4. New product development process

Three distinct categories of new products:

1. Products that are really innovative – truly unique.

2. Replacements that are significantly different from existing products in terms of form, function, and – most important – benefits provided.

3. Imitative products that are new to a particular company but not new to the market.

A new product strategy is a statement identifying the role a new product is expected to play in achieving corporate and marketing goals.

Company goal	Product strategy
To defend market share	Introduce an addition to an existing product line or revise an existing product
To strengthen a reputation as an innovator	Introduce a really new product not just an extension of an existing one

Stages in the development process:

1. Generating new-product ideas. New-product development starts with an idea. A system must be designed for stimulating new ideas within an organization and then reviewing them promptly.

2. Screening ideas. At this stage new-product ideas are evaluated to determine which ones warrant further study.

3. Business analysis. A surviving idea is expanded into a concrete business proposal. During the stage of business analysis management:

1. Identifying product features;

2. Estimates market demand, competition, and the product’s profitability;

3. Establishes a program to develop the product;

4. assigns responsibility for further study of the product’s feasibility.

4. Prototype development. If the result of the business analysis are favorable, then a prototype (a trial model) of the product is developed. In the case of services, the facilities and procedures necessary to produce and deliver the new product are designed and tested.

5. Market tests. Unlike the internal tests conducted during prototype development, market tests involve actual consumers. A new tangible product may be given to a sample of people for use in their households (in the case if a consumer good) or their organizations ( a business good).

6. Commercialization. In this stage, full-scale production and marketing programs are planned and then implemented. Up to this point in development management has virtually complete control over the product.

5. Give the characteristic of direct marketing.

Direct marketing ( direct mail, telemarketing, internet marketing) share four distinctive characteristics:

1. Nonpublic ( the message is normally addressed to a specific person);

2. Customized ( the message can be prepared to appeal to the addressed individual);

3. Up-to-date ( a message can be prepared very quickly);

4. Interactive ( the message can be changed depending on the person’s response).

6. What are the differences between primary types of price deals?

A price deal is a temporary reduction in the price of a product. Marketers may use price deals to introduce a new or improved brand, to convince current users to purchase more, or to encourage new users to try an established brand. Primary types of price deals are:

1) Cents-off deals offer a brand at less than the regular price;

2)Price-pack deals offer consumers smth extra through the packaging itself.

Example: coupon is typically printed certificate giving the bearer a stated price reduction or special value on a specific products generally for a specific period of time.

7. What is sales promotion? Types of sales promotion activities.

Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service. Sales promotions are varied: 1) Buy-One-Get-One-Free (BOGOF) – which is an example of a self-liquidating promotion. This is known as a premium sales promotion tactic.2) Customer Relationship management (CRM) incentives such as bonus points or money off coupons. 3) New-Media-Websites are mobile phones that support sales promotion; 4)Merchandising additions such as dump bins, point of sale materials and product demonstrations; 5)Free gifts; 6)Discounted prices; 7)joint promotions between brands owned by a company with another company brands;8)free samples;9) vouchers and coupons, often seen in newspapers and magazines, on the tv and radio, on the internet and the packs;10)cause-related and fair-trade products that raise money for charities;11) finance deals.

8. What are the differences between brand and branding?

Branding is strategy to differentiate products and companies and to build economic value for both the consumer and the brand owner. Brand occupies space in the perception of the consumer and is what results from the totality of what the consumer takes into consideration before making a purchase decision. So, branding is a strategy and brand is what has meaning to the consumer.

9. What are the basic approaches of determining price? Characreristics

Some basic approaches of determining prices are: markup pricing, break-even analysis, target-return pricing, price-sensitivity measurement. Retailers typically use some form of markup pricing, where markup is the difference between the cost of an item and the retail price, expressed as a percentage. A products price is determining by adding a set percentage to the cost of the product. These percentages are often standardized across product categories. Price=Unit cost +Markup. In some cases the retailer may wish to know the markup charged for a product given the price and the original cost. Markup=(price-unit cost)\price*100%. Break-even point analysis (BEP) is a useful guide for pricing decisions. It involves calculation the number of units that must be sold at a certain price for the firm to cover costs. Q (BEP)=FC\(P-VC).Once sufficient sales (or quantity sold) cover fixed costs, the quantity (P-VC) is typically reffered as the products contribution margin.Target-return pricing is a cost-oriented approach that sets prices to achieve some desired rate of return. Cost and profit estimates are based on some expected volume or sales value. Target-return pricing forecasts a fair or needed rate of return.