CONCEPT PRESENTATIONCONCEPT PRESENTATION

Make or Buy

• Make-or-Buy decision (also called the outsourcing decision) is a judgment made by management

whether to make a component internally or buy it from the market. While making the decision, both

qualitative and quantitate factors must be considered.

• Examples of the qualitative factors in make-or-buy decision are: control over quality of the component,

reliability of suppliers, impact of the decision on suppliers and customers, etc.

• The quantitative factors are actually the incremental costs resulting from making or buying the

component.

Idea Generation

• That stage of the new product development cycle in which ideas are sought for new products.

• These ideas may be created in-house or sought from outsiders.

• This stage is often called concept generation rather than idea generation, because the new product is

but a concept at this time.

• The activity of generation often follows some stated or implied strategic focus, and it precedes the

concept evaluation stage.

Internal Idea sources

• New products ideas can come from several sources.

• They come from internal sources like marketing managers, researchers, sales people,

engineers, etc.

• Brainstorming and incentives or rewards for good ideas are typical intra-firm device for

stimulation the development of products ideas.

External Idea Sources

• Customers, lead-users (user solutions)

• Patents/inventions

• Competitors

• Suppliers

• Acquisitions

• Trade fairs and conventions

• Published information and trade magazines

• Consultants

• Channel members

Idea Screening

• The step just prior to research and development and systems design in the product development process.

• It involves use of scoring models, checklists, or personal judgments and is based on information from experience

and various market research studies (including concept testing).

• Screening calls for judgments that predict the organization's ability to make the item and its ability to market the

item successfully.

• It culminates in directions to guide technical personnel in their developmental efforts.

Product Concept

• A verbal or pictorial version of a proposed new product.

• The concept consists of: (1) one or more benefits it will yield, (2) its general form, and (3) the technology used to

achieve the form.

• A new product idea becomes a concept when it achieves at least one benefit and either the form or the technology.

• Further work in the new product development process gradually clarifies and confirms those two and adds the

third.

• A concept becomes a product when it is sold successfully in the market place; prior to that, it is still undergoing

development, even if marketed.

Concept Development

• The process in which a concept statement is presented to potential buyers or users, for their reactions.

• These reactions permit the developer to estimate the sales value of the concept (whether product or

advertising) and to make changes in it so as to enhance its sales value.

Marketing Strategy statement

• A statement (implicit or explicit) of how a brand or product line will achieve its objectives.

• The strategy provides decisions and direction regarding variables such as the segmentation of the market,

identification of the target market, positioning, marketing mix elements, and expenditures.

• A marketing strategy is usually an integral part of a business strategy that provides broad direction to all functions

• Example: Provide a quality product for young families and increase sales by 10 per cent per year over the next five

years to reach $250,000 in gross profit by 2015.

Business Analysis

• This is a term of many meanings, and in marketing it is usually associated in some way with the evaluation of new

product proposals.

• In format, it may consist of a five-year, discounted cash flow, net present value-type of financial analysis, or it may

be a more comprehensive analysis of the entire situation surrounding the proposed product.

• Chronologically, it may come early in the development process (when it is used to decide whether expensive

research and development should be undertaken), and/or late in the product development cycle when the

commercialization decision is being made.

Product Development

• The overall process of strategy, organization, concept generation, concept and marketing plan

evaluation, and commercialization of a new product.

• It occasionally is restricted in meaning to that part of the process done by technical (research and

development) departments.

Market Testing

• The phase of new product development in which the new item and its marketing plan are tested

together.

• A market test simulates the eventual marketing of the product and takes many different forms, only one

of which bears the name test market.

Standard Test Market

• A market in which companies sell their products through normal distribution channels

when testing these products or the marketing efforts supporting these products.

Controlled Test Market

• A market in which an entire marketing test program is conducted by an outside

service.

Simulated Test Market

• A form of market testing in which consumers are exposed to new products and to their claims in a

staged advertising and purchase situation.

• Output of the test is an early forecast of sales and/or market share, based on mathematical forecasting

models, management assumptions, and input of specific measurements from the simulation.

Commercialization

• A stage (usually the last) in the development cycle for a new product.

• Commonly, it is thought to begin when the product is introduced into the marketplace, but actually

starts when a management commits to marketing the item.

• Subsequent activity during commercialization includes manufacturing and distribution, as well as

promotion.

• It may precede the product announcement date by months.

Market Roll Out

• Formal launching of a product or service with media fanfare, and following a

promotional campaign.

Venture Team

• This is similar to a new product task force, but with an important difference: the team is independent of any functional

department.

• Members stay with the project until abandoned or commercialized.

• In the latter case they may become the management team responsible for running the new product as a separate business.

• The venture team is authorized to obtain assistance as needed from functional departments or to purchase external assistance. A

venture team usually reports to a top corporate officer.

• A venture team is appropriate for developing new products that are outside of the company's existing businesses.

• A venture team is also appropriate for totally new products that usually require more time, expense, and risk than managers of

currently operating businesses are willing to support.

• A venture team is more likely to be used for high technology industrial products than, for example, consumer packaged goods.

• A venture team requires long-term commitment and support from corporate management

Factors of Introduction Stage

• The first stage of the product life cycle.

• The new product is introduced to the market, sales are slow, promotion is usually heavy, costs are

accumulated, profits are frequently negative, and expectation is focused on determining when and if

the product will soon enter the second (growth) stage of the cycle.

Decline Stage

• The fourth stage of a product life cycle. Sales of the product fall off from their levels

during the maturity (third) stage.

• This may lead to abandonment or efforts at rejuvenation of the product.

Characteristics of PLC

BCG Matrix

SBU

• From a strategy formulation point of view, diversified companies are best thought of as being composed

of a number of businesses (or SBUs).

• These organizational entities are large enough and homogeneous enough to exercise control over most

strategic factors affecting their performance.

• They are managed as self contained planning units for which discrete business strategies can be

developed.

Market Growth Rate

• The increase in size or sales observed within a given consumer group over a specified

time frame.

• When the management of a business is reviewing the success of a product, it needs to

deduct the overall market growth rate from the observed product sales growth.

Market Share

• Market share is the percentage of a market (defined in terms of either units or

revenue) accounted for by a specific entity.

Reference

• <http://www.marketingpower.com/_layouts/dictionary.aspx?dLetter=A>, accessed 9th

September, 2013

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