The aim of marketing to is to create value. It does this in 2 ways, within the firm and outside the firm.
Creating value within the firm
At the Corporate/business unit level
At this level, marketing creates value through corporate culture of customer first. This is then reinforced and measured so that it can transform from only values to action. It is measured by tools such as consumer research, customer visits and market orientation assessments.
At the product level
This is done by analyzing how a product/service should be adapted to the market. The value proposition of the product is decide and stated through positioning as to what benefits it provides to the customer. The product hierarchy also helps to position the product with respect to competition.
At the executional level
Done through integration of the 4 P’s – product, price, promotion and place. This requires consumer research and data analysis. These elements are deigned to flow into the positioning of the product.
Creating Value outside the firm
Value to customers
Stages of New Product Development:
(1) Idea Generation
Ideas for new products can come from the company’s own research and development department, customers, competition, employees, sales people, independent inventors, and top management. (2) Screening
In this stage, ideas that are not technologically feasible or economically feasible are eliminated. Some ideas are eliminated because they do not fit the company’s mission or objectives. (3) Business Analysis
Techniques taught in finance such as the Net Present Value (NPV) method and breakeven analysis are used to determine whether the idea has the potential of making any money. (4) Concept Testing
Prospects are shown a drawing of the proposed product with a description which includes the price and advantages/disadvantages of the proposed product. Prospects are asked whether they would buy the product. (5) Product Test
A sample of consumers try the product in their homes for several weeks and are then asked whether they would buy it. (6) Market Test. There are two major kinds of test markets: Conventional (traditional) test market – The product is introduced in small cities . One additional purpose of the test market is to test various marketing strategies (e.g., different ways of positioning a product). One thing you want to see is the trial rate (the percentage of people trying the new product) and the repurchase rate (what percentage buy it a second time). Simulated test market (STM) – Consumers are then invited to "shop" in a room that is set up to look like a supermarket. Those consumers who purchase the product being tested will be called several days later and asked whether they would purchase the product again. (7) Review and Revision
The results of the above are studied by management and a marketing strategy is determined. (8) Commercialization
The new product is introduced.
Two approaches to product development - Market driven and market driving
They begin with an unmet need of the consumer. This is used for traditional new product development. The role of marketing is to find an unmet need and devise a marketing plan to meet that need at an affordable price. The idea is to satisfy current customers.
These begin with a new technology. These are described as breakthrough products for which customers need to be educated as to how they can use this product and where are the applications. Market research role is more qualitative. The aim is to create customers.
Principles of product policy
These help to answer the questions of individual product attributes and decisions, product line, product mix and branding decisions. Product is actually a complex, multidimensional concept. It is defined broadly enough to include services, programs, and attitudes and includes whatever you are offering the target market in an effort to meet their needs. It...
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