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Steps in New Product Development Process.

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Product Mix Decision

Product Mix Decision:

The set of all product lines & items that a particular sellers offers for sale.

A company’s product mix has four important dimensions i.e. Width, Length, Depth and Consistency.

Product Mix Width: It refers to the total no.of different product lines the company carries. Ex: AVONs product mix consists 4 major product lines. Cosmetics, Jewellery, Fashion, Household Items etc…

Product Mix Length: It refers to the total no.of items the company carries in its product line.

Ex.

Co. Name: AVONs;    Line: Cosmetics;  Items: Lipstick, Powder, Eye Liner and Nail Polish.

 Product Line Depth: It refers to the no.of versions offered of each product in the line. Ex. P&G crests tooth paste comes in three types Paste, Gel, Herbal .

Product Mix Consistency:  It refers to how closely relate the various product lines are in end use. Product on requirements, distribution channels or some other ways. Ex. P& G product lines are consistent in so far as they are consumer products that go through the same distribution channels.

  Source: Books & Notes

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Product Line Decision

Product Line Decision: A group of products that are closely related they function in a similar manner are sold to the same customer group are marketed through the same type of out lets fall within given price ranges.

The company must manage it product line carefully. It can systematically increase the length if its product line in two ways.

Line Stretching

Line Filling

Line Stretching: It occurs when a company lengthen its product line beyond its current range. It may be in 3 ways Downward, Upward and Both Directions

Line Filling: Adding more items with in the present range of the line.

Source: Books & Notes

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Product Classification

Product & services fall in to two broad classes based on the types of consumers that use them.

Consumer Product

Industrial Product

Consumer Product:

Consumer Products are those bought by final consumers for personal consumption.

Marketers usually classified these goods based on how consumers go about buying them. Consumer product includes convenience Product, Shopping Product, Special product.

 Convenience Product: Consumer product that the consumer usually buys, frequently, immediately and minimum of comparison & buying effort. Ex: Soaps, New papers etc…

Shopping Product: Consumer goods that, the customer in the process of selection & purchase characteristically compares on such habits as suitability, quality, price & style.

Ex. Furniture & clothing

Special Product: Consumer with unique characteristics or brand identification for which a significant group of buyers are willing to make a special purchased effort. Ex. Car, Luxury Goods etc…

Source: Books & Notes

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Difference between Consumer and Organisational Buying Behaviour

Difference between Consumer and Organisational Buying Behaviour:

There are no.of reasons that can be identified to differentiate the process of buying for an individual consumer and Industrial consumer.

Organisations buy products in to services to reach their organisational goals. These goals should be profit maximisation, cost reducing, meeting employee needs and satisfy legal obligations. Therefore organisations are more rational during the purchase; however individuals by goods & services for their own satisfaction & other factors could influence the buying behaviour to very small extent. Hence, consumer buying process could be more spontaneous.

 More people are involved any organisation buying. There may be wide range of influences in the decision making process which could be from the various levels in the organisation. In consumer buying behaviour also they exists many roles played by different individuals. However, the extent or degree of people participation is very less in individual buying process.

  Organisation purchases are more likely to be based on formal routing like purchasing policies, constraints & requirements established by the organisations. This is not applicable to individual purchases and hence is more informal.

The poor performance of a product might cause annoyance to a customer & may not result in the repurchase of the same product. But in case of business buyer it could need to financial loss non achievement of goals.

In the process of reducing risk of the organisational buyer, the manufacturers face a greater attention to the development of product for organisational buyer, because he would seek for a longer relationship between buyer and seller with the organisation. However he may not resort to such measures for individual buyer.

Since the organisational is more formal, therefore the complexity of the process also increases. It could be a time consumer product & lot of people & various level & departments could be involved in the organisational purchase. However this is not the case in individual purchase.

Source: Books & Notes

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ORGANISATIONAL BUYING

The organisational buying process is more formal than that of the consumer buying behaviour. It involves various levels of participants of the organisation.

Participants in the organisational buying process:

Initiator

Influencer

Gate Keepers

Decision Maker

Purchasers

Users

 Problem Recognition:

The buying process stands with the recognition of the problem which is to be met by purchase of a product. The organisation does so because due to some reasons like to develop new product, where in equipment & material are required or the malfunctioning of the currently available the machinery which require new party or the unsatisfactory results of the already purchased products.

General Need Description:

The buyer then describes the general charismatic of the materials required in terms of the standards, quality, quantity, etc… In this process the helps of technically qualified manpower could be takes for the description of the need. The general description could also include reliability, durability & various other attributes.

 Product Specifications:

The product required to meet the needs are clearly specified. Technical specification & the quality expected are also specified.

Product Value analysis:

It is an approach adopted by organisations for cost reduction in which the various components are thoroughly an analysed in order to extract maximum utility out of it.

Supplier Search: In this stage the organisation tries to identify the most appropriate suppliers/vendors. The suppliers are notified about the requirement through advertisements or some notification. The vendors try to get listed in the various catalogues regarding the suppliers of the market place. This listing helps the supplier to have a reputation in the market. So that buyers would have a good impression about them.

Proposal Solicitation:

The buyer will, in this stage, invite, qualified suppliers to submit proposals which comprises of all the details regarding the products under consideration. The buyer goes through these proposals & selects a few which he feels is the most appropriate one. These proposals are further asked for presentations.

Supplier Selection

After the presentations being given the buyer selects for the most appropriate vendor.

Order Routine Specification:

After the selection of the supplier negotiation of the final order takes place between the buyer & the supplier. Technical specification, quality specification, quantity required, delivery time, warranties etc…, are discussed during these negotiation. In case of maintenance & repair buyers are employing blanket contract concept rather than periodic purchase order.

A blanket contract establishes a long term relationship which supplier promises to re supply the products at agreed up on prices over a specific period of time.

Performance Review:

The buyer keeps reviewing the performance of the suppliers at regular intervals in order to ensure there is maximum profit attain from the present supplier.

Source: Books & Notes

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Role of an Individual in the Purchase Process

Role of an Individual in the Purchase Process:

Initiators:  The initiators are those who initiate the purchase idea.

Influencer/ Gate keeper: An influencer helps the initiator to move forward the decision maker or purchaser. A gate keeper however, stops the idea from being passed on higher level.

Decider: Listening the initiator & influencer along with his own pre dispositions the decider makes a decision regarding the purchase.

Purchaser: Those who actually purchase the product are known as purchaser. The decider & purchasers may or may not be the same person.

Source: Books & Notes

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MODELS OF CONSUMER BEHAVIOUR - HOWARD SHETH MODEL

HOWARD SHETH MODEL:

This model was proposed by keeping both the industrial & consumer products, in order to give an understanding about great variety of behaviours. It shows the rational brand choice behaviour by buyer under conditions of incomplete information. It proposes levels of decisions making.

Extensive Problem Solving:

In this the customer does not have any basic information about the band and any preferences for any product. Then he will find information about all brands from the market before purchase.

Limited Problem Solving:

In this, customer has little knowledge about brands and market. This is an advance stage where the choice criterion is defined but the exact solution of the problem is unknown to the customer.

 There are four components describe in the model which causes the actual purchase behaviour.

Input Variables

Out Put variables

Hypothetical Constructs

Exogenous Variable

The input variable consists of some stimulate which serves as the information to the consumer.

Significative Stimuli: This is the elements of the brands which the consumer comes across.

Symbolic Stimuli: This consists of the stimuli which the producer shows about the various attributes /benefits of his product.

Social Stimuli: This consist of those environmental factors which can act as the source of input.

Output variable: This output is the ultimate response of the consumer. In order to come to a conclusion regarding the purchase consideration he follows sequential order.

Attention —– Comprehension —– Attitude—– Interruption—- Purchase Behaviour

The consumer first is attentive towards the various stimuli which help him in comprehensive about various brands. He then develops an attitude for the product due to which he has same intention regarding the purchase decisions.

Hypothetic Construct: These are the interviewing variables which influence the customers output decision. It consists of major variables.

Perceptual Constructs

Learning Constructs

Perceptual Constructs: This helps in the information processing for the selecting of a brand. It consists of three steps.

Sensitively to information: Where in the customer is open to the options available to him

Perceptual Bias: The consumer then has a biased opinion regarding the various brands, because he perceives each brand differently.

Search for Information: The consumer further searches for information in order to come to a conclusion.

Learning Constructs: This involves the formation of concepts regarding various brands. This consist of various factors like motive, brand potential of evoke set, decision mediators, pre – dispositions, inhibitors satisfaction.

Exogenous Variables: These are the External factors which influence the decision making process. This could include the importance of purchase, personality, social class., culture, organisation, financial status.

Therefore, this model gives on overall views regarding consumer purchases keeping in view all the factors influencing the organisation as well as the end consumer.

Source: Books & Notes

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MODELS OF CONSUMER BEHAVIOUR - Freud Theory or Model

Freud Theory or Model:

The Psychological forces shaping the consumer behaviour is mostly unconscious & their individual himself may not be able to given an explanation for his own preferences of a product. Sometimes he himself cannot fully understand this motivation to buy a product. Where an individual sees a product, he is not only analyses its features but also looks for the less conscious features like the size, color, shape, brand name & etc…, all these can act as factors of motivating him to buy the product, at the same time this consumer ins unaware of the preferences he has for it. Motivation researches conduct in depth service or interviews in order to find the effect of such unconscious factors.

Recent research has given result that each product is capable of bringing out a certain set of motives. For ex. An insurance policy will be opted by one who meets security for him and his family.

Different brands use this unconscious consumer behaviour to trap customers by giving different appeals. This is often termed as motivational positioning.

Source: Books & Notes

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MODELS OF CONSUMER BEHAVIOUR - Marshallain Economic Theory

Marshallain Economic Theory:

Alfred Marshall and other classical economists bare the first professional groups to construct a specific theory of buyer behaviour. This theory holds that purchasing decisions are the result of largely ration of & conscious economic calculation. The individual buyer seeks to spend his income on those goods that will deliver the more utility.

Marketers have dismissed this model as an observed one as it is not applicable to the real world situations. This model is also often called as economical model. In this four main effects where discussed according to which the customers where supposedly taking decisions regarding purchases. The effects are

Price Effect: According to this the lesser price of the product, the more the sale would take place.

Income Effect: The higher the real income the more the buyer would spend on the products.

Substantial Effect:  The lower of the price of the substantial products the higher the sales would be, therefore declining the sales of the other product.

Communication Effect: The more the product feature is communicated to the consumer. The more sales it would be.

However, these four effects are not always employed by consumer during their purchase. Further, nothing is specified regarding the relation between the product features and consumer preferences. This model gives only a very narrow view of the purchase pattern & this cannot serve as a perfect model for understanding consumer preferences in buying behaviour.

  Source: Books & Notes

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MODELS OF CONSUMER BEHAVIOUR - Maslow's Theory

Abraham Maslow

Abraham Maslow suggested a model based on which consumer markets their decisions. According to him motivation is the prime factor, which is divided in to various levels & this essentially dictates the behaviour of individual. According to him there are five levels of motivation which the consumer tries to satisfy in a sequential order.

Any individual would satisfy the level 1 and then only proceeds to level 2 and so on. The pressing need is satisfied in the order of these levels. A hungry person would not be interested in satisfying his esteem needs; rather he would try to satisfy the basic needs i.e. to purchase something which would satisfy his hunger. Immediately after this stage he will not try to satisfy any other need other than level 2.

Maslow’s theory helps marketers’ to understand how various products fit in to the plans, goals & lives of the customers. This serves as an important model in understanding the consumer behaviour because markets can anticipate / forecast the needs their customers & can cater to their needs depend up on their existence level.

  Source: Books & Notes

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STEPS IN BUYING PROCESS - Evaluation of Alternatives & Purchase Decision

 Evaluation of Alternatives:

There is no single evaluation process followed by all the consumers. The evaluation method could vary depending up on the individual or the nature of the product. However, it is foremost intention will be to satisfy the need. Secondly, he owned look for the other benefits accompany each product. He would evaluate each brand  assess their abilities & the ultimate satisfaction which could be achieve with that purchase consumers generally evaluate all the brands based on the key attributes and to do so he may unknowingly or knowingly rate the different brands, compare the attributes of each brand in order to arrive at a conclusion.

Purchase Decision:

Generally evaluations of alternatives are followed by the purchase decision. This because once the consumer evaluates the set of alternatives available to him it could be easier for him to reach a conclusion. However, two factors can interfere between the person intension & the actual purchase.

Attitude of Others & Un anticipated Situational Factors

The first factor describes the extent to which the other person attitude influences the choice of the consumer.

And the second factor could be situations which are confronted by the consumer & which could compile him to change his purchase decision.

Source: Books & Notes

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STEPS IN BUYING PROCESS-Information Search

 Information Search:

Once the need is recognised the consumer could search for information which would satisfy his needs. He will be involved in activities which could serve him a solution for his problem. He collects information from various sources which could be normally.

Personal Source: These include family, friends, neighbours, co workers etc…

Commercial Sources: This includes Adds, Sales, Promotional activities, Dealers, Packaging, Displays etc…

Experimental Sources: This includes handling, examining & using the product. This information search takes place a systematic way.

Total Set  —-    Awareness Set —-   Consideration Set  —–   Choice Set  —-    Decision

The total set consists of all the brands available in the particular category in the market.

Awareness set constitutes of those brands which the consumer is aware.

Consideration set consists of only those brands which would meet his initial criterion.

The choice set consists of those brands which the consumer feels could satisfy his other criterion.

Decision will be made to buy only one brand from the choice set.

Source: Books & Notes

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Consumer Buying Behaviour - Social Factors

Social Factors:

In addition to the internal/Personal factors the consumer behaviour is influenced by social factor reference groups, families, social class.

Reference Groups:

It consists of those groups which have a direct or indirect influences on the persons, attitudes & behaviour. Groups having a direct influence on a person are called membership groups, which companies of families, friends, neighbours, colleagues, etc…, with whom the person interact in a continues informal way. People who belong the secondary groups have an indirect influence on the individual and few companies of religious professional or union groups with which the individual has a formal & discrete interaction.

Family:

A family is most important influencer in the purchase behaviour of any individual. It is the family, which to large extent shake the individual believes & behaviour. The environment of a family plays a wider role in the individual’s perceptions & attitude building.

 Social Class:

A person participates in various social groups like those of clubs, Organisation etc… The role & status of an individual in the social group influence the buying behaviour. Consumer often chooses products that communicate their role/status/class in the society.

Source: Books & Notes

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Consumer Buying Behaviour

Consumer Buying Behaviour

Consumer often by product/services based on various factors. Consumers buy products in order to satisfy their needs & requirements buy. Sometimes may undertake a systematic process of buying & at other activities they could go for a product for no special reason or attribute. There are various approaches proposed for consumer’s behaviour. And consumers could follow any of these for their buying behaviour.

There are various factors which influences an individual buying a product. There could be individual buying a product. There could be

Internal Factors:

Past Experience, Attributes, Perception, Learning, Motivation & Personality.

Environmental Factors:

Which consist of the economical, technological, Legal & Political factors?

Social Factors:

Family, Reference group

Cultural Factors:

The above mention factors are influence the purchase pattern in a unit way.

Source: Books & Notes

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Differences between Marketing & Selling

  Source: Books & Notes

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Importance of Training

The importance of Human resource management to a large extends depends on human resource development and training is its most important technique. No organization can get a candidate who exactly matches with the job and the organization requirements. Hence, training is important to develop the employee and make him suitable to the job. Training works towards value addition to the company through HRD.

Job and organizational requirements are not static, they are changed from time to time in view of technological advancement and change in the awareness of the total quality and productivity management (TQPM). The objectives of the TQPM can be achieved only through training, which develops human skills and efficiency. Trained Employees would be valuable assets to an organization. Organizational efficiency, productivity, progress and development to a greater extend depend on training. If the required training is not provided, it leads to performance failure of the employees. Organizational objective like viability stability and growth can be achieved through training. Training is important as it constitutes a significant part of management control. Training enhances four C’s for the organization.

Competence

Commitment

Creativity and

Contribution.

Source: OB Books & Notes