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B207 Reading 6: The Marketing Mix – Product and NPD - Coggle Diagram
B207 Reading 6: The Marketing Mix – Product and NPD
1. The Marketing Mix (4Ps, 5Ps, and 7Ps)
Traditional Marketing Mix (4Ps):
Product
Place (distribution)
Promotion
Price
5Ps (for Product Offerings):
Adds People (now recognised as important for all offerings, not just services).
Extended Marketing Mix (7Ps) (for Services):
Adds three more elements:
Process
Physical Evidence
People
Function:
Collectively, the elements constitute the offer made to customers. Any weak element may compromise the overall value proposition.
2. The Product Element
Definition:
'Product' is used in the broad sense to cover services and ideas as well as physical goods, often referred to as an 'offering'.
Product-Related Considerations (The scope of the 'Product P'):
Specifying development requirements (informed by research).
Packaging design.
Branding.
After-care service and support.
Three Levels of Product Benefits:
Core Product:
The core benefit or service (innermost circle).
Actual Product
: Features, styling, quality, packaging, brand name.
Augmented Product:
After-sale service, warranty, delivery/credit, installation (outermost layer).
Four Main Types of Product:
Convenience:
Frequently purchased, low involvement (e.g., milk).
Shopping:
Less frequently purchased, selected on price, quality, and style (e.g., furniture).
Speciality:
Special purchase, expensive, strong brand preference (e.g., luxury items).
Unsought
: Little knowledge or interest (e.g., new invention, insurance)
Innovations
: Tend to be incremental in nature at the 'actual product' level (e.g., new packaging, features, styling, quality) rather than the core product level.
3. New Product Development (NPD) Process
Only a minority of new products are new inventions; most are product replacements (improved versions) or complementary products.
The Eight Steps of NPD (extended from Crawford's five-step model):
New Product Planning:
Reviewing product performance, identifying threats and opportunities (using SWOT and Ansoff's Matrix are useful tools).
Idea Generation
: Generating ideas in line with objectives (sources include research labs, open calls, staff, competitors, collaboration).
Idea Screening:
Selecting the most promising ideas and screening out less promising ones using criteria (e.g., the 'real, win, worth it' (R-W-W) screen).
Concept Testing
: Testing a detailed product idea (concept) with target consumers to gauge reactions (words/images/prototypes).
Market/Business Analysis:
Evaluating potential sales, costs, and profits against objectives; assessing financial viability (e.g., break-even analysis).
Product Development:
Translating the concept into an actual prototype.
Test Marketing:
Testing the prototype and the full marketing mix in limited settings (simulated, controlled, or standard markets) to allow for adjustments.
Commercialisation
: The full-scale launch (the costliest stage); timing must be considered carefully
4. NPD Success and Failure
Failure Rate
: Frequently asserted to be around 80-90%, but research suggests it's closer to 40%
Reasons for Failure (often attributed to lack of preparation):
Overestimation of market size.
Disregarding marketing research.
Poor product design or higher than expected costs.
Incorrect positioning, unsuitable launch timing, inappropriate pricing, or poor promotion.
Critical Success Drivers (Cooper, 2011):
A unique superior product (number one driver of profitability).
Building in the voice of the customer.
Doing the homework and front-end loading the project.
Spiral development (build, test, obtain feedback, revise).
A well-conceived, properly executed launch.
Speed counts (but not at the expense of quality of execution).