Product Development and Marketing Strategy

Product Design & Marketing Strategy:

1*Introduction about Product Design & Marketing Strategy:

a.       Basic Idea about Product Development & Marketing Strategy:

Basic Idea about Product Development:
Product development is the process of designing, creating and marketing new products or services to benefit customers. Sometimes referred to as new product development, the discipline is focused on developing systematic methods for guiding all the processes involved in getting a new product to market.
Basic Idea about Marketing Strategy:

There have been a number of approaches proposed for analyzing and responding to the marketing challenges of new product development. Two of these are the eight stages process of Koen^{[clarification needed]} and a process known as the fuzzy front end.

The eight stages

1. Idea Generation is often called the "NPD" of the NPD process.^[15]
   • Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
   • Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms. Many reasons are responsible for generation of an idea.
   • Idea for new product can come from many sources, such as customer, scientists, competitors, employees, channel member, and top management.
   • customer need and wants are the logical place to start the search.
   • Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step).
2. Idea Screening^{[citation needed]}
   • The object is to eliminate unsound concepts prior to devoting resources to them.
   • The screener should ask several questions:
     • Will the customer in the target market benefit from the product?
     • What is the size and growth forecasts of the market segment / target market?
     • What is the current or expected competitive pressure for the product idea?
     • What are the industry sales and market trends the product idea is based on?
     • Is it technically feasible to manufacture the product?
     • Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Idea Development and Testing^{[citation needed]}
   • Develop the marketing and engineering details
   • Product Idea - It is an idea for a possible product that the company can see itself offering to the market.
   • Product Concept - when idea is developed in every aspect so as to make it presentable, it is called a concept.^{[citation needed]}
   • Product Identity - It is the way business perceive an actual or potential product.
     • Investigate intellectual property issues and search patent databases
     • Who is the target market and who is the decision maker in the purchasing process?
     • What product features must the product incorporate?
     • What benefits will the product provide?
     • How will consumers react to the product?
     • How will the product be produced most cost effectively?
     • Prove feasibility through virtual computer aided rendering and rapid prototyping
     • What will it cost to produce it?
   • Testing the Concept - Random people belonging to the target group are chosen to test the concept. Information is provided and questions are asked. Their answers and reactions are noted for further improvement of concept.
4. Business Analysis^{[citation needed]}
   • Estimate likely selling price based upon competition and customer feedback
   • Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation
   • Estimate profitability and break-even point
5. Beta Testing and Market Testing^{[citation needed]}
   • Produce a physical prototype or mock-up
   • Test the product (and its packaging) in typical usage situations
   • Conduct focus group customer interviews or introduce at trade show
   • Make adjustments where necessary
   • Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation^{[citation needed]}
   • New program initiation
   • Finalize Quality management system
   • Resource estimation
   • Requirement publication
   • Publish technical communications such as data sheets
   • Engineering operations planning
   • Department scheduling
   • Supplier collaboration
   • Logistics plan
   • Resource plan publication
   • Program review and monitoring
   • Contingencies - what-if planning
7. Commercialization (often considered post-NPD)^{[citation needed]}
   • Launch the product
   • Produce and place advertisements and other promotions
   • Fill the distribution pipeline with product
   • Critical path analysis is most useful at this stage
8. New Product Pricing^{[citation needed]}
   • Impact of new product on the entire product portfolio
   • Value Analysis (internal & external)
   • Competition and alternative competitive technologies
   • Differing value segments (price, value and need)
   • Product Costs (fixed & variable)
   • Forecast of unit volumes, revenue, and profit

b.      Link Between Product Development & Marketing Strategy

2*Generic Product Development & Design:

a. R & D:


Companies often spend resources on certain investigative undertakings in an effort to make discoveries that can help develop new products or way of doing things or work towards enhancing pre-existing products or processes. These activities come under the Research and Development (R&D) umbrella.

R&D is an important means for achieving future growth and maintaining a relevant product in the market. There is a misconception that R&D is the domain of high tech technology firms or the big pharmaceutical companies. In fact, most established consumer goods companies dedicate a significant part of their resources towards developing new versions of products or improving existing designs. However, where most other firms may only spend less than 5 percent of their revenue on research, industries such as pharmaceutical, software or high technology products need to spend significantly given the nature of their products.

TYPES OF R&D

A US government agency, the National Science Foundation defines three types of R&D.

Basic Research

When research aims to understand a subject matter more completely and build on the body of knowledge relating to it, then it falls in the basic research category. This research does not have much practical or commercial application. The findings of such research may often be of potential interest to a company

Applied Research

Applied research has more specific and directed objectives. This type of research aims to determine methods to address a specific customer/industry need or requirement. These investigations are all focused on specific commercial objectives regarding products or processes.

Development

Development is when findings of a research are utilized for the production of specific products including materials, systems and methods. Design and development of prototypes and processes are also part of this area. A vital differentiation at this point is between development and engineering or manufacturing. Development is research that generates requisite knowledge and designs for production and converts these into prototypes. Engineering is utilization of these plans and research to produce commercial products.

UNDERSTANDING SIMILAR TERMINOLOGY

There are a number of terms that are often used interchangeably. Thought there is often overlap in all of these processes, there still remains a considerable difference in what they represent. This is why it is important to understand these differences.

R&D

The creation of new body of knowledge about existing products or processes, or the creation of an entirely new product is called R&D. This is systematic creative work, and the resulting new knowledge is then used to formulate new materials or entire new products as well as to alter and improve existing ones

Innovation

Innovation includes either of two events or a combination of both of them. These are either the exploitation of a new market opportunity or the development and subsequent marketing of a technical invention. A technical invention with no demand will not be an innovation.

New Product Development

This is a management or business term where there is some change in the appearance, materials or marketing of a product but no new invention. It is basically the conversion of a market need or opportunity into a new product or a product upgrade

Design

When an idea is turned into information which can lead to a new product then it is called design. This term is interpreted differently from country to country and varies between analytical marketing approaches to a more creative process.

Product Design

Misleadingly thought of as the superficial appearance of a product, product design actually encompasses a lot more. It is a cross functional process that includes market research, technical research, design of a concept, prototype creation, final product creation and launch. Usually, this is the refinement of an existing product rather than a new product.

MAKING THE R&D DECISION

Investment in R&D can be extensive and a long term commitment. Often, the required knowledge already exists and can be acquired for a price. Before committing to investment in R&D, a company needs to analyze whether it makes more sense to produce their own knowledge base or acquire existing work. The influence of the following factors can help make this decision.

Proprietariness

If the nature of the research is such that it can be protected through patents or non-disclosure agreements, then this research becomes the sole property of the company undertaking it and becomes much more valuable. Patents can allow a company several years of a head start to maximize profits and cement its position in the market. This sort of situation justifies the cost of the R&D process. On the other hand, if the research cannot be protected, then it may be easily copied by a competitor with little or no monetary expense. In this case, it may be a good idea to acquire research.

Timing

Setting up a R&D wing only makes sense if the market growth rate is slow or relatively moderate. In a fast paced environment, competitors may rush ahead before research has been completed, making the entire process useless.

Risk

Because of its nature, R&D is not always a guaranteed success commercially. In this regard, it may be desirable to acquire the required research to convert it into necessary marketable products. There is significantly less risk in acquisition as there may be an opportunity to test the technology out before formally purchasing anything.

Cost

Considering the long term potential success of a product, acquiring technology is less risky but more costly than generating own research. This is because license fees or royalties may need to be paid and there may even be an arrangement that requires payments tied to sales figures and may continue for as long as the license period. There is also the danger of geographical limitations or other restrictive caveats. In addition, if the technology changes mid license, all the investment will become a sunk cost. Setting up R&D has its own costs associated with it. There needs to be massive initial investment that leads to negative cash flow for a long time. But it does protect the company from the rest of the limitations of acquiring research.
All these aspects need to be carefully assessed and a pros vs. cons assessment needs to be conducted before the make or buy decision is finalized.

BASIC R&D PROCESS

The R&D may take months or years to yield fruitful results. Manufacturers of a variety of products utilize this process for new product development and innovation. Though each company or industry may have its own unique research methodology, a basic research process will form the framework for it.

Foster Ideas

At this point the research team may sit down to brainstorm. The discussion may start with an understanding and itemization of the issues faced in their particular industry and then narrowed down to important or core areas of opportunity or concern.

Focus Ideas

The initial pool of ideas is vast and may be generic. The team will then sift through these and locate ideas with potential or those that do not have insurmountable limitations. At this point the team may look into existing products and assess how original a new idea is and how well it can be developed.

Develop Ideas

Once an idea has been thoroughly researched, it may be combined with a market survey to assess market readiness. Ideas with true potential are once again narrowed down and the process of turning research into a marketable commodity begins.

Prototypes and Trials

Researchers may work closely with product developers to understand and agree on how an idea may be turned into a practical product. As the process iterates, the prototype complexity may start to increase and issues such as mass production and sales tactics may begin to enter the process.

Regulatory, Marketing & Product Development Activities

As the product takes shape, the process that began with R&D divides into relevant areas necessary to bring the research product to the market. Regulatory aspects are assessed and work begins to meet all the criteria for approvals and launch. The marketing function begins developing strategies and preparing their materials while sales, pricing and distribution are also planned for.

Launch

The product that started as a research question will now be ready for its biggest test, the introduction to the market. The evaluation of the product continues at this stage and beyond, eventually leading to possible re-designs if needed.
At any point in this process the idea may be abandoned. Its feasibility may be questioned or the research may not reveal what the business hoped for. It is therefore important to analyze each idea critically at every stage and not become emotionally invested in anything.

CREATING AN EFFECTIVE R&D PROCESS

A formal R&D function adds great value to any organization. It can significantly contribute towards organizational growth and sustained market share. However, all business may not have the necessary resources to set up such a function. In such cases, or in organizations where a formal R&D function is not really required, it is a good idea to foster an R&D mindset. When all employees are encouraged to think creatively and with a research oriented thought process, they all feel invested in the business and there will be the possibility of innovation and unique ideas and solutions. This mindset can be slowly inculcated within the company by following the steps mentioned below.

Assess Customer Needs

It is a good idea to regularly scan and assess the market and identify whether the company’s offering is doing well or if it is in trouble. If it is successful, encourage employees to identify reasons for success so that these can then be used as benchmarks or best practices. If the product is not doing well, then encourage teams to research reasons why. Perhaps a competitor is offering a better solution or perhaps the product cannot meet the customer’s needs effectively.

Identify Objectives

Allow your employees to see clearly what the business objectives are. The end goal for a commercial enterprise is to enhance profits. If this is the case, then all research the employees engage in should focus on reaching this goal while fulfilling a customer need.

Define and Design Processes

A definite project management process helps keep formal and informal research programs on schedule. Realistic goals and targets help focus the process and ensures that relevant and realistic timelines are decided upon.

Create a Team

A team may need to be created if a specific project is on the agenda. This team should be cross functional and will be able to work towards a specific goal in a systematic manner. If the surrounding organizational environment also has a research mindset then they will be better prepared and suited to assist the core team when ever needed.

Outsource

Whenever needed, it may be a good idea to outsource research projects. Universities and specific research organizations can help achieve research objectives that may not be manageable within a limited organizational budget.

ADVANTAGES OF R&D

Though setting up an R&D function is not an easy task by any means, it has its unique advantages for the organization. These include the following.

Tax breaks

Research and Development expenses are often tax deductible. This depends on the country of operations of course but a significant write-off can be a great way to offset large initial investments. But it is important to understand what kind of research activities are deductible and which ones are not. Generally, things like market research or an assessment of historical information are not deductible.

Costs

A company can use research to identify leaner and more cost effective means of manufacturing. This reduction in cost can either help provide a more reasonably priced product to the customer or increase the profit margin.

Financing

When an investor sets out to put their resources into any company, they tend to prefer those who can become market leaders and innovate constantly. An effective R&D function goes a long way in helping to achieve these objectives for a company. Investors see this as a proactive approach to business and they may end up financing the costs associated with maintaining this R&D function.

Recruitment

Top talent is also attracted to innovative companies doing exciting things. With a successful Research and Development function, qualified candidates will be excited to join the company.

Patents

Through R&D based developments, companies can acquire patents for their products. These can help them gain market advantage and cement their position in the industry. This one time product development can lead to long term profits.

R&D CHALLENGES

R&D also has many challenges associated with it. These may include the following.

High Costs

Initial setup costs as well as continued investment are necessary to keep research work cutting edge and relevant. Not all companies may find it feasible to continue this expenditure.

Increased Timescales

Once a commitment to R&D is made, it may take many years for the actual product to reach the market and a number of years will be filled with no return on continued heavy investment.

Uncertain Results

Not all research that is undertaken yields results. Many ideas and solutions are scrapped midway and work has to start from the beginning.

Market Conditions

There is always the danger that a significant new invention or innovation will render years of research obsolete and create setbacks in the industry with competitors becoming front runners for the customer’s business.
It is important for any business to understand the advantages and disadvantages of engaging in Research and Development activities. Once these are studied, then the step can be taken towards becoming and R&D organization.
In the meanwhile, it is good practice to inculcate a research mind set and research oriented thinking within all employees, no matter what their functional area of expertise. This will help bring about new ideas, new solutions and an innovative way of approaching all business problems, whether small or large.

b. Development Process

c. The Life of a Product

The Product Life Cycle

A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix.

The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below:

      Product Life Cycle Diagram

Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows:

• Product branding and quality level is established, and intellectual property protection such as patents and trademarks are obtained.
• Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs.
• Distribution is selective until consumers show acceptance of the product.
• Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product.

Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market share.

• Product quality is maintained and additional features and support services may be added.
• Pricing is maintained as the firm enjoys increasing demand with little competition.
• Distribution channels are added as demand increases and customers accept the product.
• Promotion is aimed at a broader audience.

Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit.

• Product features may be enhanced to differentiate the product from that of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive and incentives may be offered to encourage preference over competing products.
• Promotion emphasizes product differentiation.

Decline Stage

As sales decline, the firm has several options:

• Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
• Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment.
• Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.

The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be maintained if the product is harvested, or reduced drastically if liquidated.

What is the product life cycle?
The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall.

What are the main stages of the product life cycle?
The main stages of the product life cycle are:
Introduction – researching, developing and then launching the product
Growth – when sales are increasing at their fastest rate
Maturity – sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or saturation
Decline – final stage of the cycle, when sales begin to fall
This can be illustrated by looking at the sales during the time period of the product.

Extending the Product Life Cycle
What can businesses do to extend the product life cycle?
Extension strategies extend the life of the product before it goes into decline. Again businesses use marketing techniques to improve sales. Examples of the techniques are:
Advertising – try to gain a new audience or remind the current audience
Price reduction – more attractive to customers
Adding value – add new features to the current product, e.g. improving the specifications on a smartphone
Explore new markets – selling the product into new geographical areas or creating a version targeted at different segments
New packaging – brightening up old packaging or subtle changes

c.       Product Conceptual Design

e. Form & Function

f. Fundamental Rules of Design

Fundamental Rules of Design

•1.Allignment

•2.Repitition

•3.Contrast

•4.Proximity

•5.Balance

•Alignment creates a sharper, more ordered design. Aligning elements allows them to create a visual connection with each other. It tightens the design and eliminates the haphazard, messy effect which comes when items are placed randomly.

•Aligning elements which are not in close proximity with each other, helps to provide an invisible connection between them.

•Alignment is one of the most basic and important principles of design. It allows us to create order and organisation among elements.

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•Repetition strengthens a design by tying together individual elements. It helps to create association and consistency.

•The consistent repetition of an element is widely used in multi-page documents & websites. Elements can be as simple as colour, shapes, typefaces or even texture.

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•Contrast

•Contrast allows you to emphasize or highlight key elements within your design. Contrast is created when two elements are total opposites. This doesn’t necessarily have to be colours either. It can be achieved with fonts (classic/contemporary), lines (thick/thin) and shapes (big/small), just to name a few.

•Contrast plays a crucial part in the organisation of information on a page. It will guide the reader to where they should look first or to the most important element. For it to work successfully though, it must be strong and obvious. It needs to make an impact.

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•Proximity

•Proximity helps creates organization. By grouping similar elements together or in close proximity, you create a relationship between those elements. It also provides a focal point and can give the reader and idea of where they should start and finish reading.

•Proximity doesn’t mean that elements have to be placed together, it means they should be visually connected in someway. This can be by use of point size, font, colour etc…

•Balance

•Balance provides stability and structure to a design. It’s the weight distributed in the design by the placement of your elements. The elements don’t necessarily need to be of the same size. Balance can be achieved by placing a large element on one side of your design and several small elements on the other side.

•Balance can be achieved in 2 ways, either Symmetrical or Asymmetrical.

•Symmetrical balance is achieved when the weight of the elements on both halves of the design is even, given a centre line. Asymmetrical balance is achieved by the use of contrast. A dark element would need to be balanced by several lighter elements.

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g. The Golden Triangle

h. The Design Paradox

i. Design Process Evaluation

3.   *The Role of Product Development in Apparel Supply Chain:

*Strategic Marketing Process:

 

The marketing process

The marketing process consists of four elements: strategic marketing analysis, marketing-mix planning, marketing implementation, and marketing control.

Strategic marketing analysis

Market segments

The aim of marketing in profit-oriented organizations is to meet needs profitably. Companies must therefore first define which needs—and whose needs—they can satisfy. For example, the personal transportation market consists of people who put different values on an automobile's cost, speed, safety, status, and styling. No single automobile can satisfy all these needs in a superior fashion; compromises have to be made. Furthermore, some individuals may wish to meet their personal transportation needs with something other than an automobile, such as a motorcycle, a bicycle, or a bus or other form of public transportation. Because of such variables, an automobile company must identify the different preference groups, or segments, of customers and decide which group(s) they can target profitably.

Market niches

Segments can be divided into even smaller groups, called subsegments or niches. A niche is defined as a small target group that has special requirements. For example, a bank may specialize in serving the investment needs of not only senior citizens but also senior citizens with high incomes and perhaps even those with particular investment preferences. It is more likely that larger organizations will serve the larger market segments (mass marketing) and ignore niches. As a result, smaller companies typically emerge that are intimately familiar with a particular niche and specialize in serving its needs.

Marketing to individuals

A growing number of companies are now trying to serve “segments of one.” They attempt to adapt their offer and communication to each individual customer. This is understandable, for instance, with large industrial companies that have only a few major customers. For example, The Boeing Company (United States) designs its 747 planes differently for each major customer, such as United Airlines, Inc., or American Airlines, Inc. Serving individual customers is increasingly possible with the advent of database marketing, through which individual customer characteristics and purchase histories are retained in company information systems. Even mass-marketing companies, particularly large retailers and catalog houses, compile comprehensive data on individual customers and are able to customize their offerings and communications.

Positioning

A key step in marketing strategy, known as positioning, involves creating and communicating a message that clearly establishes the company or brand in relation to competitors. Thus, Volvo Aktiebolaget (Sweden) has positioned its automobile as the “safest,” and Daimler-Benz AG (Germany), manufacturer of Mercedes-Benz vehicles, has positioned its car as the best “engineered.” Some products may be positioned as “outstanding” in two or more ways. However, claiming superiority along several dimensions may hurt a company's credibility because consumers will not believe that any one offering can excel in all dimensions. Furthermore, although the company may communicate a particular position, customers may perceive a different image of the company as a result of their actual experiences with the company's product or through word of mouth.

*STRATEGY:

a.       Competitive Positioning

b.      Brand Strategy

c.       Distribution Channels

*TOOLS

a.       Naming

b.      Messaging

c.       Corporate Identity

d.      Websites

e.      Sales Tools & Literature

f.        Copy Right & Graphic Design

g.       Vendor Selection

h.      Recruiting

i.         Customer Relationship Management

j.        Customer Lifetime Value

k.       Return On Investment

           

  *PLANNING:

a.       Sales Process

b.      Campaign Process

c.       Marketing plan & process

       *TRADITIONAL

a.       Traditional Media

b.      Direct Mail

c.       Publicity

d.      Tele Marketing

e.      Trade Show & Event

          *DIGITAL:

a.       SEO and SEM

b.      Online Advertising

c.       Social Media

d.      Email marketing

         *MANAGEMENT

a.       Customer Retention

b.      Business Development

c.       Sales Management