like
who made it, where it was made, when
it was made, its contents, and how it is
to be used and how to use it safely.
Product support services- include
warranty and after sale services and
spares.
Goal 2: Learn decisions companies make regarding products
Examples of Packaging
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Examples of Packaging
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Product and Service Decisions
 Product line

Key Decisions
 Individual
Product
 Product Line
 Product Mix
A group of products that
are closely related
because they may:
function
in a similar
manner
be sold to the same
customer groups,
be marketed through the
same types of outlets
fall within given price
ranges
For
example- HP
computers, Scanners,
Printers, fax machines.
Goal 2: Learn decisions companies make regarding products
Product Line
Product and Service Decisions
Key Decisions
 Individual
Product
 Product Line
 Product Mix
 Product mix
 Consists of all the product
lines and items that a
particular seller offers for
sale.
 For example- Samsung
product mix consists of
GSM phones, LCD,
Computers, Laptops,
Washing Machines, Micro
waves, digital cameras
Goal 2: Learn decisions companies make regarding products
Product mix
New Product Development
&
Product Life-Cycle
New Product Development Process
1.
2.
3.
4.
5.
6.
7.
Idea Generation
Screening
Concept Development and Testing
Business Analysis
Product Development
Market testing
Commercialization
New Product Development Process
Step 1. Idea Generation
 Internal Sources:
 Research and Development can be done in market for more new
and customer oriented ideas.
 Employees can also give good ideas according to the objectives
and capability of organization
For example, Samsung has built a special center to encourage
and support new product innovation ideas internally by their
employees.
New Product Development Process
Step 1. Idea Generation
 External Sources:
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 Customers. The Company can analyze customer questions and
complaints to find new product that better solve consumer
problems.
 Competitors. The company buy competitors product to analyze
their sale, and to see how it works and decide whether they
should bring out a new product of their own.
 Distributors. Distributer are close to the market and can pass
information about consumer problems and new product
possibilities.
 Suppliers. Suppliers can tell the company about new concepts,
techniques and materials that can be used to develop new
product.
New Product Development Process
Step 2. Idea Screening
Process to spot Good ideas & drop Poor ones;

The screeners must ask at least 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 on which the
product idea is based on?
 Is it technically feasible to manufacture the product?
 Will the product be profitable when manufactured and
delivered to the customer at the target price?
New Product Development Process
Step 3. Concept Development & Testing
Develop the Marketing and Engineering Details
•
•
•
•
•
•
•
Who is the target market and who is the decision maker in
the purchasing process?
What product features must the product incorporate or
delivers?
What benefits will the product provide?
How will consumers react to the product?
How will the product be produced most cost effectively (with
lowest price)?
What will it cost to produce the product?
Testing the concept by asking a sample of prospective
customers that what they think of the idea.
New Product Development Process
Step 4. Business Analysis
Business Analysis
 Estimate likely selling price based upon
competition of same and substitutes products in
the market by customer feedback.
 Estimate sales volume based upon size of market
 Estimate profitability and breakeven point of
your product that you wants to offer in the
market.
New Product Development Process
Step 5. Product Development
Product Development;
Developing the product concept into physical
product in order to ensure that the product idea can
be turned into a workable product.
New Product Development Process
Step 6. Market Testing
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 Test the product (and its packaging) in the market
on small scale in typical usage situations.
 Conduct focus group customer interviews or
introduce at trade show or seminars to target
customers.
 Make adjustments where necessary, as suggested by
the target customers in the test marketing session.
 Produce an initial sample of the product and sell it in
a test market area to determine customer acceptance
and feedback for improvement.
New Product Development Process
Step 7. Commercialization
Commercialization means launching the product in the
market on large scale.
 Produce and place advertisement and other promotions
in the market.
 Fill the distribution pipeline with products which you
wants to launch.
 Critical path analysis is most useful at this stage which
means that you should analyze each possible best option
for launching the product in the market.

Product Life Cycle
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Losses/
Investments ($)
Introduction
Growth
Maturity
Decline
Introduction Stage of the PLC
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Marketing Objectives
Create product awareness
and trial
Growth stage of PLC
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Maturity Stage of PLC
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Marketing Objectives
Maximize profit while defending
market share
Decline Stage of PLC
Sales
Decreasing sales
Costs
Low cost per customer
Profits
Low profits
Marketing Objectives
Trying to servive while defending
existing market share
End of Chapter