Unit 1
Meaning and Definition of Marketing.
Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses.
Marketing has been defined in many ways.
According to the Committee of Marketing Teacher’s Association, USA, “Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers or users.”
According to Philip Kotler, “Marketing is a societal process by which individuals and groups obtain what they need and want, through creating, offering and freely exchanging products and services of value with others.”
According to Paul Mazur, “Marketing is the delivery of a standard of living to the society.”
Thus, marketing is the creative management function which promotes trade and employment by assessing consumer needs and initiating research and development to meet them. Marketing makes goods and services useful to the society by getting them where they are wanted, when they are wanted and by transferring them to those people who want them. In this sense marketing means, “All the activities involved in the creation of place, time and possession utilities.” It has been righty remarked, “Nothing happens in our economy until somebody sells something.”
Nature of Marketing
When we discuss the nature of marketing we come to know that marketing is both a science as well as an art. It has the features of both science as well as art.
Marketing as a science:
The handling of marketing responsibilities needs a diversity of human talents. These responsibilities require the men who have personality traits which enable them to do an effective job in dealing with customers.
Marketing needs innovative and imaginary people to create effective advertisement and sales promotion programmes. Marketing people need to develop new ideas in products, market and distribution methods. They must have strong analytical abilities and observations to cope with the strategical and logistical aspects of marketing operations.
All these prove that marketing is a science. Many marketing problems can be sorted out by taking a scientific approach.
Marketing as an art:
Marketing is a continuous practice through which one can bring perfection. Marketing develops a ‘group of artists’ for bringing solutions to the problems of personal selling, advertising and sales promotion etc. The artistic aspect of marketing influence and educate the customers and bring success to the organization.
As science and art, the nature of marketing has the following features-
| As Science | As an Art |
|---|---|
| 1. It advances knowledge | 1. It advances practice |
| 2. It proves | 2. It feels |
| 3. It predicts | 3. It guess |
| 4. It impresses | 4. It expresses |
| 5. It measures | 5. It opines |
| 6. It defines | 6. It describes |
Scope of Marketing
Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses. Marketing people are involved in marketing of ten different types of entities. In other words, marketing today includes the following activities within its scope –
1. Goods:
Physical goods constitute the bulk of most countries production and marketing efforts. For example, each year US companies alone market billions of canned and frozen goods, million tons of steel, cars, tv sets, machines etc.
2. Services:
As economies advance, a growing proportion of marketers’ activities are focused on the production of services. Services include the work of airlines, hotels, beauticians, maintenance and repair people as well as professionals such as accountants, lawyers, engineers, bureaucrats, doctors, software programmers and management consultants.
3. Experiences:
By producing several services and goods, a firm can create stage and market experiences. Walt Disney World’s Magic Kingdom represents experiential marketing. Customers visit a fairy kingdom or a haunted house. There is also a market for customized experiences, such as spending a week at a baseball camp playing with some retired baseball greats or climbing Mount Everest.
4. Events:
Marketers promote time-based events, such as Olympics, company anniversaries, major trade shows, sports events and artistic performances. There is a whole profession of meeting planners who work out the details of an event and make sure it comes off perfectly.
5. Persons:
Celebrity marketing is a major business. Today every major film star has an agent, a personal manager and ties to a public relations agency. Artists, musicians, CEOs, physicians, lawyers and other professionals are also getting help from celebrity marketers.
6. Places:
Places i.e., cities, states, regions and whole nation compete actively to attract tourists, factories, company headquarters. For example – Ireland has been an outstanding place marketer having attracted more than 500 companies to locate their plants there.
7. Properties:
Properties are intangible rights of ownership of either real property or financial property. Properties are bought and sold, and this requires marketing. Investment companies and banks are involved in marketing securities (financial property) to both institutional and individual investors.
8. Organizations:
Organizations actively work to build a strong and favorable image in the minds of their target customers. Companies spend money on Corporate Identity Ads. Universities, museums and performing art organizations all use marketing to boost their public images and to compete for audiences and funds.
9. Information:
Information can be produced and marketed as a product. We buy software and CDs and we visit internet for information. The production, packaging and distribution of information are one of the society’s major industries.
10. Marketing of Ideas:
Every market offering includes a basic idea. Charles Revson of ‘Revlon’ observed, “In the factory we make cosmetics, in the store we sell hope.” Products and services are platforms for delivering some idea or benefits. Today social marketers are busy in promoting ideas such as –
a) Say no to Drugs,
b) Save the Rain Forest,
c) Exercise Daily,
e) Avoid fatly food.
Importance of Marketing
The various functions of marketing under concentration, equalization and dispersion are explained below with their importance –
1. Buying and Assembling:
Buying and assembling is an important function of marketing. The marketers have to take a number of decisions regarding the types of products to be purchased or assembled. Their quality, quantity, price, time of purchase, selection of suppliers and forms of purchase.
The failure in the successful performance of buying function may lead to losses in the form of unsellable inventories, which will finally be the cause of business ruin.
2. Selling:
Selling creates demand for a product.
Selling function includes –
a) Product planning and development.
b) Finding out the buyers.
c) Creation of demand through personal selling, advertisement and sales
promotion.
d) Negotiation of terms of sale.
e) Sales contract.
Selling is important not merely for increasing the profits but also for making the goods and services available to the consumers in the society. In modern marketing selling activity involves tackling with a number of problems such as facing competition and conducting market research from time to time.
3. Standardization and Grading:
Standardization and grading are also important functions of marketing. Standardization is the process of setting up standards. It assures quality. It promotes uniformity of products i.e. size, shape, design and colour of the products. Grading is a part of standardization. It is a process of sorting out goods into a number of grades or classes. Grading enhances marketing efficiency.
4. Financing:
Financing is the life blood of business. Value of goods is expressed in money and it is denoted by price to be paid by a buyer to a seller.
Finance is very important in marketing operations such as maintenance of minimum inventory level, payment of rent and insurance charges. Salaries and commission to sales force, advertising expenses etc.
5. Warehousing and Storage:
The place where the goods are stored and
preserved against natural and human hazards is known as warehouse.
Warehousing and storage of goods are necessary not only for the markets but
also for the wholesalers (as well as) and retailers.
Warehousing performs the functions like, storage risk bearing, price
stabilization, packing etc.
6. Marketing Risk (Risk taking):
Risk is a universal function and is present in all marketing transactions. Risks are constantly challenging the businessmen and no businessmen are able to develop an all-out formula to eliminate risk 100%.
Risk implies an element of uncertainty and possibility of loss due to some unpredictable happening of events in future. There are many ways of minimizing risk. They may be –
a) Avoiding or preventing the risk
b) Shifting the risk (insurance)
c) Accepting unavoidable risk
7. Marketing Information:
Marketing conditions are dynamic and they may affect industry in any way and to any degree. Therefore, marketers must know the trends in marketing demand, supply, prices, competition and other related marketing information.
8. Transportation:
Transportation involves the movement of goods from the point of production to the point of consumption. Without transportation, large scale production, specialization and distribution would have become impossible. Transportation provides place utility to products. The marketers need to use the appropriate mode of transport for quick and safe movement of goods at the minimum possible cost.
Marketing Concepts
Marketing concept means the philosophy which guides the marketing efforts. There are marketing concepts which are adopted by organizations for their marketing activities. They may broadly be divided into two groups-
Traditional Concept
Production Concept
Product Concept
Selling Concept
Modern Concept
Marketing Concept
Societal Marketing Concept
1. The Production Concept:
This concept holds that the consumers will support those products that are produced in large quantities at low unit cost. The authorities of this view believe that marketing can be managed by managing production. It involves high production efficiency and wide distribution network. This concept holds good (valid) in cases where there is more demand than supply. In such a situation, consumers readily accept the product that is made available. For e.g. cooking gas.
Production ——-> Consumption
2. The Product Concept:
Under this concept, producers believe that if the product is good and reasonably priced, it will be quite popular among consumers even if no special marketing efforts are made. They are of the opinion that it is the quality of product alone will yield satisfactory sales. The marketers under this concept believe on the slogan that, “Good wine needs no wishes.”
Production —> Quality of Product —> Consumers
3. The Selling Concept:
The third concept followed is the selling concept. Under this concept it is presumed that consumers will not normally buy as much as expected unless they are approached and convinced. The company lays emphasis on getting sufficient sales for its products. Under this concept the company assumes that its products are sold and not bought. In other words, the consumer’s satisfaction is considered secondary, selling the product is the primary consideration. Till 1953, marketing was usually sales oriented.
Production —> Product Quality —> Approaching Consumer’s —> Consumers
4. The Marketing Concept:
This is a new idea in the field of exchanging. Under this concept, the organization tries its best to determine the needs, wants and values of the buyer’s market and finally takes all steps to deliver the desired satisfaction more effectively and efficiently than its competitors do. Every attempt is made to satisfy the wants of customers. Winning the confidence of customers is as good as fulfilling the goals of organization. In selling, the main idea is to convert the product into cash. But marketing deals with the satisfaction of the customers with the product that is supplied. Marketing concept has been extensively adopted.
Identification of needs
⬇️
Production
⬇️
Product Quality
⬇️
Selling Efforts
⬇️
Satisfaction of the Consumers Needs
5. Societal Marketing Concept:
Under the marketing concept, individual satisfaction and personal interest are both ignored. This limitation is removed by introducing the societal marketing concept. This concept aims at giving individual satisfaction so far the costumer is concerned and maintains public welfare as its goal and responsibility in the long run. The societal marketing concept involves creation of a healthy life for its customers by providing quality products and maintaining customer interest at the top level.
The societal marketing concept believes in the slogan that, “Marketing both begins and ends with the customers.”
This is the current or modern concept which has been extensively adopted and widely accepted in the interest of the organization, the customers and the society. In short, societal marketing can seek profits by-
a) Satisfying customer utility.
b) Maximizing the public welfare.
c) Enhancing the quality of life.
Difference between Selling and Marketing
| Basis | Selling | Marketing |
|---|---|---|
| 1. Objective | Its main objective is to maximize sales without caring for the needs and satisfaction of the customers. | Its main objective is to identify the wants and demands of the buyers and to satisfy them. |
| 2. View | It views business as a process of converting finished goods into turnover. | It views business as a value satisfying process. |
| 3. Cost and Price | In selling, cost determines price. | In marketing, price determines cost. |
| 4. Decision of Production | In selling, seller determines what product or service is to be produced. | In marketing, buyer determines what they want and what product or service is to be produced. |
| 5. Goal | It tries to maximize the profits by converting output into cash. | It tries to maximize profits by satisfying consumer needs and delivering quality of life to people. |
| 6. 4 Ps | In selling, the decisions on ‘Four Ps’ i.e., Product, Price, Place and Promotion are taken from seller’s point of view. | In marketing, decisions on ‘Four Ps’ are taken from customers’ point of view. |
Marketing Environment
Marketing environment comprises external or macro factors over which
the organization and management has little control. These are relatively
uncontrollable external forces.
The marketing management must be in close contact with many
uncontrollable forces. To be successful in marketing they must learn to
accommodate them and if possible to take advantage of them. These
uncontrollable forces are the parameters of the market.
Let us describe the various environmental forces of marketing in brief:
| Forces | Components of the Environment |
|---|---|
| 1. Socio-cultural | Changes in social values, lifestyles, role of women, attitudes, preferences etc. |
| 2. Technology | Innovation of new technology, product innovation, distribution, packaging etc. |
| 3. Economic | Economic growth, economic policy and stability, per-capita income, economic system etc. |
| 4. Political-legal | Stability of government, law, political organizations, foreign policy, consumer protection. |
| 5. Demographic | Population growth, age, sex, level of education, density of population etc. |
| 6. Competing firms | Substitute brands, competitive firms, price policy etc. |
| 7. Ecological | Air, water and noise pollution, conservation of forests and scarce resource |
1. Socio-cultural factors:
The socio-cultural environment determines the value system of a society. Marketing manager is called upon to make necessary adjustments in marketing policies and strategies in order to meet the socio-cultural needs of people.
There are three aspects of socio-cultural environment.
a) Changes in our lifestyle and social values.
b) Growing consumerism indicating consumer dissatisfaction since 1960.
c) Major social problems i.e. concern for pollution of our environment.
We have witnessed many changes in socio-cultural environment in India. Indian consumers are acquiring new lifestyles influenced by various satellite channels. There is a clear decline in joint family concept in favour of nuclear family.
2. Technological factors:
Technology has shaped the face of human life faster than the pace of human life. The unprecedented development of science and technology has created a phenomenal impact on our lives. We have witnessed radical changes in our lifestyles, in our consumption pattern as well as in our economic welfare.
The technological changes have increased competition in the market and the marketers are compelled to innovate and improve the products. The packaging technology has revolutionized the Indian Industry. The world has moved from early machine age to the digital age.
3. Economic factors:
Marketing plans and programmes are influenced by many economic factors like economic growth rate, level of employment and income, purchasing power and willingness to buy, price level, interest rate,consumer credit etc. The role of marketing management becomes important when economic factors greatly touch the lives of consumers. The liberalization of economic policies is responsible for bringing changes in our economic system, economic policies, licensing policy, investment policy, merger and acquisition policy etc. For e.g. Coca-Cola had to go from India in 1977. But in 1992 it came back due to changes in economic policies.
4. Political and legal forces:
Political and legal forces are gaining considerable importance in marketing activities and operation of business enterprises. Marketing system is affected by government, monetary and fiscal policies, import/export environment influence marketing plans and policies. E.g. the bio-medical waste rules 1998 apply to all persons to generate, collect, receive, store, transport, dispose or handle the bio-medical waste in any form.
5. Demographic forces:
Demographic environment refers to the development of population growth, age, sex, education pattern, urban and rural population, occupation, income etc. The demographic factors are directly related to the marketing activities. Hence, management must make a scientific study of human population and its distribution structure.
E.g. growing population indicates growing marketing particularly for baby products. But, when we have reduction in the birth rate and the lower rate of growth of population, companies, specializing in baby products will have to adjust their marketing program accordingly.
6. Competitive environment:
No marketing decision of major importance should be made without accessing competition in a free market economy. The marketing manager has little or no control over activities of competitors. Competitor’s considerably influence the marketing strategies particularly in relation to selection of target market, suppliers, channels of distribution, product mix, price mix and promotion mix.
Competition may be of two types:
a) Competition within an industry producing and selling similar goods.
b) Competition between two companies engaged in production and selling of different goods or services. The marketing manager must understand that his rivals are bound to limit the marketing activities of his firm sooner or later.
7. Ecological factors:
Ecological environment has assumed a unique importance in production and marketing in modern economies. The marketers are expected to take measures to conserve and allocate scarce resources properly. Prevention of all types pollution and efficient use of scarce resources can restore the balance in our ecological environment. The marketers have to innovate new marketing process so as to make them eco-friendly.
Marketing Mix
The policies adopted by manufacturers to attain success in the market constitute the marketing mix. Broadly speaking, the combination of marketing methods or device is known as marketing mix.
There are 7 Ps in the marketing mix. They may broadly be divided as:
A) Traditional Marketing Mix:
It consists of 4 Ps i.e. product, price, place and
promotion.
B) Extended Marketing Mix:
It consists of 3 more Ps people, process and
physical evidence.
The 7 Ps in marketing are known as elements of Marketing Mix. They are
explained below:
A. Traditional Marketing Mix:
1. Product Mix:
Product is the thing possessing a bundle of utilities. It covers
the physical attributes, the package, branding, labelling, style, shape and
design, warranties and after sales services of the product. The product mix
must match with customer needs and expectations.
2. Price Mix:
It includes pricing policies and pricing objectives. Price is the
monetary value of the product. Pricing decision also includes discount,
allowances, terms of credit, profit margin etc. Price is an effective means of
publications. It can also act as a device of promotion.
3. Place Mix:
Place mix covers decisions about-
i) Channels of distribution including all middlemen and facilitating agencies and
ii) Physical distribution which is concerned with transporting, warehousing, storing and handling of products.
4. Promotion Mix:
It covers all means of marketing communication designed to persuade buyers to purchase the product. There are five main devices of promotion:
a) Personal selling
b) Advertising
c) Sales promotion
d) Publicity
e) Public relations
B. Expanded Marketing Mix:
In 1988, 4Ps concept was challenged by Alan. J. McGrath. He added three more Ps to the traditional 4Ps and suggested ‘7Ps’ framework of marketing mix.
The 3Ps include:
1) People
2) Process
3) Physical evidence
The 3 Ps are explained below:
5. People:
People mean those who are in touch with the consumers i.e. salesmen. They deliver the services to the consumers. People in service marketing must possess sound knowledge and skill and they must have positive attitude towards the customers.
6. Process:
Process means the system or method used by the marketers for delivering the goods and services to the customers. The process must be customer friendly. In modern marketing all companies are trying to have some comparative advantages over the others in developing the process.
7. Physical Evidence:
It includes use of vouchers, cards, booklets etc. which are of use to the customers as evidence of visiting that place or institution. It also includes the maintenance of neat and clean shopping area with sufficient space for parking and sitting arrangements. The place where delivery and service of product takes place must be entertaining with beautiful interior decorations.
Market Segmentation
Market segmentation is a marketing strategy that involves dividing a target audience into groups based on shared characteristics. The goal is to create more targeted products and advertisements that appeal to specific groups, which can lead to higher returns on investment (ROI).
What are the basis of market Segmentation
Bases for Segmenting Consumer Market
Major bases for segmenting the consumer market include geographic, demographic, psychographic, and behavioural variables.
1. Geographic Segmentation:
Geographic segmentation calls for dividing the whole consumer market into different geographical units such as nations, regions, states, cities, etc. A company may want to target one or more geographical units but should pay attention to the differences in needs and wants of different units. Various factors, like geographical conditions, cultural influence, etc., help identify the various geographic segmentations.
Example: McDonald’s offers a range of vegetarian options in India, including the McAloo Tikki Burger.
2. Demographic Segmentation:
Demographic segmentation involves segmenting the market according to various basic yet important factors. Factors like age, gender, income, etc., determine the segments under demographic segmentation.
Example: Coca-Cola segments its market according to various demographic factors and formed segments like the youth market and health-conscious adults.
3. Psychographic Segmentation:
This type of segmentation includes dividing the whole consumer market into various segments based on personality and lifestyle. Personality refers to the combination of various characteristics like traits, habits, attitudes, etc. Lifestyle includes how an individual lives and spends their money and time.
Example: Apple’s marketing and product design are known for appealing to customers who value innovation and creativity.
4. Behavioural Segmentation:
Behavioural Segmentation involves segmenting the market into various segments based on how an individual reacts in a certain situation or to a particular product/service.
Example: Amazon uses behavioural data to personalise product recommendations for its customers.
Bases for Segmenting Organisational Market
Major bases for segmenting the organisational market include the type of business, geographic location, size of business, and buying behaviour.
1. Type of Business:
Organisational market segmentation can be done based on the type of business. There are various sectors in the economy, the demands of which can differ from one another. Sectors like agriculture, mining, communication, services, construction, etc., need different types of technology and functions.
Example: Microsoft’s cloud computing service, Azure, offers industry-specific solutions.
2. Geographic Location:
Organisational segmentation can be done on the basis of the location of the buying business. Different locations have different weather, culture, lifestyle, etc. On the basis of these factors, businesses decide to target one or more segments.
Example: Coca-Cola offers its beverage portfolio to suit regional tastes and preferences.
3. Size of Business:
The size of the buying business can also affect the segmentation strategy. Businesses can be small, medium-sized, and large-sized. Medium and large-sized businesses are given more preference over small-sized businesses.
Example: Oraofferscle, a provider of enterprise software solutions, offers different product lines based on the size and complexity of businesses.
4. Buying Behaviour:
Organisational market segmentation can be done on the buying behaviour of a business. Business buying behaviour can include new buyers, modified buyers, and repeat buyers.
Example: Amazon Business, a B2B marketplace, offer features like bulk pricing, business-only selection, and multi-user accounts.
Define Product
A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form. Every product is made at a cost and each is sold at a price. The price that can be charged depends on the market, the quality, the marketing and the segment that is targeted.
Various Stages of PLC
The product life cycle is the succession of stages that a product goes through during its existence, starting from development and ultimately ending in decline. Business owners and marketers use the product life cycle to make important decisions and strategies on advertising budgets, product prices, and packaging.
In the marketing industry, the typical depiction of the product life cycle only has four main stages — Introduction, Growth, Maturity, and Decline.
1. Development
The development stage of the product life cycle is the research phase before a product is introduced to the marketplace. This is when companies bring in investors, develop prototypes, test product effectiveness, and strategize their launch.
In this stage, companies typically spend a lot of money without bringing in any revenue because the product isn’t being sold yet.
This phase can last for a long time, depending on the complexity of the product, how new it is, and the competition. For a completely new product, the development stage is particularly difficult because the first pioneer of a product isn’t always as successful as later iterations.
Before full-scale production, the product may be released in a limited market or region for testing purposes. This allows companies to assess market acceptance, gather user feedback, and make necessary adjustments before a wider launch.
2. Introduction
The introduction stage happens when a product is launched in the marketplace. This is when marketing teams begin building product awareness and targeting potential customers. Typically, when a product is introduced, sales are low and demand builds slowly.
In this phase, marketers focus on advertising and marketing campaigns. They also work on testing distribution channels and building product and brand awareness.
This stage is crucial because companies have the opportunity to shake up the status quo and capture the attention and loyalty of early adopters. The positive experiences and word-of-mouth recommendations from these early customers can influence the broader target market and accelerate product adoption.
Some examples of products currently in the introduction stage include:
Generative AI
Self-driving cars
3D televisions
Ultimately, the success of this stage sets the foundation for the product’s future growth and success in subsequent stages of the product life cycle.
3. Growth
During the growth stage, consumers have accepted the product in the market and customers are beginning to truly buy in. That means demand and profits are growing, hopefully at a steadily rapid pace. This momentum is crucial for sustaining business operations, funding further product development, and generating returns on investment.
As companies scale, they can benefit from lower per-unit production costs, improved supplier relationships, and optimized distribution networks.
However, there are some challenges that come with the growth stage. As the market for the product expands, competition grows. Potential competitors will see your success and will want in.
Some products that are currently in the growth stage are:
Smartwatches
Electric cars
Peloton
During this stage, it’s important to keep attracting new customers and solidify your brand image so you can stay ahead of the competition.
4. Maturity
The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies begin to reduce their prices so they can stay competitive amongst the growing competition. Streamlining production processes, negotiating favorable supplier contracts, and optimizing distribution networks also become important considerations.
This is the phase where a company begins to become more efficient and learns from the mistakes made in the introduction and growth stages. Marketing campaigns are typically focused on differentiation rather than awareness. This means that product features might be enhanced, prices might be lowered, and distribution becomes more intensive.
During the maturity stage, products begin to enter the most profitable stage. The cost of production declines while the sales are increasing.
Examples:
Smartphones
Amazon
Video game consoles
5. Saturation
During the product saturation stage, competitors have begun to take a portion of the market and products will experience neither growth nor decline in sales.
Typically, this is the point when most consumers are using a product, but there are many competing companies. At this point, you want your product to become the brand preference so you don’t enter the decline stage. To achieve this, you’ll want to focus on providing exceptional service and building strong relationships with your customers.
In a saturated market, innovation also becomes essential to stay relevant. Businesses must continuously invest in research and development to improve products and offer new features. Failure to do so may lead to product obsolescence and loss of market share.
Some examples of products in the saturation stage are:
Streaming services
Breakfast cereals
Soft drinks
6. Decline
Unfortunately, if your product doesn‘t become the preferred brand in a marketplace, you’ll typically experience a decline. Sales will decrease during the heightened competition, which is hard to overcome.
Decline also occurs when products become outdated or less relevant as newer technologies enter the market. Consumers may turn to more advanced options, rendering the declining product less desirable.
If a company is at this stage, it’ll either discontinue its product, sell the company, or innovate and iterate on its product in some way.
Here are a few examples of products in the decline stage:
CDs and cassette tapes
Landline telephones
DVDs
The best companies will usually have products at several points in the product life cycle at any given time. Some companies look to other countries to begin the cycle anew.
What is new product development
New product development (NPD) is the process of creating a new product, service, or technology for the market. It’s a complex, iterative process that involves multiple stages, from idea to launch, and requires the participation of many different departments
Various stages of New Product Development
When a company develops a new product, it cannot just hope that the product will be a success in the market. It is essential for the company to understand its customers, markets, and competitors before developing a product to deliver superior value to customers. For this, the company must carry out a strong new product development process. The eight major steps of the new product development process are as follows:
1. Idea Generation
Idea generation refers to brainstorming new product ideas or strategies to innovate an existing product. The different internal and external sources through which a company generates ideas for a new product are customers, distributors, suppliers, competitors, etc. Before creating any product, companies evaluate market conditions, perform studies, understand the users’ wants and needs, and then suggest possible solutions. SWOT analysis is a very effective technique to discover the weak aspects of the product as well as to explore where significant opportunities exist. A SWOT Analysis is a framework to evaluate the organisation’s Strengths, Weaknesses, Opportunities, and Threats. At last, this stage aims to generate as many ideas as possible which are feasible and deliver value to consumers. The need for high-quality photography among consumers, for instance, can inspire a mobile phone maker to develop the idea of a smartphone with a novel camera system.
2. Idea Screening
The second stage is called Idea Screening. This stage involves screening and reviewing all of the ideas generated in the first step and selecting only those with the best probability of success. Many factors are kept in mind while deciding which ideas to accept and which to reject. These factors include projected advantages to consumers, necessary product innovations, technical viability, and feasibility for marketing. The stage of idea screening is best performed within the company. Experts from several teams also assist the company in assessing the requirement of resources, the need for technology, and the marketability of the proposal. For instance, an automobile manufacturer may evaluate potential concepts for electric vehicles before manufacturing electric cars while considering factors, like the availability of batteries, their affordability, and how well they would appeal to consumers.
3. Concept Development and Testing
After all the ideas pass through the stage of idea screening, these ideas are evolved into concepts. A product concept is a detailed version of the product idea and contains a precise explanation of the idea. It should highlight the target audience, the pricing for the product, and the characteristics and advantages of the product that could be valuable for the customers. Generating various product concepts assist the companies in determining how attractive each concept is to buyers and selecting the one that will bring them the most value. Once the concepts are generated, they are tested within a select group of consumers. Concept testing is a great technique for validating product ideas with users before committing time and resources to develop them. For instance, any business producing sportswear products might create a concept for a light running shoe and seek opinions from athletes concerning the product’s comfort, toughness, and design.
4. Marketing Strategy Development
Once a concept is selected and well-validated, it is essential to develop a preliminary marketing strategy to launch the product to the market based on the product concept and assess the worth of the product from a business point of view. The marketing strategy helps in deciding pricing, positioning, and promoting the product. A marketing strategy statement includes three parts:
The first part of the statement describes the target market, the firm’s planned value proposition, and its sales, market share and profit goals for the first few years.
The second part of the statement includes the product’s planned price, its distribution, and marketing budget for the first year.
The last part of the statement consists of the planned long-run sales, marketing mix strategy, and profit goals.
Once the marketing strategy has been developed, product management can assess the economic desirability of the product.
5. Business Analysis
Once the marketing strategy has been developed it is important to assess the worth of the product from a business point of view. An assessment of the sales projections, estimated expenses, and anticipated profits are included in the business analysis. And, If they meet the goals of the company, the product can proceed to the product development stage. For instance, a food company would assess the profitability of a new snack by looking at the expenses associated with ingredient sourcing, production, packaging, and distribution.
6. Product Development
The next stage is Product Development. In this stage, the R&D or engineering department converts a product concept into a physical product. This step involves a huge jump in investment as it shows whether or not the product idea can be turned into a workable product. The R&D Department tries to design a prototype to satisfy customer needs and excite them in buying the product, and can also be produced quickly and within budget. For this, the department runs tests on one or more physical versions of the product concept. Development of a successful prototype may take time (days, weeks, months, or even years). The companies can do product testing on their own or can outsource testing from a third party/firm which specialises in testing. For instance, a tech business might create test versions of a new smartwatch, evaluate how well it works, and then make design changes that can satisfy the customer’s needs.
7. Test Marketing
The next step is Test Marketing. Test Marketing refers to the process of testing the product and marketing program in realistic market settings. With this step, the marketer can have the experience of marketing the product in the market at a small scale before spending huge money on its full introduction. Simply put, test marketing lets the organisation test its product and its marketing program including targeting, positioning strategy, distribution, advertising, branding, pricing, packaging, and budget levels.
The cost of performing test marketing can be high, and as it takes time, it can give The need for test marketing and the level of test marketing varies with the product. When the cost of developing and introducing the product is low, or when the management is confident about the product’s success, the company may do no or little test marketing. However, when the introduction of a new product requires a big investment, risks are high, or when the management is not confident about the product and its marketing program, it may do a lot of test marketing. For instance. a cosmetics company might launch a new skincare product in a particular area and collect information on consumer reaction, usage trends, and sales.
8. Product Launch
At the final stage, companies are now prepared to launch the new product onto the market. For a successful launch, a company must ensure that the product, marketing, sales, and support teams are well-placed and should keep good track of its performance. Companies must frequently monitor and evaluate the success of the product launch and make modifications if it fails to accomplish the expected goals. For instance, a software provider might monitor sales, client feedback, and user satisfaction polls to assess the effectiveness of a recently introduced productivity tool.
Define Brand
A brand is the perception or identity that a company, product, or individual establishes in the minds of consumers. It encompasses the name, logo, design, messaging, and overall experience that differentiates it from others. A brand is more than just a logo or a product; it’s the emotions, associations, and values that customers connect with.
Key elements of a brand include:
Brand Identity: Visual and verbal elements like logos, colors, and taglines.
Brand Image: How the public perceives the brand.
Brand Promise: What consumers expect to receive from the brand.
Brand Values: The principles and ideals the brand stands for.
Brand Loyalty: The attachment consumers develop to a particular brand.
Essentials of a Good Brand Name
A good brand name is crucial for a company’s identity and plays a significant role in attracting and retaining customers. Here are the essentials of a good brand name:
1. Memorability
- The name should be easy to remember and recognize. Simplicity helps consumers recall the brand quickly, making it more likely for them to return.
2. Simplicity
- A short, simple name is easier to pronounce, spell, and understand. Complicated or long names can be confusing and difficult to remember.
3. Uniqueness
- A good brand name stands out from the competition. It should be distinctive and not easily confused with other brands in the same market.
4. Relevance
- The name should reflect the brand’s mission, values, or the products/services offered. It should give some idea of what the business is about or resonate with its target audience.
5. Scalability
- The name should allow for growth, so it remains relevant even if the company expands its product line or enters new markets. It shouldn’t limit future business opportunities.
6. Positive Connotations
- A good brand name carries positive associations and evokes good feelings. It should avoid negative or confusing meanings, especially in different languages or cultures.
7. Adaptability
- The name should be versatile enough to work across different platforms, whether digital (websites, social media) or physical (packaging, signage).
8. Legally Available
- It is essential that the name is not already trademarked or in use by another company. It must be legally available to avoid conflicts and protect the brand.
9. Emotional Connection
- A strong brand name can evoke an emotional response or connection, making it more appealing to customers. Names that tap into customers’ values, desires, or emotions can foster brand loyalty.
10. Consistency with Brand Identity
- The name should align with the overall brand strategy, including the brand’s tone, personality, and positioning. It should fit the image the company wants to project.
Define Labeling
Labeling
Labeling refers to the process of attaching or printing informative labels on a product. These labels typically provide important details about the product, such as its name, contents, ingredients, usage instructions, expiration dates, manufacturer information, and legal warnings. Labeling is a crucial aspect of marketing and regulatory compliance because it communicates vital information to consumers and helps them make informed purchasing decisions.
Key functions of labeling:
- Product Identification: Helps consumers recognize the product.
- Information Provision: Offers details like ingredients, usage, and instructions.
- Legal Compliance: Meets regulatory requirements such as safety warnings or nutritional facts.
- Branding: Conveys brand identity through logos, designs, and messaging.
Define Packaging
Packaging
Packaging is the process of designing and producing containers or wrappers for a product. It serves both practical and promotional purposes, protecting the product from damage during transportation and storage, while also serving as a marketing tool. Good packaging not only preserves the product’s quality but also attracts potential customers through design and functionality.
Key functions of packaging:
- Protection: Safeguards the product from physical damage, contamination, and spoilage.
- Convenience: Makes the product easy to handle, transport, and store.
- Promotion: Serves as a tool to market the product through attractive design, branding, and messaging.
- Differentiation: Distinguishes the product from competitors with unique packaging designs.
- Information: Displays essential product information, much like labeling.
Thanks a lot for these notes. It helps a lot during the exams.