THE PROCESS OF PRODUCT PLANNING AND DEVELOPMENT IN MARKETING

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter is concerned with the review of related literature of the subject matter of essay.

2.1 PRODUCT DEFINITION

According to Kotler (p 368 1980) “a product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need, it includes physical object service person place organization and ideas”

Bakar (1980 p 200) define product as everything the purchaser gets in exchange for his money” thus, the money value gives product itself. The contention of these author however stress the fact that a product is not what is seen in the general sense but the whole benefits packed to it that tend to save a particular problem. This justification land credence to the fact that if a company takes too marrow of view of product concept and do not consider the various attributes sought by the consumers their tend to be problem sustaining acceptance for the product.

Cundiff Etal (1980 p125) who defines a product as both what a seller has to sell and which a buyer has to buy” thus any enterprises that has something to sell, tangible goods or not is selling products. For instance laundry sells the service of cleaning clothes and is just as surely engages in selling product as the retail stores that originally sold the cloths it cleans.

They further contend that from sells service as part of the something it sells, a buyer equally buys a mixture not of goods and service, but rather of expected physical and psychological satisfaction. In other words, the buyers buy the total product not the physical product itself.

Stanton (1981 p 183) defines ‘product as a set of tangible and intangible attributes, including packaging colour, price, manufactures and retailers services which the buyer may accept as offering want satisfaction’ viewing product in this perspective Stanton is emphasizing on the features and offer sales services attached to a given product as being the vehicle driving the satisfaction.

From these definitions, it is glaring that a product could be anything that offered to the customers of a price and from when he derives a satisfaction and the company in turn makes profit.

2.2 PRODUCT CONCEPT

According to Kolter (200 p17) hold that consumers will favour those product that offer the most quality performance or innovative features. The product offered by a company is expected to possess all the attribute that consumers are craving for and its ability to meet their expectation. This is the problem many companies faces, some over come this problem by developing the right product that satisfies consumers needs and wants but in most cases many fail to even comprehend how to tacked it.

The development of a product start with the formulation of product idea “A possible product described in objection and functional terms that the company can see itself offering to the marketing but the consumers is not interesting in a product ideas.

Therefore, the product idea most be translated into a product concept that is the particular consumer. In building the product thus subject tiredly comes in. this is because a number of forces into play shape the product concept.However, the product concept is a management believes that consumer will favour product that offer the most quality, performance and innovative, features, thus an organization should devote energy to making continuous product improvement.

2.3 THE PRODUCT MIX AND LINE

The product mix: - Is the range of the company product and brands. In other words, product mix is the complete range of the company’s product services and brands designed for all the relevant target markets and market segments.

The product line: - This includes a group of closely related product that function in a similar manager and sold to the same customer group through the same type outler or fall within given price ranges. For instance, Peugeot Automobile Nigeria (PAN) producer several lines of automobile product which includes:

Peugeot 504 salon

Peugeot 30 salon

Peugeot 607 salon

Peugeot 406 salon

Peugeot boxer bus

Most firms offer a ranger of product line and not just a single product. For instance, for a particular organization. The reason may be as follows:

Risk reduction reason: - To reduce the risk of reliance on a single product.

Profitable reason: -A firm might be able to produce a new item at lower cost because the equipment, labour, expertise already exists within the firm to make the new product.

Competitive reason: - A firm might be able to complete favourable if it have so many brands of product compareto that of rivals products.

2.4 PRODUCT LEVEL COMPOSITION

In planning it market offering, the product planner needs to think levels includes:

1. Core product level
2. Tangible product level
3. Augmented product level

CORE PRODUCT

The core product is the specific benefit in the general part of the product which the buyer is really buying. For example, Peugeot care, the core product in the car is mobility, which comes inform of the engine and its ability to more from one place to another efficiently.

In other word, the core product is the essential utility (satisfaction) or benefit that is being offered to or sought by the buyer. This answer the question what is the buyer really buying

TANGIBLE PRODUCT

This is the physical object or services thus is offered to the target market as the real offer. If it is physical in nature, it may be recognized as having up to five characteristics namely:Quality level, Features, Styling, Brand name and Packing. However, if it is a service, then it may have some of all those characteristics in an analogs manner.

AUGMENTED PRODUCT

These are the additional services and benefits that would be offered along with the tangible product so as to attract customers and help a rapid market penetration. These service or benefit could be in the form of warranties installation customers advices or instruction delivery arrangement e.t.c.

2.5 NEW PRODUCT DEVELOPMENT PROCESS

The new product development process involves the set of all activities that enable a company to determine what product a company will market profitably. The process encompasses the technical activities such a research, engineering and design these activities in term go through major stat of:

1. Idea generation
2. Screening of idea
3. Business analyses
4. Product development
5. Test marketing
6. Commercialization

IDEA GENERATION: - New product development start with an idea, the actual source of new product and new ideas are: the company staff advertising and research agencies conferences and seminar, the company sales representatives opinion, customers and the competitors.

SCREENING OF IDEA: - The idea pruning stage is screening the job of screening is to spot and drop idea as early as possible.The rational is the product development cost rise substantially at each successive stage of the process, in the screening stage therefore a company seeks to avoid two types of errors namely: Drop error and Go error. A drop error occurs when the company dismisses another wise goods idea because of lack of vision of its potentialities. While a go error occurs when the company lets a poor proceed to development and commercialization. If a company makes too many drop error, its standards are obviously too conservative.

BUSINESS ANALYSIS: - under this stage the cost benefit analysis is assessed. The company must estimate the cost that will be incur and sales profitability that will occur to them. The key to whether a product should be developed is whether its sales will be high enough to return satisfactory profit to the company.

PRODUCT DEVELOPMENT: -This is the stage where the product is developed physically or tangibly, three things must be noted under this stage: proto-type, branding and packaging.

PROTO-TYPE: - This is the work of research and development department. It is where the product is produced physically, when the proto-type has been developed the nest thing to check is its physically attributers or functional attributes build into it, where the product perform the function safely, whether the product is produced within the range of budgeting cost estimates.

BRANDING: - Imposes the product concept the specific customers, meaning that the company intends to build into the product. A company may have one brand name or different brand names for different product.

In choosing a brand name, the following point should be considered. The brand should be such that it would suggest the benefit attached to the sue to the product. The brand name should suggest the product quality. The brand name should be easy to pronounce.

PACKAGING: -A packaging simple means a container of a product. It is part of the product it self because it provides protection and economized the product, it is used to promote the product.

TEST MARKETING: - After management is satisfied with the product functional performance. The product move into further test marketing. Test marketing is the stage where the product and marketing programmes are introduced into more authentic consumer setting to learn how will the product will do before making a final decision to launch it in the market place.Test marketing is therefore meant educate such mistake thus preventing the company from high risk of the product failure.

COMMERCIALIZATION: - At this point management has enough information to make a final decision about whether to launch the new product or not.The company may decide to proceed further to commercialize its produce, this calls for full scale launching of new product to the market or the introduction of new product to the market place.

2.6 THE PRODUCT LIFE CYCLE

Just like the life span of an individual human being, product go through a life cycle. They grow in sales volume, then decline and eventually are replaced.Thus means that a product sales position and profitability can be expected to change overtime, the product life cycle is an attempt to recognize the distinct stages in the sales history of company’s production. These stages includes:

1. Introductory stage
2. Growth stage
3. Maturity stage
4. Decline stage

THE PRODUCT LIFE CYCLE

SOURCE:

W.D. STANTON

2.7 FUNDAMENTAL OF MARKETING

INTRODUCTORY STAGE: - This is the first stage in the product life cycle. It coincides with the period when the product is introduced into the market. Many products do no survive this stage because the maturity rate for new product is high. This is the most risky and expensive stage due to high percentage of product failure activities in the introductory stage are characterized by high cost low sales volume and limited distribution, even though there are very few competitors get special or aggressive advertising and promotion must be launched and a great preparation of salesmen and senior marketing personnel must devote their attention to this few product. The promotional programmes should all create awareness as well as stimulate primary demand rather than secondary demand. All these activities involve heavy expensive and costs as such the profit position at the stage is very low.

GROWTH STAGE: - During this stage of the product life cycle, sales rise rapidly as more and more customers accept and buy the product. At this stage, profit figure improve with both sales and profit curves rising often at a rapid rate number of competitors will being to enter the market especially if the profit outlook is very attractive. In promotion, marketer shift their campaign to my brand rather than to buy my product and the intensive distribution strategies is used.

MATURITY STAGE: - The fully established product will face competition from other contenders in the market. Sales may still continue to rise but now at a decreasing rate. Profit for both the manufacturers and the retailers of the product may decline as a result of rising costs (promotion costs) and fail in sales, if care is not taken, in fact industries are forced out of the market. Thus means the objectives at this stage is to maintain and strengthen market position and build loyalty among customers and middlemen.

DECLINE STAGE: - This is the period when sales continue a strong downward drift i.e. sales decline and profits erode to wards. The zero point, during this stage the strategy is for a company to exploit the product to attain all possible profit before making the final decision to eliminate or abandon it. A product at this stage can still be profitable to those marketers that stay in the field. As many competitors have dropped out of the market and the product availability has been out back, the product matches only the needs of the core market and buyers tend to be specialists.

The phenomenon leads the marketer or companies to develop new replacement product.The dying product may be retained for loyal customers while the new replacement product and targeted at new customers segment and serve the existing

one that are more or less innovative.

2.5 REASON FOR NEW PRODUCT FAILURE

There are several reasons that account for the new product failure, some of those reason include the following:

1. Inadequate market analysis: - There are situation where the new product idea may be good, the market size are over estimated, in ability to determined buying motives and habits and misjudgments are to the type of product the market wanted.
2. Straight of competition: - Where competitors may fight harder than expected the new product is bound to fail.
3. Technical or production problem: - This will occur where the companies could not produce sufficient to meet demand, so competition gained an unanticipated share of market.
4. Product deficiencies: - Product poor quality and performance and product that are too complicated and those that have no significant advantage over already competing product in market hardly survive.
5. Lack of effecting effort: - Failure to provide sufficient follow through effort after introductory programmers, and failure to rain through marketing personnel for new product and new markets.
6. Higher cost that anticipated: -Where the cost involves producing a new product is higher than the expected prices, consequently lower sales is anticipated and as much lead to products failure.
7. Poor timing of introduction: -The usual mistake here was to introduce a product too late, although in a few cases the problem was premature market entry of the new product lead to the product failure.

After all these factors were analyses, two point become quite clear, first as executive where frank to admit, the factors that lead to product failure typically were within the control of the company itself, second, close to three quarters of the course of failure were marketing related short comings.

2.8 PRODUCTION DISTRIBUTION STRATEGY

A channel of distribution comprise a group of inter-dependent organizations that move a product or survive from the produce to the ultimate customers. The main purpose of the channel is to facilitate exchanges as the goods or services moves from producer to ultimate consumers. To facilitate these exchange inter-mediaries such as retailers and wholesalers are used.

CHANNELS OF DISTRIBUTION

TYPES OF DISTRIBUTION STRATEGIES

1. INTENSIVE DISTRIBUTION STRATEGY: - Intensive distribution strategy that the maximum possible number of retailers is used to distribute the product. Generally this strategy suit manufacturers of convenience good that consumers purchase frequently and with a minimum of effort. The manufacturer using an intensive distribution and more impulse are likely due to broad exposure of the product to buyers and this of course mean increases sales volume and profitability.
2. EXCLUSIVE DISTRIBUTION STRATEGY: - ….. means that only one retail or wholesales in a geographic area carries a product – usually there is a contractual agreement between at manufacturer and the intermediary covering the detail of types of arrangement product market by exclusive distribution tend to be very quality among the highest price in their product categories.

The main advantage of exclusive distribution is the close cooperation that can be develops between the manufacturer and intermediary. The manufacturer relies exclusively upon the wholesalers to implement the distribution and promotional programmed for the product the main disadvantage to the manufacturer is that success of the product distribution and promotion depends on how well the one retailer or wholesaler performs.

1. SELECTIVE DISTRIBUTION STRATEGY: - This is a compromise between the extremes of intensive and exclusive type in practice.It can very from nearly intensive to nearly exclusive. Usually shopping goods than consumer purchase in frequently and compare considerable on price and product feature are distributed selectively, when selecting resellers, the manufacturer usually has a set of criteria (capital requirement, order size, annual sales volume inventory turn over rate) the reseller most meet.

2.9 PRODUCT DIFFERENTIATION

Differentiation is the act of designing a set of difference to distinguish the company’s product from competitors products. A company can differentiate is product using the following parameters from features, performance quality, durability, reliability, style and design.

FORM: - Many products can be differentiated, the size shape, or physical structure of a product.Consider the many possible forms taken by products.

FEATURES: - Most product can be offered with varying features characteristics that supplement the product basis functions being the first to introduce valued new features is one of the most effective ways to compete and differentiate their development.

PERFORMANCE QUALITY: - Product are established at one of fun performance level: low, average, high, superior performance quality refers to the product primary characteristics operate the question here is: does offering higher product performance produce higher profitability? The strategic planning institute studied the impact of higher relative product quality and found a significantly possible correlation between relative product quality and returns on investment (POI) high quality business units earned more because their premiums quality allowed them to charge a premium price, they benefit from more repeat purchasing consumer loyalties and position and word of mouth, and their cot of delivering more quality were not much higher than for business units producing low quality.

Some companies cut quality to offset rising costs, other reduce quality deliberately in order to increase current profit, although this course of action often hints long run profit but it is used for differentiation company product.

CONFORMANCE QUALITY: - Buyer expects products to have a high conformance quality, which is the degree to which all the product units are identical and meet the promised specification.

DURABILITY: - Is a measure of the product expected operating life under natural or stressful conditions, is a value attribute for certain product. Buyers will pay more for a product that have a long lasting reputation. However, this rule is subject to some qualification.However, company may decide to produce a high durable product to distinguish it from competitors own.

RELIABILITY: - Buyers normally will pay more for reliable product. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period

STYLE: - Describes the produce look and feel to the buyer customer’s one normally willing to pay premium for products that are attractively styled. However, product can be differentiated through styling.