BA 590BA 590

New Product Development and

Sales

PlaceProduct PricePromotion

Brand

Type of Brand:Individual or family

Manufacturer or dealer

ProductIdea

Physicalgood/service

FeaturesQuality levelAccessoriesInstallationInstructionsProduct line

Warranty

None, full, orlimited

Package

Protection,Promotion,

or both

Target Market

8-3

Exhibit 8-1

Defining “Product”

Exhibit 13-7Time13-14

The Adoption CurveP

erce

nt

Ad

op

tio

n

Innovators(3-5%)

EarlyAdopters(10-15%)

EarlyMajority

(34%)

LateMajority

(34%)

Laggards/Nonadopters

(5-16%)

05

20

50

90

The Adoption CurveThe Adoption Curve

• Innovators: • First to Adopt, Eager to Try• Young, Well-Educated, Mobile• Seek Info from non-salesperson Sources

• Early Adopters• Opinion Leaders• Greater Contact with Salespeople• Word-of-Mouth

The Adoption CurveThe Adoption Curve

• Early Majority: • Avoid Risk, Try Only if Others Have

Usually are Not Opinion Leaders

• Late Majority:• Cautious About New Ideas, Older

and More Set in Their Ways• More Subject to Peer Pressure

The Adoption CurveThe Adoption Curve

• Laggards:• Suspicious of New Ideas• Do Things the Way that They Have

Always Been Done

The Product Life Cycle

9-3

Exhibit 9-1

Total IndustryProfit

+

–

$ 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Total IndustrySales

Defining ProductDefining Product

• High Physical Good Emphasis• Nails, Soup

• Medium Physical Good Emphasis/Medium Service Emphasis:• Restaurant Meal, Automobile Tune-up

• High Service Emphasis:• Financial Services, Hair Cut, Postal

Service

ConsumerProductClasses

Convenience

Specialty

Unsought

Shopping

8-4

Consumer Product Classes

Product LinesProduct Lines

• Product Assortment: All Products and Product Lines in a Firm

• Product Lines: Individual Products that are Closely Related

• Individual Products: Particular Products in a Product Line

Oakley Product AssortmentOakley Product Assortment

Oakley Product LineOakley Product Line

Individual ProductIndividual Product

3-Minute Drill3-Minute Drill

• Identify a New “Individual Product” or “Individual Service” that is Part of an Existing Product Line. Explain Why it Would be Successful• Example: Kodak has a Product Line of

Disposable Cameras. A Possible New “Individual Product” Would be a Disposable

Digital Camera. 1-5

The Product Life Cycle

9-3

Exhibit 9-1

Total IndustryProfit

+

–

$ 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Total IndustrySales

Introducing NewProducts

Managing MatureProducts

Future Adaptation

New Markets

Dying Products

Budget / Rate of Growth

Persuasion / Less Profit

New or Improve?

New Strategies

Phase Out

Focus:

Focus:

Focus:

Focus:

Focus:

Planning for Life Cycle Stages

9-4

IdeaGeneration

Ideas from:Customers and usersMarketing

researchCompetitorsOther

marketsCompany

peopleMiddlemen

Screening

Strengthsand

WeaknessesFit with

objectivesMarket

trendsRough ROI

estimate

IdeaEvaluation

Concepttesting

Customerreactions

Roughestimatesof cost, sales,

profits

Development

R & DDevelop

model orserviceprototype

Testmarketingmix

Revise plansas needed

ROI estimate

Commercial-ization

Finalizeproduct andmarketingplan

Startproduction

and marketing

“Roll out” in selectmarkets

Final ROIestimate

9-5

Exhibit 9-4

New-Product Development Process

Long-RunConsumer

Welfare

Immediate Satisfaction

DesirableProducts

PleasingProducts

SalutaryProducts

DeficientProducts

High Low

High

Low

Types of New Product Opportunities

9-6

Exhibit 9-5

KeyIssues

Top LevelSupport

Market-GuidedR & D

Authority

9-7

New-Product Development Management

Total Quality Management

Cost of Defects

Empowerment

ContinuousImprovement

CustomerFocus

ManagementLeadership andreturn on quality

Quality tools,benchmarking,

and the like

TQMTQM

9-8

NPD At Briggs and StrattonNPD At Briggs and Stratton

• Are There Any Advantages to Holding Off International Distribution of the Quattro Engine?

• What Does Maturity in the Mower Market mean for B & S?

• Should B & S Develop Their own Line of Lawn Mowers?

Promotion Promotion

• Sales Promotion

• Personal Selling

1-5

Exhibit 13-113-3

Basic Promotion Methods

TargetMarketTargetMarket

PricePricePromotionPromotionPlacePlaceProductProduct

SalesPromotion

SalesPromotion

PersonalSelling

PersonalSelling

PublicityPublicityAdvertisingAdvertising

MassSellingMass

Selling

Exhibit 13-2

Aimed at middlemen

Price dealsPromotion allowancesSales contestsCalendarsGiftsTrade ShowsMeetingsCatalogsMerchandising aids

Aimed at finalconsumers or users

ContestsCouponsAisle displaysSamplesTrade showsPoint-of-purchase materialsBanners and streamersTrading stampsSponsored events

Aimed at company’sown sales force

ContestsBonusesMeetingsPortfoliosDisplaysSales aidsTraining materials

13-4

Sales Promotion Activities

0

Price

Quantity

D

0

Price

Quantity 0

Price

Quantity

D2

D1 DD

D

B. to the rightA. To be more elastic C. Both to the right and more elastic

13-8

Promotion and the Demand Curve

Exhibit 13-4

Feedback

ReceiverDecodingMessagechannelEncodingSource

Noise

13-10

The Traditional Communication Model

Encoder

Decoder

Commonframe ofreference

The same message may be

interpreted differently by the encoder and the

decoder

13-11

Message Interpretation

Push-Pull Strategies

Exhibit 13-6

WholesalerPromotion

Push

WholesalerPromotion

Push

RetailerPromotion

Push

FinalConsumer

Pull

BusinessCustomer

Pull

Pro

mo

tio

n t

oB

us

ine

ss

Cu

sto

me

rsP

rom

otio

n to

Fin

al C

usto

mers

Promotion toChannel Members

Producer’s Promotion BlendPersonal Selling, Sales Promotion, Advertising, Publicity

13-13

Setting the Promotion Budget

Task Method!Task Method!

Uncommitted Resources?Uncommitted Resources?

Per Unit?Per Unit?

Match Competitors?Match Competitors?

Percentage of Sales?Percentage of Sales?

????????????????????????????????????????

13-15

Exhibit 14-1

SalesPromotion

Mass Selling

PersonalSelling

Target Market

PricePricePromotionPromotionPlacePlaceProductProduct

Personal selling

techniques

Compensation and motivation

approach

Selection and training

procedure

Number and kind of

salespersons needed

14-3

Strategy Planning for Personal Selling

SupportingSupporting

Order-TakingOrder-Taking

Order-GettingOrder-Getting????????????????????????????????????????????????????????????

14-4

Basic Sales Tasks

Basic Sales TasksBasic Sales Tasks

• Order Getting• Establishing Relationships with New

Customers and New Businesses

• Order Taking• Sell to Regular or Established Customers,

Complete Most Transactions, Maintain Relationships

• Supporting• Missionary and Technical Specialists

SupportingSupporting

Order-TakingOrder-Taking

Order-GettingOrder-Getting????????????????????????????????????????????????????????????

14-4

Basic Sales Tasks

Types of Sales PresentationsTypes of Sales Presentations

• Prepared Sales Presentation• Memorized Presentation for All• Useful for Quick Training, Lower Skill

Levels

• Consultative Selling Approach• Understanding the Customer’s Needs

Before Attempting to Close• Acts as a Consultant to Identify and

Solve the Customer’s Problems

Types of Sales PresentationsTypes of Sales Presentations

• Buying Formula Approach• Starts With Prepared Presentation

Approach• Leads Customer Through Logical Steps• Final Close

Exhibit 14-3

Evaluate needs of established customers

Prospect for new customer

Set effort priorities

Select target customer

Preplan sales call and presentation(s)

Make sales presentation

Close sale

Follow up to establish

Follow up to maintain

Fee

db

ack

14-8

Steps in the Personal Selling Process

QuestionsQuestions

• What Strategy Decisions are Needed in the Personal Selling Area? Why Should the Marketing Manager Be Involved?

Major Accounts

Telemarketing

Sales Territory

Sales Force Size

Large Customers

Quick, Inexpensive

Geographic Area

Work Load

Focus:

Focus:

Focus:

Focus :

14-5

Salesforce Structure

KeyComponents

JobDescription

Level of Compensation

Method ofPayment

Training

14-7

Selecting, Training, and Motivating

Compensating and MotivatingCompensating and Motivating

• Two Basic Decisions• Level of Compensation• Method of Compensation

• Method Of Compensation• Straight Salary• Straight Commission• Combination Plan

14-9

Consultative Selling Approach

Selling FormulaApproach

PreparedApproach

ThreePresentationApproaches

Types of Presentation Approaches

Types of Sales PresentationsTypes of Sales Presentations

• Prepared Sales Presentation• Memorized Presentation for All• Useful for Quick Training, Lower Skill

Levels

• Consultative Selling Approach• Understanding the Customer’s Needs

Before Attempting to Close• Acts as a Consultant to Identify and

Solve the Customer’s Problems

Types of Sales PresentationsTypes of Sales Presentations

• Buying Formula Approach• Starts With Prepared Presentation

Approach• Leads Customer Through Logical Steps• Final Close

Branding

Rejection

Nonrecognition

Recognition

Preference

Insistence

Change Position

Increase Awareness

Continue Education

Maintain Availability

Develop High Brand Equity

Focus:

Focus:

Focus:

Focus :

Focus :

8-6

What Kind of Brand to Use?

Generic

FamilyBrand

IndividualBrand

BrandingChoices

Manufacturer Dealer

??

?

?

? ?

?

8-7

Convenient packages are easier to use, making purchase decisions easier for the customer as well.

8-8

The Strategic Importance of Packaging

A warranty says the company stands behind the product. Consumers often feel more comfortable with products they know come with assurances.

Warranty

8-9

Using Warranties to Improve the Marketing Mix