Friday, March 16, 2012
Tuesday, February 8, 2011
New Product Dev.
New Product Development enables you to:
• Track all projects in New Product Portfolio, and Research and Development Portfolio
• Prioritize effectively
• Make better prioritization decisions
• Optimize product portfolio balance - by market, stage, technology, strategy etc
• Focus resources on the winning projects
• Reduce time to market
• Increase competitive advantage
The new product development process has been conceived in discreet terms with a beginning and an end. Different companies and different industries may alter this seven-step process for different products, or the steps themselves may become blurred as companies become engaged in several stages at the same time.
The process begins with idea generation. For every successful new product, many new product ideas are conceived and discarded. Therefore, companies usually generate a large number of ideas from which successful new products emerge.
Idea screening, the second step, considers all new product ideas in the idea pool and eliminates ones that are perceived to be the least likely to succeed. Not only should the firm's manufacturing, technology, and marketing capabilities be evaluated at this stage, but also how the new idea fits with the company's vision and strategic objectives.
The third stage, concept development and testing, requires formal evaluations of the product concept by consumers, usually through some form of marketing research. New product ideas with low concept test scores are discarded or revised. While the Internet is making it easier to gather consumer data, there are limitations. As people get deluged with an increasing number of surveys and solicitations, it is possible that they will grow tired of helping marketers.
The business analysis stage is next. At this point the new product idea is analyzed for its marketability and costs. After passing the first three stages an idea may be discarded once marketing and manufacturing costs are analyzed, due to limited potential for profitability or commercial success. Throughout these four stages, the new idea has remained on paper with a relatively small investment required.
The fifth stage, prototype development, is the first stage where new product costs begin to escalate. Because of this, many companies have placed greater emphasis on the first four stages and reduced the proportion of new products that reach the prototype stage from about 50 percent to around 20 percent. At this stage the concept is converted into an actual product. A customer value perspective during this phase means the product is designed to satisfy the needs expressed by consumers. Firms may use quality function deployment (QFD) as they develop the prototype. QFD links specific consumer requirements such as versatility, durability, and low maintenance with specific product characteristics (for example, adjustable shelves, a door-mounted ice and water dispenser, and touch controls for a refrigerator). The customer value perspective requires the new product to satisfy customer needs and meet desired quality levels at specified production costs.
Test marketing tests the prototype and marketing strategy in simulated or actual market situations. Because of the expense and risks associated with actual test markets, marketers use them with caution. Products that test poorly are pulled back and reconceptualized or discarded.
Commercialization, the final stage, is when the product is introduced full scale. The level of investment and risk are highest at this stage. Consumer adoption rates, timing decisions for introduction, and coordinating efforts with production, distribution, and marketing should be considered.
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• Track all projects in New Product Portfolio, and Research and Development Portfolio
• Prioritize effectively
• Make better prioritization decisions
• Optimize product portfolio balance - by market, stage, technology, strategy etc
• Focus resources on the winning projects
• Reduce time to market
• Increase competitive advantage
The new product development process has been conceived in discreet terms with a beginning and an end. Different companies and different industries may alter this seven-step process for different products, or the steps themselves may become blurred as companies become engaged in several stages at the same time.
The process begins with idea generation. For every successful new product, many new product ideas are conceived and discarded. Therefore, companies usually generate a large number of ideas from which successful new products emerge.
Idea screening, the second step, considers all new product ideas in the idea pool and eliminates ones that are perceived to be the least likely to succeed. Not only should the firm's manufacturing, technology, and marketing capabilities be evaluated at this stage, but also how the new idea fits with the company's vision and strategic objectives.
The third stage, concept development and testing, requires formal evaluations of the product concept by consumers, usually through some form of marketing research. New product ideas with low concept test scores are discarded or revised. While the Internet is making it easier to gather consumer data, there are limitations. As people get deluged with an increasing number of surveys and solicitations, it is possible that they will grow tired of helping marketers.
The business analysis stage is next. At this point the new product idea is analyzed for its marketability and costs. After passing the first three stages an idea may be discarded once marketing and manufacturing costs are analyzed, due to limited potential for profitability or commercial success. Throughout these four stages, the new idea has remained on paper with a relatively small investment required.
The fifth stage, prototype development, is the first stage where new product costs begin to escalate. Because of this, many companies have placed greater emphasis on the first four stages and reduced the proportion of new products that reach the prototype stage from about 50 percent to around 20 percent. At this stage the concept is converted into an actual product. A customer value perspective during this phase means the product is designed to satisfy the needs expressed by consumers. Firms may use quality function deployment (QFD) as they develop the prototype. QFD links specific consumer requirements such as versatility, durability, and low maintenance with specific product characteristics (for example, adjustable shelves, a door-mounted ice and water dispenser, and touch controls for a refrigerator). The customer value perspective requires the new product to satisfy customer needs and meet desired quality levels at specified production costs.
Test marketing tests the prototype and marketing strategy in simulated or actual market situations. Because of the expense and risks associated with actual test markets, marketers use them with caution. Products that test poorly are pulled back and reconceptualized or discarded.
Commercialization, the final stage, is when the product is introduced full scale. The level of investment and risk are highest at this stage. Consumer adoption rates, timing decisions for introduction, and coordinating efforts with production, distribution, and marketing should be considered.
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Tuesday, November 16, 2010
STP-SEM I
Identifying Market Segments and Target Market Positioning
A market segment consists of a group of customers who share similar needs, preferences and buying habits. Market segmentation is a process of dividing the total market for a good or service into several smaller groups such that the members of each group are similar with respect to the factors that influence demand. A major element in a company's
success is the ability to segment its market effectively.
A target market consists of a group of customers (people or organisation) whether large or small; for whom the seller designs a particular marketing mix.
Undifferentiated Marketing and Differentiated Marketing
There are three quite distinct approaches to marketing strategy:
- Undifferentiated or mass marketing
- Product-variety or differentiated marketing
- Target or concentrated marketing
Undifferentiated or Mass Marketing- Ex Bajaj Scooters
Differentiated Marketing: Ex Coca-Cola for many years produced only one type of drink for the entire market
but subsequently they came to the market with wider variety of taste, which are packaged
in a number of different sizes and types of containers.
Segment Marketing: The car market has several segments from entry level low cost car to luxury sedan (A, B, C, D, E - segments). Segment marketing offers several benefits over mass marketing. A company can create a more fine-tuned product or service offering and price it according to the target segment.
Niche Marketing: Ex IIM’s programme for Family Business Owners, Harley Davidson
Variables that can be used to segment consumer markets
Geographic: - region, climate, population density (nations, states, regions, countries, cities of metro size, neighbourhoods, density, climate, attitude ,etc
Demographic:- age, sex, education, occupation, religion, race, nationality, family size, family lifestyle.( age, sex, family size, family life cycle, income, occupation, education, religion, race, generation, social class and nationality)
· Psychographic: - personality, lifestyle, VALS, AIO
§ Self Respect
§ Self Fulfillment
§ Security
§ Sense of belonging
§ Excitement
§ Sense of Accomplishment
§ Fun & Enjoyment in Life
§ Being well respected
§ Having warm relationships
· Behavioural: - attitude, knowledge, benefits, user status, usage rate, loyalty status, readiness to buy, occasions
· Occasion Segmentation: Dividing the market into groups according to occasions when buyers activate their buying process and actually make the purchase. For example festival market, marriage market, anniversary market, etc.
· Benefit Segmentation: Dividing the market into groups according to the different benefitsthat consumers seek from the product. For example economy segment, cosmetic segment, segment for medicinal toothpaste
Targetting:
Single Segment
S1 | S2 | S3 | |
P1 | |||
P2 | X | ||
P3 |
EXAMPLE: McDonalds, McDonald's on fast-food, Volkswagen on small car, Porsche on sports car. |
Selective specialization
| <> | S1 | <>S2 | <>S3 | <>
P1 | <>X | <><> | <> |
P2 | <><> | <> | X | <>
P3 | <><> | X | <><> |
Ex: FM appeals to both younger and older listeners, Land Rover produce vehicle for agricultural and military market, Birla White Cement & putty |
Product Specialization
S1 | S2 | S3 | |
P1 | |||
P2 | X | X | X |
P3 |
Ex: Maruti on car
Market Specialization
S1 | S2 | S3 | |
P1 | X | ||
P2 | X | ||
P3 | X |
Ex Peerless in West Bengal,
Full Market Specialisation
Ex IBM , Coca Cola, Tata Motors(Nano to high end JLR)
What is Positioning?
According to Al Ries and Jack Trout, "Positioning starts with a product, a piece of merchandise, a service, a company, an institution or even a person… but positioning is not what you do to a product.
Positioning is what you do to the mind of a prospect.
That is, you position the product in the mind of the prospect".
Here the marketer does not stress much on changing the product but by changing the perception of the consumer.
The competitor may have three alternatives:
o To strengthen its own current position.
o To grab an unoccupied position.
o To deposition or reposition the consumers' brand.
Ries and Trout also argued that in an over advertised society, only the brands having top-of- the-mind (TOM) awareness with the customers will survive the competition. Therefore, the company should try to position themselves as product leader, largest firm, cheapest product, fastest delivery, etc.
A company must decide how many ideas (benefits, features etc.) to convey in its positioning to its target customers. Many marketers advocate promoting only one central benefit.
The brand should tout itself as "number one" on the benefit it selects. Number one positioning includes 'best quality', 'best performance', 'best service', 'lowest price', 'safest', 'fastest' etc.
For example, an automobile can be positioned as a
· most fuel efficient,
· cheapest in its category, and
· providing best service.
Nevertheless a company must be very careful to avoid the major positioning errors:
Under Positioning: When the brands disposition is so vague that it is seen as just another entry in a crowded marketplace.
Over Positioning: Buyers may have too narrow an image of the brand and they may think it to be unaffordable for them.
Confused Positioning: Buyers might have a confused image of a brand resulting from company's making too many claims or changing the brand's positioning too frequently e.g., Steve Jobs - Next desktop.
Doubtful Positioning: Buyers may find it hard to believe the brand claims in view of the product's features, price or manufacture. Solving the positioning problems enables the company to solve the marketing-mix problem.
Seizing the 'high-quality positioning' requires the firm to produce high-quality product, charge a high price, distribute to high-class dealers, and advertise in high quality magazines.
Broad Positioning can be done as
§ Product leader
§ Operational Excellence &
§ Customer intimacy
A company can also choose a unique brand positioning from several positioning possibilities such as:
· Source Positioning
o Attribute positioning
o Benefit positioning
o Application positioning
o User positioning
o Competition positioning
o Product category positioning
· Superlative Positioning
o Best
o Most
o Least
o Biggest
o First
o _____est
· Quality
· Price positioning
o More for More
o More for the Same
o The Same for Less
o Less for Much Less
o More for Less
After a company has identified a number of alternative positioning platforms : technology, cost, quality and service, the company has to compare its standing on each positioning platform against its major competitors and then choose those platforms where it will be able to improve substantially better than the competitors. So, a technical service provider
company can improve its service and position itself as 'technical service leader' rather than a 'technology leader'.
The company should communicate the brand's positioning through a positioning statement.
Once the company has developed the clear positioning statement, it must communicate that positioning through all the elements of the marketing mix.
Quality is also communicated through other marketing elements; e.g., a high price usually signals a premium quality product.
A manufacturer's reputation also contributes to the perception of quality. As important as positioning to a company's success, most ads fail to communicate the company or the brand positioning.
Monday, October 18, 2010
Business Models
Business Model
Definition:
• Business Model
Business Model describes details of planned activities in business that involve with
· purpose,
· offerings,
· strategies,
· infrastructure,
· organization structures,
· trading practices,
· operational processes, and
· policies
designed to result in profits in a marketplace.
Business model is very important because business model is a main component of business plan and every good business must have a business model.
• Business Plan
Business plan is a formal statement that describes objectives of a company and how the company will achieve those objectives. And business plan also describes the company’s business model.
• E-commerce business model
E-commerce business model aims to use and leverage unique qualities of Internet and Web.
E-commerce business model aims to use and leverage unique qualities of Internet and Web.
Key elements of business model:
Business model composes of different parts of activities that organizations use to earn revenues and there are 8 key elements of business model as following: (for most of the case study, students need to indentify the following key elements)
Laudon and Laudon (2009)
1. Value proposition
Value proposition describes the unique value of a company offers to its customers that can fulfill the needs of them. There are some questions that a company has to ask itself in order to create the value proposition such as:
• Why will customers want to do business with you instead of others?
• What can attract customers to buy your products or services?
• What does your company provide that others cannot?
• What can set your company different from your competitors?
• What can attract customers to buy your products or services?
• What does your company provide that others cannot?
• What can set your company different from your competitors?
For example: Why do customers choose to use Google instead of Yahoo or MSN?
What are advantages of Google over its rivals?
What are advantages of Google over its rivals?
Examples of successful value propositions:
• Personalization/ Customization
• Reduction of product search costs
• Reduction of price discover costs
• Facilitation of transactions by managing product delivery
• Personalization/ Customization
• Reduction of product search costs
• Reduction of price discover costs
• Facilitation of transactions by managing product delivery
Therefore, values proposition represents a company’s uniqueness over its competitors. And if the company know its own value proposition for its business, the company is much more likely to succeed because the value proposition will separate the company from its competitors.
2. Revenue Model
Revenue model is the most important element of business model in professor’s opinion because revenue model describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital.
There are 5 major types of e- business revenue model as follows:
• Advertising revenue model
• Subscription revenue model
• Transaction fee revenue model
• Sales revenue model
• Affiliate revenue model
• Subscription revenue model
• Transaction fee revenue model
• Sales revenue model
• Affiliate revenue model
Example:
• What would be the revenue model for Google? AdWords and AdSense
• What would be the revenue model for HP? Sales of products (PC) and service
• What would be the revenue model for Microsoft?
Software and service
Software and service
Laudon and Laudon (2004)
Advertising Revenue Model
The Advertising Revenue Model is very famous for e-commerce business and this type of revenue model is implemented from the business model of newspapers. The idea of this revenue model is to offer and sell space to companies or individuals that want to put their advertisings in the space over the internet such as Google, Yahoo, MSN, and Ask.com. These companies make money through the advertising revenue model.
For example, Google earns most of the revenue from “Google AdWords”. Google Adwords is a pay per click advertising program of Google that created for advertisers who want to post their advertisements to attract people who are looking for some information that advertisers offer. According to OrganicSpam.com, when a user searches Google's search engine, ads for relevant words are shown as “sponsored link” on the right side of the screen, and sometimes above the main search results.
Google- AdWords Advertising Revenue Model for Google.com
Yahoo - An Advertising Revenue Model for Yahoo.com
Subscription Revenue Model
The idea of this revenue model is that a customer has to pay a subscription price in order to have access to the products or services. The model was first used in magazines and newspapers businesses but it is currently used by various types of businesses and websites such as Xdrive, and yahoo.
For example, Xdrive.com provides online storage for customers to upload their data and keep it on the internet to backup their valuable files. And another example would be companies who produce game online such as SIM and WARCRAFT games that offer game online but users have to subscribe first in order to get the games.
Xdrive – A Subscription Revenue Model
Yahoo – A Subscription Revenue Model for Yahoo Mail Plus
Transaction Fee Revenue Model
Transaction fee revenue model is very famous for B2C, C2C, and also B2B. The idea of this model is to match the buyer and seller together and a company will receive a fee for enabling or executing a transaction. The revenues will base on transaction fees and the amount of transactions. Examples of companies that use this model would be eBay (Become the biggest market in the world), and Paypal.
Participation: Bruno (ID) is both buyer and seller on eBay. He sells iPhone on eBay and buys some computer software on eBay because the price is normally cheaper.
Participation: Choomsak (5110212016) is a buyer on eBay. He bought Mac case on eBay.
eBay – A Transaction Fee Revenue Model
PayPal – A Transaction Fee Revenue Model
Sales Revenue Model
A company that uses sales revenue model generating revenues based on selling goods, information, or services to customers such as Amazon, HP, Microsoft, Apple (product started from PC, iPhone and iTunes) that sell both product and service to the customers.
Amazon - A Sales Revenue Model
Microsoft - A Sales Revenue Model
Affiliate Revenue Model
Affiliate revenue model is a model that can generate revenues by earning commissions from selling products and services of other companies or providing advertisements and links of others companies. And the revenues depend on the numbers of customers that view the links or the advertisements. A lot of big companies also use this type of revenue model such as MyPoints.com, Google (AdSense) eBay, and Amazon.
AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and more recently, video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google).
Source: http://en.wikipedia.org/wiki/AdSense
Source: http://en.wikipedia.org/wiki/AdSense
MyPoints - An Affiliate Revenue Model
3. Market Opportunity
Market Opportunity consists of 2 things which are market value and market share comparing to your competitors.
5 Forces Model is one of the tools that can use to analyze market opportunity. And market opportunity describes needs, wants, or demand trends that a company can take advantage of because they are not being addressed by the competitors. Any company has to be able to identify these questions as following:
• What is your market space?
• What is your market value of products and services?
• What is your market share comparing to your competitors?
• What is your market space?
• What is your market value of products and services?
• What is your market share comparing to your competitors?
For example, Google is a big company who offers search engine. Google has to identify many aspects for finding market opportunity such as:
• What the value for search engine market is
• How much it is
• What Google’s share is, comparing to its competitors
• What the value for search engine market is
• How much it is
• What Google’s share is, comparing to its competitors
Marketspace
Marketspace is area of actual or potential commercial value in which company intends to operate.
Realistic market opportunity
Realistic market opportunity is defined by revenue potential in each of market niches in which a company hopes to.
Example of Market Opportunity
4. Competitive Environment
Competitive environment refers to a company’s external environment that consists of direct and indirect competitors that offer similar products and services and competing in the same market. And 5 forces model is one of the tools that can be used to analyze the competitive environment.
Competitive environment is related to:
• How many active competitors are in the market
• How large of the active competitors’ operations are
• How profitable of these competitors are
• What market share of each competitor is
• How they set up their prices
• How many active competitors are in the market
• How large of the active competitors’ operations are
• How profitable of these competitors are
• What market share of each competitor is
• How they set up their prices
5. Competitive Advantage
A competitive advantage exists when the company is able to gain superiority or an advantage over its competitors by delivering the same products or services as its competitors to the customers but at a lower price or at greater value through differentiation. Therefore, competitive advantage will set the company different from its competitors.
Competitive advantage can refer to:
• The first mover in the market
• Having economy of scale in the company’s operations
• Having a unique organizational culture in the company
• Having access to valuable resources that others do not have
• Unfair competitive advantage
• Perfect market: No competitive advantages or asymmetries
• Leverage: When a company uses its competitive advantage to achieve more advantage in surrounding markets
Competitive advantage can refer to:
• The first mover in the market
• Having economy of scale in the company’s operations
• Having a unique organizational culture in the company
• Having access to valuable resources that others do not have
• Unfair competitive advantage
• Perfect market: No competitive advantages or asymmetries
• Leverage: When a company uses its competitive advantage to achieve more advantage in surrounding markets
6. Market Strategy
Market strategy is a detailed plan that describes a process of how a company intends
to enter a new market and attract customers, and concentrate on how its limited resources can increase sales and achieve a sustainable competitive advantage by fulfilling the customers’ satisfactions. Best business concepts will fail if not properly marketed to potential customers.
to enter a new market and attract customers, and concentrate on how its limited resources can increase sales and achieve a sustainable competitive advantage by fulfilling the customers’ satisfactions. Best business concepts will fail if not properly marketed to potential customers.
Market Strategy is related to:
• How do you plan to promote your products?
• How do you target your customers?
• How do you plan to promote your products?
• How do you target your customers?
7. Organizational Development
Organizational Development can be described as a plan from top-down that relates to how a company organizes beliefs, attitudes, values, and structure of people and the company itself for the positive changing or to accomplish the work. In order to have a good organizational development, the company has to understand the nature of its structure and culture of the company first, and then the company will know what aspects of the organization need to be improved to get the work done and to achieve the success.
• Work is typically divided into functional departments.
• Hiring moves from generalists to specialists as company grows.
• Work is typically divided into functional departments.
• Hiring moves from generalists to specialists as company grows.
8. Management Team
Management team refers to employees in the company who have control in making the business model work. Before the company assigns the management team to work on the business model, it has to know the management team’s background, strong points and weak points in order to get the right management team to control the business model.
• Strong management team gives instant credibility to outside investors.
• Strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary.
• Strong management team gives instant credibility to outside investors.
• Strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary.
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