New product process

DEVELOPING NEW PRODUCTS AND SERVICES

Hello Everyone,

               Welcome back to my marketing blog, I hope you guys have been enjoying my postings and learning about marketing at the same time I am. Just to fill you all in; This is going to be my SIXTH blog post of the semester. This blog is going to be filled with many pictures and examples to inform you all about THE NEW PRODUCT PROCESS

Lets Jump right in; first by defining a few terms that are going to be needed when talking about the new product process.

IMPORTANT TERMS:

• PRODUCT: a good, service or idea that is comprised of many different features; intangible and tangible that are made to satisfy the consumers needs when exchanged for something of value. 
• SERVICE: intangible activities or benefits that are used by an organization to get the customer what they are looking for in exchange for something of value. 
• CONSUMER PRODUCT: products that are bought by the ultimate consumer 
• BUSINESS PRODUCTS: products that a business buys when trying to provide other products resale process.

This is just a small list of important terms that you are going to want to keep in the back of your head when we begin the NEW PRODUCT PROCESS. 

Firstly what is the new product process? Well it is just about what it sounds like; the specific definition is the seven stages an organization goes through to identify business opportunities and convert them into stable products or services. 

STAGE 1: NEW PRODUCT STRATEGY DEVELOPMENT: 

This is the beginning point of this process; this stage is designed to define the role for a new product in understanding with the companies purpose. 

In this stage the company uses both SWOT and ENVIRONMENTAL SCANNING ( which i talked about in my previous blogs) to look at what the strengths and also what the weaknesses are and then use the findings to identify opportunities and threats to the business.

The overall goal of this stage is to be able to come up with an outcome and also a protocol for the product and see how it may fit in with the business as a whole. 

Overall this is the planning stage; take a group project for example; you are assigned your topic but your first group meeting is going to consist of conversing with one another about how you are going to attack the project. 

STAGE 2: IDEA GENERATION: 

Idea generation is once again very self explanatory; this step involves developing a pool of concepts to act as candidates for new products. It is all about building on the stage that came before; in this case stage 1. 

There are a few different ways the company can go about getting ideas.. those being 

EMPLOYEE AND CO-WORKER SUGGESTIONS: The employees of the company should be able to voice their opinion about new ideas for products in the works; many companies have suggestion boxes that their employees utilize to get new ideas. 

CUSTOMER AND SUPPLIER SUGGESTIONS: Companies also do the same thing when it comes to the consumer/customer themselves. Sales reps of many companies get out into the market and talk with the customers and ask them questions pertaining the product; this is also a great way to generate ideas for new products because you are going directly to the source; to the person who is going to be purchasing your product; the customer! 

RESEARCH AND DEVELOPMENT: Research and development is yet another way that a company can generate ideas. They can be in the works of producing a computer but they discover a great feature that could be utilized on a smart phone. Ideas can generate everywhere. 

• Companies can use all three of these steps to help with the idea generation process or they can use a select few; all of these are going to help the product become more successful in the end. 

STAGE 3: SCREENING AND EVALUATION: 

This stage of the new product process is the stage that is used to evaluate the company internally and externally in regards to ideas and also in this stage they weed out some ideas that display no further effort. 

Lets outline the two different approaches

INTERNAL APPROACH: This is done by the employees of the business, they evaluate the technical feasibility of a product that has been proposed and then they determine weather or not it meets the new product strategy development stage. 

Lets take 3M for example; one of their recent innovations was micro replication technology- one that has 3000 tiny gripping fingers per square inch used to improve gripping of golf or work glove. (Kerin). 

EXTERNAL APPROACH: This is where firms use concept tests, external evaluation with consumers that contains new product idea as apposed to the real product. 

          STAGE 4: BUSINESS ANALYSIS: 

This stage pertains to the specific features that the product has to offer, along with the marketing strategy needed to bring the product to market and make their financial presumptions. 

This is the last step in the new product process before a prototype is created!

This stage is meant to assess the total fit of the proposed product keeping the companies missions and objectives in mind. 

                                               WHAT DOES THIS STAGE REQUIRED?

• Detailed financial projections 
• assessments of the marketing and product synergies relating to existing operation

Overall this stage is very important to the new product process as a whole; it is the part right before spending money to create a prototype and also it involves a large analysis of the business as a whole. 

               STAGE 5: DEVELOPMENT:

This is the stage we have all been waiting for! This stage of the new product process is what turns an idea on paper into a prototype! The result that you are going to obtain from this is a demonstrable product. 

There are many products that come out with prototypes; and not just one prototype, sometimes the product is not what they company expects it to be and they decide that need to go back and revisit what they did and update the product. 

I have embedded a clip about target; it is a quick snip it about their product and development and their thoughts on the process; it just puts into perspective that all companies go through this stage before coming out with a finalized product. 

https://corporate.target.com/careers/career-areas/product-design-development

              STAGE 6: MARKET TESTING:

We are almost to the final step in the process;  but  first we have to talk about market testing.

Market testing involves exposing the product to customers under business like conditions to see if they will buy the product or not. 

                                                  There are three main kinds of test marketing 

                                                           1) standard 

                                                                    2) controlled

                                                          3) simulated

STANDARD TEST MARKETS:  The objective of this type of marketing is for a company to develops a product and then try and sell  it through a normal distribution channel in an array of test market cities. 

• An interesting feature about this type of test market is the producer sells the product to distributors, retailers and wholesalers. 

CONTROLLED TEST MARKETS: Involves contracting the entire program to an outside service. That service is then going to pay the outside retailer for space on their shelf. 

SIMULATED TEST MARKETS:  This option is a way for the company to save time as well as money. This is a way that tries to replicate a full test market to a limited degree. 

Any one of these strategies is a good strategy to go with; it all depends on what your company is looking to do; are they looking to save time and money or are they looking to test the outside service. 

WE HAVE FINALLY REACHED STAGE 7 OF THE NEW PRODUCT PURCHASE PROCESS!!

       STAGE 7: COMMERCIALIZATION: 

This is the final stage of the seven step process; it encompasses the above six turns to come up with the final product. This stage of the new product process is the stage used to position and launch the product in full scale production and sales. 

*** Companies take precautions at this stage though; this stage is very expensive and they want to be sure that this is exactly what they want to launch into the market before they do so***

After the company has gone through all the stages it is time for them to release their product into the market; it is just like when your parents dropped you off at college; they released you into the college world; hoping that you will survive. This comes in to play also with product; there is always the thought in the back of the companies mind that their product will be cannibalized by other markets. This just means that they have to have the best product with the best price in the market and they will do just fine in comparison to other markets!

This completes the NEW PRODUCT PURCHASE PROCESS; all seven of these steps have to work together to enable the company a product that is going to succeed in the market in the minds of the customers and also in the pockets of the company in terms of profit. 

Overall this process is very straight forward and it outlines for a company exactly what they need to do to be able to obtain a successful creation of a new product!

So just to recap the steps 

1) New product strategy development 

2) idea generation 

3) Screening and evaluation 

4) Business Analysis 

5) Development 

6) Market testing 

7) Commercialization 

Now that you have the knowledge about the new product process go out and tell all your friends or even the company you work for and maybe you can assist them in their new product process!!

I have attached a video that outlines the process as well to help anyone who is still a bit confused about the process of a whole.

Until Next time,

Alexis Combs 

Sources used: 

Kerin, Roger A., and Steven William Hartley. Marketing. 11th ed. New York, NY: McGraw-Hill/Irwin, 2013. Print.

WHAT IS MARKET SEGMENTATION AND WHAT DOES IT INCLUDE?!

Welcome back everyone to my marketing blog. Today we are going to be talking about market segmentation and what is needed to successfully market to consumers. Before reading this chapter I had absolutely no ideas as to what was included in market segmentation; so i assume that you have no background on this topic either. We are going to change that; after reading this blog you will have a clear definition of what market segmentation is and what is included in the process.

Lets begin with defining market segmentation. 

                   MARKET SEGMENTATION: The process of grouping prospective buyers into two groups; 1) that have common needs and 2) will respond similarly to a marketing action. 

MARKET SEGMENTS: A market segment is the group of prospective buyers that result from the market segmentation process. In each specific market segment it contains people who are similar to one another in terms of consumption behavior. 

As in every other marketing topic there is a 5 step process. This 5 step process helps one to segment a a market and select a prospective target market. 

I am going to go through the five steps with you to help you understand how the process actually works!

STEP 1: Group potential buyers into segments 

First of all you needs to make sure that segmenting your market is the way that you want to go. Some times segmenting your market is not the best thing to do; but if you do decide to do so there are a few criteria to use in forming your segment.

CRITERIA FOR FORMING SEGMENTS:

1) Simplicity and cost effectiveness of assigning potential buyers to segments: The manger must be able to put the plan into effect. 

2) Potential for increase profit: You want to go with the plan that is going to give you the best return on investment as well as maximizing profits

3) Similarity of  needs of potential buyers within a segment: The people in each segment need to have similar needs

4) Difference of needs of buyers among segments : If the needs of your segments are not extremely different then you are going to want to combine them into one segment. the more segments that you have the greater your cost is going to be.  

5) Potential of a marketing action to reach a segment.: You have to have an effective marketing plan.

Now that we have the criteria outlined to form the segments there are four ways to segment consumer markets: those being 

• Geographical segmentation: Based on where prospective customers live or where they work 
• Region
• City size
• Statistical area 
• Density
  
• Demographic segmentation: Based on some objective physical( gender, race) or measurable(age, income)

• Gender
• Age 
• Race/ethnicity
• Household size 
• Income 
• Education                                                                                                                                                                                                                                                                                                                                                                            
• Psychographic segmentation: Based on some subjective mental or emotional attributes, 

• Personality 
• Values 
• Lifestyles
• Needs
  
  
  
• Behavioral segmentation: Based on some observable actions or attitudes. 

•  Retail store type 
• Direct marketing 
• Product features 
• User status 

All of these different forms of forming segments are very crucial when it comes to figuring out the market in which you are going to target. If you were to not go through this process and segment based on these criteria you would not be a successful company.

STEP 2: Group products to be sold in categories

In this step you want to do exactly what it says. lets take Wendy's for example they sell many different product ranging from your classic hamburgers, fries, frosty' s and more but the main goal for Wendy's is they want to be able to sell these products as meals. There are two ways that this can be addressed; Individual products vs. grouping of products.

Individual products: There are many different products that are sold by Wendy's but each product is not equally targeted to all market segments; it all depends on gender, needs and much more. Someone may come in wanting a hamburger where as someone else may come in wanting chicken nuggets. The purchase that one single product. 

Grouping of products: This is very self explanatory as well; it is finding a mean of grouping the products a business sells into meaningful categories so that customers are going to want to purchase them. If they see that they can get a meal containing a hamburger fries and a drink all in one they are going to purchase that. 

STEP 3: Develop a market product grid 

and estimate the size of markets:

lets begin with defining a MARKET PRODUCT GRID: This is a framework that is used to relate the market segments of potential buyers to products offered or potential marketing actions by an organization.

• when looking at the grid each cell shows the estimated market size for a current product
• Horizontal rows: identifying and labeling the market in which you wish to get into
• Vertical rows: the product groupings 

Now that you have your grid you can estimate your market size; for the grid i have above you can figure out the estimated sales for each kind of meal that Wendy's offers. 

• A (3) represents a large market where as a (0) represents no market at all. 

STEP 4: Select target market 

This is one of the most important steps seeming that without a target market your business is not going to be successful. A firm needs to choose their market very carefully. They need to make sure not to choose a market that is too narrow; because once again they will not be successful. Also when looking in the other direction if you pick a market that is too broad you are not going to be able to satisfy all the customers and you are going to loose sales and profits. 

lets look at some criteria when selecting a target segment. There are  2 kinds of criteria in the market segmentation process, those being 

                                          1) divide the market into segments 

                                                            2) actually pick the target segment  

Under these two ways of selecting a segment that are 5 criteria that can be used to select the target segment

• Market size: The size of the market in the segment is an important factor to consider when you are deciding whether it is worth going through with or not.

• Expected growth: If the size of the market that you choose is small; it may be expected to grow in the future or it is growing as we speak. 

• Competitive position: Looking at if these is a lot of competition in the segment or if there is going to be some competition that is expected to come into the segment 

• Cost of reaching the segment: A firm should not go for a market segment that is inaccessible for the marketing plan.

• Compatibility with the organizations objectives and resources: Take Wendy's for example. if they do not have the equipment to make breakfast then they should not go out of their way and try and reach the breakfast segment. 

STEP 5: Take marketing actions to reach Target Market:

Now that you have created your market product grid you can now take action to increase your sales and profits. There has to be some in charge of executing the plan as well as someone keeping an eye on the businesses that are similar. 

Keep an eye on the competition: The other companies are not just sitting still they are doing exactly what you are; trying to better their company. So you have to be aware of what they are doing as well. For example for Wendy's they have to keep an eye on what McDonald's is doing as well as what Burger King is doing.

This concludes the five steps of the process that is used to target and segment markets. This process can be very successful if it is done correctly but if not done correctly then it can hurt a business in the long run. You need to make sure that each step is done in depth and also that is done to the best ability of the employees of the company.

Lets Recap the 5 steps:

1) Group potential buyers into segment 

2) Group products to be sold into categories 

3) Develop a market product grid and estimate the size of markets 

4) select target markets

5) Take marketing action to reach target markets

Now that you understand what the process is you can implement it in your own business or you can assist others when they are working to segmenting and target markets.

I have given you all a video to watch if things are still a little fuzzy in your minds. Just click on the link and enjoy!

http://education-portal.com/academy/lesson/market-segmentation-why-market-segments-are-important-to-marketers.html#lesson

I hope you guys enjoyed learning about this topic and by now your marketing knowledge should be very deep!!

Until next time!

         Alexis 

Resources used:

Kerin, Roger A., and Steven William Hartley. Marketing. 11th ed. New York, NY: McGraw-Hill/Irwin, 2013. Print.

Understanding consumer behavior

UNDERSTANDING CONSUMER BEHAVIOR:

Welcome back once again everyone; It has been a little while since I have posted but things have been crazy here at Saint Michael's College! But now that I am back to blogging I am going to teach you guys a little bit about understanding consumer behavior. This can be beneficial in two ways. The first being that you are going to learn a little more about marketing but secondly  you are going to be able to understand this process as a consumer yourself; because we all buy things and we all go through a process but we do not always realize we are doing so. So I am going to explain to you what the CONSUMER PURCHASE DECISION is and all the steps that go along with that.

lets first define what CONSUMER BEHAVIOR really is: The actions that a person take in purchasing and also using products. This also includes what goes through the minds of consume before hand as well as after the process.

There are 5 stages that the consumer has to pass through in making their final choice about buying a product or service. that 5 stage process is known as the PURCHASE DECISION PROCESS.

Throughout this blog i am going to go through each step with you to help you understand what is involved and what needs to be completed to make this process successful.

Lets jump right in with step #1

STEP 1: PROBLEM RECOGNITION; PERCEIVING A NEED

This is the first step that needs to take place, you need to be able to notice that you are in need of something. For example, you are about to call your mom to tell her that you got a good grade on your marketing test and you realize that you only have 2% battery life on your phone but you just charged your phone one hour ago. You have recognized that you have a problem; that problem being you do not have enough battery life to call your mom. You know that this is not how the device is supposed to work and there may be a defect in your phone making it so want to get a new phone. The need that you are perceiving is needing a new phone that is going to have a better battery life.

STEP 2: INFORMATION SEARCH; SEEKING VALUE 

The next step in the consumer purchase decision is information search. After you realize that you have a problem you being to search for information to try and resolve your problem. There are a few ways to start this process; you can try and remember products that you have dealt with in the past; known as INTERNAL SEARCH.   You can also use another approach known as EXTERNAL SEARCH; this comes in handy when you when you do not have sufficient knowledge about the product or you are scared of making the wrong decision. there are three ways that can help one with external search; those being 
1) Personal sources: relatives, friends, 
2) Public sources: product rating organizations, consumer reports
3) Marketer dominated sources: information from sellers, websites, sales people

when getting back to our smart phone example you are going to do some internal search but you are going to mainly use external search; you are going to talk to your friends and relatives, look at companies websites, the stores that carry that phone so that you have the ability to touch it and get a feel for it and lastly you may refer to some consumer reports to see how everyone else is liking to product. 

STEP 3: ALTERNATIVE EVALUATION; ASSESSING VALUE

Now that you have recognized the problem and you have begun the information search you are now able to move on to step 3: assessing value. This is all about evaluation criteria; factors that represent both the objective attributes of a brand and the subjective ones a consumer uses to compare different products and brands.

lets take our smart phone example again to walk through this process. The company that you are buying your smartphone from is going to do all that they can to try to catch your attention and buy their product and they do this through advertisement. As a customer you are going to have several different criteria for evaluating a brand; such as the best price, the best display, and the best battery life. This is the step that is going to help you decided on if you want the new I phone 6 or if you want to stick with the blackberry.

A key term that is helpful in the evaluation stage is CONSIDERATION SET: these are all of the brands that you are considering among all brands of which you are aware in the product class.

STEP 4: PURCHASE DECISION; BUYING VALUE

You have now reached step four of the process. You have already examined the alternatives in the consideration set and you are almost at the end result of your decision. There are two choices that you still need to make 
1) for whom to buy : The choice of which seller to buy from depends on considerations as the terms of sale, your past experiences from this seller and also the return policy. 
2) when to buy: Deciding when to buy is determined by a number of factors such as you may want to buy your phone sooner if one of your preferred brands is on sale or there is a rebate in place. 

This is a very important step in the consumer purchase decision, you are making the final decision as to where you are going to buy your product and when you are going to do so. All of  the previous steps add much insight to what is going on in this step; all of your research and recommendations from outside sources are put to place to buy the product.

STEP 5: POST PURCHASE BEHAVIOR; VALUE IN CONSUMPTION OR USE 

Now that you have bought your product it is time to compare it with what your expectations and you are either going to be satisfied or dissatisfied. If you are dissatisfied it is the markets job to figure out why the product was a deficient or if the consumer expectations were too high. 

when using our smartphone example if you ended up purchasing the I phone 6 you may think after "should i have bought the blackberry instead". This is a post purchase feeling known as COGNITIVE DISSONANCE. 

That completes the five step consumer decision process. It is a process that we go through every day; and also probably more than once a day depending on what we are doing. You can use this process when buying toothpaste which is a very routine buy or when buying a car which is a much more in depth type of buy. You use this process without even thinking, it is simply second nature to us. 

So lets Recap on the 5 steps:

1) Problem recognition

2) Information Search

3) Alternative Evaluation

4) Purchases Decision

5) Post Purchase Behavior 

I have attached a cartoon video for you to watch in regards to the buying decision process. This video outlines exactly what we covered in the above sections. 

If you can keep these steps in the back of your mind the next time you go to buy something, you are going to go through all of these steps in one way or another and you are not even going to know that you are doing so.

Thank you for reading everyone, and I hope that you enjoyed learning about consumer behavior in terms of the consumer buying process. 

Until next time;

                Alexis 

Resources used: 

Kerin, Roger A., and Steven William Hartley. Marketing. 11th Ed. New York, NY: McGraw-Hill/Irwin, 2013. Print.