MARKETING Flashcards
define new product development
design, creation, and marketing of goods and services. Key for firms in v/ dynamic/fast-changing markets/environments
Successful products must:
Have desirable features: that meet consumer expectations, satisfy an unsatisfied need/want
Product differentiation: make it stand out, offer USP.
Effective marketing: (special strategies for NPD).
Stages of new product development
- Generate ideas: from business R&D; market research (primary + secondary, focus groups); intrapreneurship – encourage employees who are in contact w/ both customers and products to develop new ideas.
- Idea screening: pull out ideas which seem less likely to work. Developing + marketing g/s is expensive + time consuming, so care needs to be taken to ensure the product to develop has
a good chance for success. Is it feasible to manufacture this product? Does business have resources/capacity necessary? - Concept development + testing: examine product’s featuresestimate likely costs establish likely consumer profilechoose best way to manufacture product. Any feature
adaptations? How will consumers react to it? Which specific benefits will it provide? Test an early CONCEPT/prototype of product w/ a sample from the customer group. - Business analysis: considers the product’s likely impact on business’s costs, sales, profits. A price is set for product, based on customer feedback from concept testing. Expected sales,
market share and break-even point can be estimated. Is there sufficient finance to develop the product? Can product be patented/can business afford patent? Do expected revenue
and profit levels match business objectives/expectations? Can business afford the loss if product fails? Evaluate external influence risks – PESTLE! Are there any visible risks? - Product testing: test the technical performance of the product, how likely is it to meet customer expectations. Product should be tested in typical use conditions; given to focus groups and gather feedback. Finally adapt product, fixing flaws/improvements detected at
testing and incorporating focus group feedback. - Test marketing: Identify a small test market (ideally a sample of the market very representative of the market segment the product is aimed at: EG: if product is to be sold at Waitrose, release it in one Waitrose in one town). Observe real response to product.
Feedback from consumers will enable a final decision to be made; even at this stage, the product can still be abandoned. Risks must be minimised in this stage to secure launch. Test
marketing can be expensive +time consuming; a cheaper alternative may be offering free samples to consumer agreeing to be questioned later on thoughts ab. Products. - Launch + commercialisation: introduction phase of product life cycle. Promotional strategy put in place (penetration pricing; below the line offers).
Define R&D
scientific research + technical development of new products/processes. Effective R&D is
essential in some industries where innovation is key; to retain a competitive advantage; gain a USP over rivals, gain a temporary monopoly, therefore able to charge high prices = HUGE sales. HWVR: R& can be very expensivecan business assume the cost?; No guarantee that product will be successful, so perhaps expensive R&D is not worth it if the product has a lot of risks!;
What factors influence the level of R&D spending
- Type of industry/market/sector/product: eg: tech, FMCGs, fast fashion will need lots of R&D so high spending. Some products (EG: fruit + veg farmer) may need zero R&D.
- Competitors’ R&D spending: to maintain the necessary level of innovation to avoid losing
market share. - PEST: external influences: if managers are confident in the economy, in regulatory
framework, they may settle on a larger R&D budget. - Corporate culture/risk culture: family business may take less risks so spend less on R&D.
- Financial resources: how much of profits are available to invest in R&D? Is it a PLC therefore
is the opportunity cost to R&D investment less dividends? Should business do this? - Grants/Tax allowances/Subsidies: sometimes govts. give firms tax breaks/grants to perform
R&D, if it benefits the govt./country, or if they partner with a university to perform R&D.
Define Marketing
Functional department of a business; a management task linking business to customer by identifying + meeting customers’ needs profitably. Aims to provide right product, at right price, to the right place at the right time, and craft brand loyalty.
Define marketing plan
Detailed + researched report on marketing objectives and marketing strategy to be
used to achieve them.
What does a marketing plan contain
- Purpose and SMART objectives
- Situational analysis + market research: including: product portfolio, market research,
competitor info., PEST, SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) - Marketing strategy: mass or niche? Existing customers/markets or new? New market segment? Developing new markets?
- Marketing mix and budget
Advantages of a Marketing Plan
Marketing plan reduces risk of failure as a step by step plan is established: clear objectives
are set, market research is done, a coordinated strategy is used, promotion spending is kept under budget. It also helps give directions to departments within the business, allowing them to get organised (HR ensures enough workers are hired and necessary training/warning is issued, finance ensures cash flow forecasts are correct…)
Disadvantages of a Marketing Plan
However, marketing plans take time an expertise, a (small) business may not have the
skilled managers to perform an effective plan. Plan is static; business environment is dynamic (PEST changes can render a plan useless!). Also inaccurate/biased market research = ineffective plan.
Define marketing strategy
Plan that details marketing objectives, + actions + resources needed to achieve them. (Mass or niche marketing? Selling to an existing or new market/market segment?). Must be coordinated, with objectives, with the budget (tactics), to avoid inconsistency among 4Ps.
Define the stages in the ANSOFF Matrix
- Market Penetration: (least risky). Trying to increase market share of your product in the market in which your product is already present in. Trying to get sales of a product to GROW; incr. brand loyalty; encourage more repeat purchases.
- Product Development: NPD to sell a new product in a market you already operate
in. - Market Development: Selling a product
in your portfolio in a new market you have not yet operated in. (EG: repositioning your product so it appeals to a different market segment/group of consumers; or entering a new geographical market; new income
bracket…). - Diversification: (most risky). G/s you have never produced before, sold in a new market you have not yet operated in.
Define marketing objectives
SMART, clear. Can be in the form of: level of sales to reach by a given date; market share target; rate of sales growth target; profit target. OR; successfully increase sales for a particular product or from a particular market segment.
Define polycentric strategy
strategies based on regions. Marketing of products adapts to local cultures. Attempt to differentiate their product, considering particular needs of local customers in different marketsGlobal Localization (Glocalisation)!.
Advantages of polycentric strategy
- Risk- Bearing Economies of scale: if one fails, the rest of the subsidiary businesses may survive because marketing strategies are different in each area.
- More chances of success: product is more likely to satisfy customer needs/satisfy them better than an ethnocentric product, because they are targeted at the specific customers in that area with their own particular needs.
- Long term more profitable: even though in the short term costs would be higher, higher sales potential and better chance of gaining a long term large loyal customer base may mean higher long term profit.
