Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGI NG THE PRODUCT

Step 4 : Technical and Marketing Development

A product that has passed the screen and business analysis stages is ready for technical and

marketing development. Technical development involves two steps. The first is the applied

laboratory research required to develop exact product specifications. The goal of this research

is to construct a prototype model of the produc: that can be subjected to further study. Once

the prototype has been created , manufacturing-methods research can

undertaken to plan

the best way of making the product in

quantities under normal manufacturing

conditions. This is an extremely important step, because there is a significant distinction

between what an engineer can assemble in a laboratory and what a factory worker can

produce.

While the laboratory technicians are working on the prototype, the marketing depart-

ment is responsible for testing the new product with its intended consumers and develop-

ing the other elements of the marketing mix. The testing process usually begins with the

test. The product concept is a synthesis or a description of a product idea that reflects the core element of the proposed product.

example, a consumer group might be assem-

bled

interview session might begin with the c;uestion: "How about something that

would do this?

The

aspect of market

consumer

the product

idea.

activity

await the

of

prototype or, preferably, lim-

production models

kinds of consumer preference can be conducted. The

product itself can be

consumer taste or use tests. Packaging, labeiing, and other

elements in t;1e mix can be similarly studied. Comparison tests are also used.

Step 5: Manufacturing Planning

Assuming that the product has cleared the technical and marketing development stage, the

manufacturing department is asked to prepare plans for producing it.

plan begins with

an appraisal of the existing productIOn plant and the necessary tooling required to achieve

the most economical producti.on. Fancy

and material might be hard if not impos-

sible to accommodate on existing production eql'ipment;

machinery is often time-

consuming and costly to obtain. Compromise between attractiveness and economy is often

necessary.

Finally, manufacturing planning must consider the other areas of the organization and

what is required of each. More specifically, they

determine how to secure the avail-

ability of required funds, facilities , and personnel at the intended time, as well as the meth-

ods of coordinating this effort.

Step 6 : Marketing Planning

It is at this point

the marketing department moves into action again. The product plan-

ner must prepare a complete marketing plan-one that starts with a statement of objectives

and ends with [he

of

distribution, promotion,

pricing into an integrated

program of marketing action.

Step 7: Test Marketing

Test marketing is the final step before commercialization; the objective is to test all the variabilites in the marketing plan including elements of the product.

markeiing represents

an actual launching of the total marketing program. But it is

on a limited basis.

PRODUCT PLANNING AND STRATEGY FORMULATION

179

INTEGRATED MARKETING

•

TRICKIER THAN YOU THINK

Everyone knows the fastest way to get rich is to start a dot-com

•

Although e-business moves fast: managers shouldn't

business. According to the U.S. Commerce Department, traf-

move

take risks that jeopardize reach-

fic on the Internet doubles every 100 days. To acquire an audi-

ing your goals.

ence of 50 million, it took radio 30 years, television 13 years,

•

Cash-flow problems are common with Internet start-

personal computers 16 years, and the Internet four years.

. ups-project the amount of cash needed, then double

Still, marketers who go online expecting to make an

it.

"overnight killing" are in for a bruising lesson. Getting on the

•

Creating a true brand is specially difficult with Inter-

Web takes an investment, and once there, you have to build

net start-ups-excellent customer service, not adver-

your Web presence and brand. And there are still technical

tising, is likely the answer.

and logistical hurdles to clear.Just ask Julie Wainwright, who

•

Deliver the goods-getting goods delivered to a cus-

got a fi rsthand look at the new math after the pet-products

tomer's doorstep in a timely manner is much more com-

Web site she heads, Pet.com, went public in 2000. After mak-

plicated for Intemet businesses.

ing its debut at $11 a share, the San Francisco-based Inter- .

•

Actively monitor the customer-this ongoing dialogue

net company's stock rose to $14 and then promptly dropped

leads to a deeper understanding of a customer's pref-

$3 .

.

erences and shopping habits, and that, in tum, leads to

Volatility in the Internet business has produced a new

more personalized offerings and services. .

industry-Internet consultants. As a result, a plethora of rec-

Don' t assume that the Web will solve all your problems

ommendations have emerged for entering an Internet busi-

or substitute for sound business judgment. "It is not some sort

ness. Here are some of the suggestions:

of get-rich-quick scheme," says Mark Weaver, professor of

•

Keep it simple-focus on providing compelling

entrepreneurship at the University of

"You have to

infOlmation.

be even more a perfectionist, more meticulous, and more pre-

•

Put customers first-understand them and meet their

pared to adjust to the changing rules of business online."

needs.

•

Make your

web-friendly--<ion' t assume everyone

Sources: Sreenath Sreenivasan, "Wrestling with the Web," Busi-

is technically competent.

ness Week, May 24, 1999, pp.

Peggy Pulliam, "To Web

•

Spread the word-publicize your web address, offline

or Not to Web," Internet Marketing, June 2000, pp.

Kara

as well as on the Net, by putting it everywhere you do

Swisher, "Reality Check," The Wall Street Journal, April 17,2000,

business.

p. R19; Erin Strout,

an E-Business," Sales & Market-

ing Management, July 2000, pp. 89-91.

•

Be ready for success-a Web site can give you more

business than you can handle.

Three general questions can be answered through test marketing . First, the overall

of the marketing plan can be assessed. Second, alternative allocations of the

buaget can be evaluated. Third, determining whether a new product introduction is inspir-

ing users to switch from their previous brands to the new one and holding them there through

subsequent repeat purchases is determined. In the

the test market should include an

estimate of sales, market share, and financial performance over the life of the product.

Initial product testing and test marketing are not the same. Product testing is totally initiated by the producer: he selects the sample of people, provides the consumer with the

test product, and offers the consumer some sort of incentive to participate.

Test marketing, on the other hand, is distinguished by the fact that the test cities are to represent the national market, the consumer must make the decision herself, must pay

her money, and the test pro duct must compete with the existing products in the actual mar-

keting environment. For these and other reasons a market test is an accurate simulation of

the national m arket and serves as a method for reducing risk. It should enhance the new

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