UNIT – 2

Market Segmentation is the process of dividing a board and diverse market into smaller more focused
groups of consumers or business who share similar characterstics, needs and behavior.

OR
Market Segmentation is the sub-dividing of the market into homogeneous sub-sections of customers,
where any sub-section may be selected as a target market to be reached with a distinct marketing mix.

 It helps the marketer to take a heterogeneous market consisting of customers with diverse
characteristics, needs, wants and behaviours and carve it up into a more homogeneous market
with similar needs, wants and behaviours.
 It’s a valuable technique because of:
i) Efficient Use of Marketing Resources
ii) Better Understanding of the competitive situation.
iii) Better understanding of the customer needs
iv) Accurate measurement of goals and performances

Basis for Segmenting Consumer Markets

1) Demographic Segmentation
In this form of segmentation, sellers divides the market into different segments on the basis of
demographic variables such as age, sex, family size, income, occupation, education or social class.
Demographic Segmentation is useful because it is closely linked with customer wants, and they are
easier to recognize and measure than most other types of variable.
Eg. Age- Young and Old segments would have different demands, Gender based segments is useful
for Clothing and Lifestyle related products., Income Distribution shifts the demands, Education level
also plays an important role for shaping demand.

2) Geographic Segmentation
In this form of segmentation, seller divides the market into different geographical units such as
Nation, State or Region in which they can operate and enjoy a comparative advantage. This assists
the seller to position the distribution channel in the most appropriate manner.
Eg. A product maybe popular only in North India and not in South India, thereby North India can be
further segmented on the basis of various cities, and districts.

3) Psychographic Segmentation
In this form of segmentation, seller divides the market or customer group into segments based on
their beliefs, values, interest, opinions and other psychological criteria. It enables businesses to build
a better overall understanding of their target audience.
Such type of segmentation can be done on the basis of:
 a. Motive
b. Lifestyles
c. Personality Characteristics
Eg. A home décor company might find that it has a customer base of religious individuals. With this
information, they can start producing and promoting religious products for interior design.

4) Behavioural Segmentation
Dividing the consumers on the basis of their behavioural pattern such as:
a) Occasion - The occasions when they purchase or use a product.
b) Benefits- the Benefits that they seek from the product.
c) Status of The User- Whether the consumer is a non-user, ex-user, potential user etc.
d) Loyalty Status – Whether they are hardcore loyals, soft-core loyals, Shifting Loyals, Switchers.
e) Buyer Readiness Stage: Some people are aware, some are informed, others maybe interested,
some are desiring to buy, while other intend to buy.
f) Attitude – On the basis of their degree of enthusiasm for the product.
g) Volume Segmentation: On the basis of size and purchase patterns.

Levels of Market Segmentation

1) Mass Marketing – Seller offers the same product for buyers with different need by engaging in mass
production, distribution and promotion of one product for all buyers. The size of the market will be
larger, with promotion and advertisement expenses generic. It may lead to lower cost of production
and higher profit margin, but high competition. Eg. Coca Cola
2) Segment Marketing – The marketer divides the total market into several segments based on various
factors as described above. It results in a smaller market, but has advantage of better and
concentrated utilization of resources for marketing.
3) Niche Marketing – Niche marketing is defined as channeling all marketing efforts towards one well-
defined segment of the population. Niche marketing can be done when company knows what
customer needs and then deliver a better solution to a problem which was not presented by other
firms. In niche marketing the Customers are rich and require high end service, thereby competition
is not much and marketer can quote a premium price. It maybe used to cater to a specific type of
need.
4) Local Marketing – Local marketing is a marketing strategy that targets consumers and customers
within a certain radius of the physical location(s) of a business. Local marketing is also known as
neighborhood marketing or local store marketing. The focus is on a local market such as that of a
neighbourhood, town or a city. The cost of production is high and competition will also be less.
5) Individual Marketing - Individual marketing is the kind of marketing communication or promotion
that is customized for individuals in a personalized manner by the companies mainly through
technology. It is also known as Personalized Marketing. It’s a form of customized marketing where
the marketer offers customized products to the customer.
Criteria
The following criteria must be satisfied for effective segmentation:

a) Identity: There must be certain means of identifying an individual as being or not being a
member of the segment. Member of a segment should be readily identified by a common
identity
b) Accessibility: It must be possible to reach out the segment both in terms of promotion and
distribution. The firm must be able to make the customer aware of the product and secondly
reach to them through the distribution channel at reasonable cost.
c) Responsiveness: The segment must have defined so that it reacts to the any changes in the
marketing mix. Eg. Cost Conscious customer must respond -vely to a price rise.
d) Size: The segment must be large enough to be a profitable target, which depends upon the
number of people as well as their purchasing power.
e) Measurability: The purpose of segmentation must be to measure the changing behavioural
patterns of the consumers.
f) Durable: The segment should stay stable to avoid costs due to frequent changes.

Flow of Segmentation Process

I. Analyse the needs of the customer
II. Analyse his characteristics
III. Divide the customers into suitable segments
IV. Formulate different marketing mix
V. Feedback gathered from segments
VI. Selecting the higher potential segment

Advantages of Market Segmentation

I. Better Understanding of Customer and his wants
II. Better formulation of marketing mix as per the customer wants.
III. Using marketing resources more carefully.
IV. Selecting the apt channels of distribution
V. Right understanding of the competition.
VI. Accurate measurement of goals and performance.
TARGETING
Targeting refers to the process of identifying and selecting specific segments of the population
that a company wants to reach with its advertising, products, or services. This involves analyzing
various characteristics, behaviors, demographics, and preferences of potential customers to
create targeted marketing campaigns. By focusing on specific segments of the market,
businesses can tailor their messages and offerings to better meet the needs and interests of
their intended audience, ultimately increasing the effectiveness and efficiency of their marketing
efforts.

Evaluating Market Segments

The following factors must be considered while evaluating market segments:

1) Size of the market or segment: The market should be large enough to make sales and earnings from
the same. Small segments generally have less consumers and it is not easy to derive profits from the
same.
2) Porter’s Five Force Analysis: This analysis is used for determining the long-run profitability of the
segment
a) Threat of rivalry: A segment is unattractive if it contains aggressive competitors.
b) Threat of New entrants: A segment is unattractive if it is likely to attract new competitors who
might take up the market share.
c) Threat of substitute products – if there exist actual or potential substitutes for the product.
d) Threat of growing bargaining powers of buyers: if the buyers possess strong or increasing
purchasing power (can raise prices)
e) Threat of growing bargaining power of suppliers: they can raise prices or reduce the
quality/quantity of products offered.
3) Resource Allocation: Consideration of available resources, including budget, time, personnel,
and expertise, is essential. It's important to select target markets where resources can be
allocated efficiently to maximize return on investment.
4) Measurable: The results of the targeted segment should be measurable so, analysing results
become an easy process.
5) Growth: The chosen segment should also have growth prospects, in absence of these opportunities
the profit will be limited to a particular time period.
6) Accessibility: The segment that is chosen by the marketing department should be within the reach
of the firm and should be easy to accessible.
7) Segment Interrelationships The segment should be inter-related in terms of costs, performance and
technology for effectiveness.
Market Targeting Strategies
1) Concentrated Marketing (Single Segment)
Concentrated marketing, also known as niche marketing is a marketing approach where a
company focuses its resources and efforts on serving a single or limited number of well-
defined market segments. Instead of targeting the entire market broadly, concentrated
marketing involves identifying a specific niche or segment of the market that is underserved
or has distinct needs, preferences, or characteristics. Used By – Smaller Companies with Limited
Resources.

2) Differentiated Strategy (Multiple Segments)

Differentiated marketing, also known as differentiated targeting or segmentation targeting,
is a marketing strategy in which a company targets multiple market segments and develops
distinct marketing mix strategies (product, price, promotion, and distribution) tailored to
each segment. It is one of the most popular methods of market targeting. The product may not be
different, only promotion and distribution vary.

3) Product Specialization (One Product and different Market Segments)

Product specialization is a marketing strategy in which a company focuses its efforts on
serving a particular product niche within a broader market. Instead of targeting multiple
market segments or offering a wide range of products, the company specializes in a specific
product category and tailors its marketing efforts to appeal to customers interested in that
particular product.

4) Market Specialization (One Market Segment and different products)

Market specialization is a marketing strategy where a company focuses its efforts on serving
a specific market segment or niche within a broader market. Instead of targeting the entire
market, the company specializes in understanding and meeting the needs of a particular
group of customers who share common characteristics, preferences, or behaviors.

5) Undifferentiated Strategy (Mass Marketing)

Undifferentiated marketing also known as mass marketing is a marketing strategy in which a
company targets the entire market with a single marketing mix, without segmenting the
market into distinct groups or niches. In undifferentiated marketing, the company assumes
that all consumers have similar needs and preferences, and therefore, a uniform marketing
strategy and product offering can effectively reach and appeal to the broadest possible
audience.

6) Micro Marketing
 Micro marketing targeting, also known as one-to-one marketing, is a marketing strategy that
involves tailoring products, services, and marketing efforts to meet the individual needs and
preferences of specific customers or small, well-defined market segments. Micro marketing
focuses on personalized interactions and customized solutions for each customer or
segment.

POSITIONING
Positioning in marketing refers to the process of establishing a distinct image or perception of a
product, brand, or company in the minds of target customers relative to competitors. It involves
creating a unique identity and value proposition that sets the offering apart from others in the
market and resonates with the target audience.

The purpose of positioning is to locate the brand in the minds of the consumers to maximize the
potential benefit to the firm.

Benefits of positioning
1) Creates a particular image of the brand and the company.
2) Effective positioning helps differentiate a product, brand, or company from competitors
in the market.
3) Helps by guiding the marketing strategy by clarifying the brand’s essence.
4) Strong positioning can justify higher prices for products or services by emphasizing their
unique value proposition and differentiation.
5) Effective positioning can open up opportunities for market expansion by appealing to
new customer segments or entering new geographic markets.

A good positioning strategy should strike a balance between what the brand is and what it could be.

Positioning Strategies
1) Quality based product positioning: As the name implies, product positioning focus on the
product's quality as the main selling element. This strategy aims to appeal to customers who
prioritize quality and are willing to pay a premium for it. E.g. Apple and Tesla
2) Price Positioning: Positioning the product based on its price relative to competitors.
This strategy can involve positioning the product as a premium offering with higher
 prices to convey quality or exclusivity, or as a value offering with lower prices to attract
price-sensitive consumers.
3) Product Attributes or Features Positioning: Emphasizing specific product attributes or
features that set the offering apart from competitors. This could include superior quality,
performance, reliability, innovation, or unique functionality.
4) Variety based product positioning: The diversity of products the brand offers is primarily the
focus of this kind of product positioning. The audience will be aware of their range of choices in
this way. It can be utilized for services even though it is often employed for goods.
5) Efficiency based product positioning: The focus of this kind of product positioning strategy is on
how the product will make the customer's life more effective and simple.
6) Aesthetic-based Product Positioning: This type of product positioning focuses on how a
product's appearance and aesthetic fit with the needs and lifestyle of its target market. The
focus of this product positioning is solely on the current product and how attractive it is.

Product Positioning Process

1) Competition Identification: Researching the competition and its products is the first stage in
positioning. Understanding the competition that exists in that specific market is essential for
developing a unique positioning. The competitors frequently use technique of brand mapping to
position its products.
2) Product Characteristics Identification: The assessment of all qualitative aspects, qualities, and
uses of a good or service constitutes the second step in the positioning process. The numerous
qualities of a product can include its use, durability, benefit, ability to solve problems, emotional
appeal, etc.
3) Analyzing Customers: Understanding the needs, psychology, personality, etc. of the client is the
third step in the positioning process. A organization cannot develop an effective positioning
statement unless it comprehends its customer. Customer surveys, feedback forms, and other
tools can aid in improving customer comprehension.
4) Comparative qualitative analysis: Comparing and analysing competition data, qualitative
customer inputs, external influences, etc. is the fourth step in the positioning process. The
differences in market can be understood by comparison.
5) Determine Unique Positioning: The fifth phase in the positioning process involves determining a
particular issue or need that was missing and is addressed by the good or service. This enables a
business to have a strong and distinctive positioning in comparison to its rivals.
6) Execute Marketing Plan: Developing a solid marketing strategy that will aid in expressing the
brand's value proposition is the sixth step in the positioning process.
7) Measure & Evaluate: Measurement and evaluation are the final steps in the positioning process,
and they involve tracking the effectiveness of brand positioning in consumers' minds. This is
crucial since a customer's perspective could be quite different from the message that the
business is attempting to convey.
PRODUCT DECISIONS
 Product :- Product can be any object, service, commodity, event etc. that consumers purchase
to satisfy different needs. Every product comes with a bundle of different features to satisfy the
customers. The product is offered by the marketer for sale in the market.
 Layers of Product
As it is a bundle of different features, each and every feature of the product comes at a different
layer of the product, and each layer offers a different benefit to the consumer.
1. Core Product: Primary benefit for which consumer is actually buying the product. Eg.
Communication. (for a Phone)
2. Basic/Generic Product: Additional features or benefits that a consumer wants in
product. Eg. Features, quality and brand.
3. Expected Product: Minimum expected features required to attract a customer. Eg.
Weight, Look, Battery etc.
4. Augmented Product: Features that grant a competitive edge to product. (beyond the
expectations of the consumer) Eg. Fast Face-Unlock.
5. Potential Product: It includes all the transformations that the product may undergo in
the future.
 Product Classification
1) On the basis of Durability
a) Durable Goods – That can be used for longer periods of time and can survive many uses.
b) Non-Durable Goods – That can be used for a shorter span of time and can survive only a few
uses.
1) On the basis of Visibility
a) Tangibility: Products that can be seen, felt are called tangible goods.
b) Intangible: Products that can’t be seen but only felt are called Intangible goods.
2) On the basis of Users
a) Consumer Goods: Those good consumed by the final consumer to satisfy his needs
 b) Industrial Goods Intermediate goods used for producing Consumer goods.

 Types of Consumer Goods

a) Convenience Goods – Purchased with minimum efforts, frequently and for immediate
consumption
b) Shopping Goods – Goods for which the consumer will take some time to purchase, by
comparing the price, quality, looks, features etc.
c) Specialty goods – Goods associated with a brand name that provides a unique benefit to the
consumer. For such goods, the consumer makes special efforts for buying them
d) Unsought goods – Goods about which the consumer is unaware and doesn’t think about
buying them during the normal course

 Types of Industrial Goods

a) Material and Parts The goods that enter into the manufacturer’s product completely. Eg.
Raw Materials, Fabricated Material
b) Capital Items – Long lasting goods that facilitate the production of final goods. Eg.
Installation (basic infrastructure) and Equipment.
c) Supplies and Business Services – Short lasting and intangible goods that facilitate the
development or management of finished product. Eg. Coal, Paper, pen – supplies and
maintenance/advisory services.

Product Mix and Product Line

Product mix refers to the complete range of products offered by a company in the market. It
encompasses all the various types of products or product lines that a company produces or sells,
including different brands, variations, and categories.

For example, a consumer electronics company's product mix might include smartphones,
tablets, laptops, smartwatches, and accessories.

Product Mix Decisions: An organization must make changes in the product mix to make it adaptable
according to the needs of the customer. Product mix decisions refer to the addition, deletion or
modification of the product in the product mix. (Primary aim is sales and profit maximisation)

 Dimensions of Product Mix (Decisions)

1) Width of Product Mix: This refers to the number of different product lines a company offers. A
wide product mix includes diverse product lines, while a narrow product mix focuses on a
limited number of product lines.

2) Length of Product Mix: This dimension refers to the total number of products or items within a
product line. A longer product mix includes more products within each product line, while a
shorter product mix has fewer products in each line.
 3) Depth of Product Mix: Depth refers to the variations in each product line. It involves offering
different versions, sizes, flavors, colors, etc., within each product line.
4) Consistency of Product Mix: Consistency relates to how closely related the various product lines
are in terms of their use, production, distribution channels, or target market. A consistent
product mix involves products that are closely related, while an inconsistent product mix
involves unrelated product lines. Eg. Nestle is consistent in product lines as it offers edible
product with same distribution channel.

A product line refers to a group of related products offered by a company. These products
typically share similar characteristics, functions, target markets, or customer benefits. A product
line allows companies to offer a variety of options to meet different customer needs and
preferences, thereby increasing market coverage and catering to a wider audience.

Product line decisions refer to strategic choices made by companies regarding the products to
include in their product line. These decisions involve adding, modifying, or removing products
from an existing product line to meet evolving customer needs, stay competitive, and maximize
profitability

 Line Stretching Decisions: Implies increasing the length of the product line. It can take place in 3
directions:
i) Downward Stretching: Refers to addition of a new product at a lesser price.
ii) Upward Stretching – Addition of a new product at a higher price
iii) Two-Way stretching – Addition of products in the product line in both the directions.
2) Line Filling Decisions – Involves adding a new product in the existing product line to face
competition and increase consumer base.
3) Product line pruning: Removing unprofitable or underperforming products from a line to
improve overall profitability and efficiency.
BRANDING DECISIONS
Brand – It can be defined as a “name, term, sign, symbol or design or a combination of these” to identify
the goods and services of one seller from those of other sellers. Therefore, a brand differentiates one
seller's products or services from those of competitors. It refers to a unique identity of a product. For
example, Lux Soap, Hamam Soap.

Branding is the process of creating and managing a unique identity for a product, service, or
company in the marketplace. It involves a combination of elements such as a name, logo,
design, messaging, and overall experience that distinguishes a brand from its competitors and
creates a lasting impression on consumers. It’s about understanding the needs and wants of the
customer and understanding how your product can help the customer fulfill them. Effective branding
helps build recognition, loyalty, and trust among customers.

FUNCTIONS OF BRANDING
 Identification: Helps consumers identify and recognize the brand easily among
competitors.
 Differentiation: Distinguishes a brand from its competitors by highlighting unique
characteristics and attributes.
 Trust: Ensures consistent quality and experience, fostering trust among consumers.
 Loyalty: Encourages repeat purchases and brand preference, leading to customer
loyalty.
 Value Proposition: Clearly communicates the unique benefits and value of the brand,
helping to position it in the market.
 Quality Assurance: Communicates a certain level of quality and reliability associated
with the brand.
 Emotional Connection: Branding creates emotional connections with consumers by
aligning with their values and aspirations, leading to stronger loyalty and attachment to
the brand.
 Price Premium and Perceived Value: Well-branded products can command higher
prices due to the perceived value and quality associated with the brand, allowing for
better profit margins.

STRATEGIES OF BRANDING
Branding strategies are approaches companies use to establish and manage their brand identities
effectively. Here are several key branding strategies, including umbrella branding and corporate
branding:

1. Umbrella Branding :- Also known as family branding, this strategy involves marketing multiple
related products under a single brand name. This approach leverages the existing brand equity
and reputation across different products. For example, Apple uses umbrella branding for its
range of products like iPhones, iPads, and MacBooks.
 2. Corporate Branding :- This strategy focuses on promoting the entire company rather than
individual products or services. It involves creating a strong, cohesive brand identity that
represents the company's values, mission, and culture. Examples include company like Apple,
Whether it’s the iPhone, iPad, MacBook, Apple Watch, or even its services like Apple Music and
iCloud, the consistent use of the Apple logo, and a unified marketing message strengthens the
overall corporate brand and ensures a strong, cohesive brand identity.
3. Product Branding : - In this strategy, each product is given a unique brand identity. This allows
companies to target specific market segments and tailor marketing strategies to individual
products. Procter & Gamble (P&G) uses product branding for its various consumer goods like
Tide, Pampers, and Gillette.
4. Private Label Branding :- Retailers use this strategy to brand products manufactured by third
parties but sold under the retailer's brand name. This approach often offers cost advantages and
builds retailer loyalty. Examples include store brands like AmazonBasics and Costco's Kirkland
Signature.
5. Co-Branding : - Co-branding involves partnering with another brand to create a product that
leverages the strengths and recognition of both brands. This strategy can enhance market reach
and appeal. An example is the collaboration between Nike and Apple to create the Nike+
product line.
6. Brand Extension :- This strategy involves using an established brand name to launch new
products in different categories. Brand extensions can leverage existing brand equity to gain
quick acceptance. An example is Dove, which extended its brand from soap to a wide range of
personal care products.
7. Individual branding :- Individual branding is a marketing strategy where a company
creates unique brand names for the various products it offers. This approach allows each
product to establish its own identity, target different market segments, and potentially
appeal to different consumer preferences without being directly associated with the
parent company's brand. Procter & Gamble (P&G) is a prime example of a company that
employs individual branding. Tide (laundry detergent), Gillette (razors and personal care)

Advantages of Branding
Certainly, here are ten advantages of branding, each briefly explained:

1. Recognition: Branding creates familiarity, making it easier for customers to identify and choose
your products or services among competitors.
2. Customer Loyalty: Strong branding builds trust and emotional connections with customers,
leading to repeat purchases and brand advocacy.
3. Competitive Edge: A well-established brand provides a competitive advantage by differentiating
your offerings from others in the market.
4. Perceived Value: Effective branding enhances the perceived value of your products or services,
allowing you to command premium prices.
 5. Marketing Efficiency: Strong brands require less marketing effort and expenditure as they
benefit from word-of-mouth and customer loyalty.

Importance of Branding
1. Identity Establishment: Branding creates a distinct identity for a business, allowing it to stand
out in a crowded marketplace.
2. Differentiation: It helps differentiate products or services from competitors, highlighting unique
features and benefits.
3. Consumer Trust: Effective branding builds trust and credibility with consumers, influencing their
purchasing decisions.
4. Market Positioning: Branding allows businesses to position themselves strategically in the
market, catering to specific target audiences.
5. Consumer Decision-Making: Brands simplify consumer decision-making by providing familiar
options they trust.
6. Business Growth: Strong brands facilitate business growth by attracting new customers and
expanding into new markets.
7. Reputation Management: Effective branding helps manage and maintain the company's
reputation, especially during times of crisis.

Disadvantages of Branding
Certainly, here are ten potential disadvantages of branding:

1. Costly Investment: Building and maintaining a strong brand requires significant financial
investment in marketing, advertising, and brand management.
2. Risk of Failure: Despite efforts, branding initiatives may fail to resonate with the target
audience, leading to wasted resources and missed opportunities.
3. Brand Dilution: As companies expand their product lines or target new markets, there's a risk of
diluting the brand's identity and losing its original appeal.
4. Negative Association: If a brand experiences a public relations crisis or is associated with
negative events, its reputation and customer trust can be severely damaged.
5. High Expectations: Brands with a reputation for quality and reliability face increased pressure to
deliver consistently high levels of products or services.
6. Dependency on Perception: Brand success relies heavily on how consumers perceive it, which
can be influenced by subjective factors beyond the company's control.
PACKAGING
It refers to the outer layer of the product, the primary purpose of which is to protect the product from
outer environment. Packaging makes the product ready for transportation, storage, easy handling and
provides a unique identification to the product.

Functions
1. Protection: Packaging provides physical protection to products from damage, breakage,
moisture, and other environmental factors during handling, transportation, and storage.
2. Containment: Packaging holds the product together in a single unit, preventing it from
dispersing or spilling.
3. Preservation: Packaging helps preserve the quality, freshness, and shelf life of perishable
products by shielding them from air, light, and moisture.
4. Safety: Packaging ensures the safety of consumers by containing products securely and
providing warnings and instructions for safe handling and usage.
5. Identification: Packaging facilitates the easy identification of products by displaying essential
information such as the product name, brand, quantity, and barcode.
6. Convenience: Packaging is designed for ease of handling, storage, and use, making it convenient
for consumers to carry, open, and dispose of products.
7. Brand Promotion: Packaging serves as a platform for branding and promotional activities,
featuring logos, slogans, and visual elements that reinforce brand identity and attract
consumers' attention.
8. Differentiation: Packaging design helps differentiate products from competitors by incorporating
unique colors, shapes, graphics, and other distinctive features.

Labeling
It is a written slip attached to the product that provides essential information about the product. This
information can include the product's name, ingredients, nutritional facts, manufacturer details,
batch number, expiry date, etc.

FUNCTIONS
1. Product Identification: Labels help in identifying the product by displaying its name, brand, and
other unique identifiers.
2. Information Provision: Labels provide essential information about the product, such as
ingredients, nutritional value, and instructions for use.
3. Legal Compliance: Labels ensure that the product complies with regulatory requirements,
including safety warnings, ingredient lists, and other mandated information.
4. Marketing and Promotion: Labels can be used to promote the product through attractive design,
promotional messages, and highlighting key features or benefits.
5. Usage Instructions: Labels provide instructions on how to use the product safely and effectively.
 6. Safety Warnings: Labels include warnings about potential hazards and precautions that should
be taken when using the product.
7. Nutritional Information: For food products, labels provide details on nutritional content, helping
consumers make informed dietary choices.
8. Expiration Date: Labels indicate the product's expiration or best-before date, ensuring that
consumers use the product within its safe and effective period.

CONTENTS
 Ingredients List: A detailed list of all the ingredients or materials used in the product, usually in
descending order of quantity.
 Nutritional Information: For food and beverage products, this includes details like calories, fats,
carbohydrates, proteins, vitamins, and minerals.
 Safety Warnings: Any potential hazards associated with the product and precautions that need
to be taken.
 Manufacturer Details: Information about the manufacturer, including name, address, and
contact details.
 Batch or Serial Number: Unique identifiers for the batch or production run of the product, aiding
in traceability and quality control.
 Expiration Date or Best Before Date: The date after which the product may no longer be safe or
effective to use.
 Certifications and Standards: Symbols or logos indicating certifications (e.g., organic, fair trade)
and compliance with industry standards or regulations.

NEW PRODUCT DEVELOPMENT

Development of a new product is a critical and important process since the product is central to the
marketing mix. Product must be developed keeping in mind the needs of the customers. NPD takes a lot
of time, creative thinking, innovative ideas as well as cost. The success of the product decides the fate of
the organization.

STAGES/PROCESS OF NPD

1. Idea Generation: The stage involves pooling as many ideas for the product and considering each
one of them. This stage involves innovative and creative thinking abilities, and the source of the
idea can vary from the customer to the supplier to the employee. Techniques such as
brainstorming, think tanks (body of experts) and Delphi process (questionnaire sent out to a
panel of experts) may be used for ideation.
2. Idea Screening: All the ideas that have been generated at first stage should be developed. Then
the ideas must be examined on the basis of parameters like consumer preference, profitability.
This should be followed by ranking the ideas and finally evaluating and comparing the ideas. This
is a crucial stage, if error is made here then it might prove costly to the firm in the latter stages.
 3. Concept Development and Testing: Selected ideas are developed into detailed product
concepts. These concepts are then tested with target consumers to gather feedback and refine
the product idea.
4. Business Analysis: This stage involves assessing the business potential of the product, including
market size, cost estimates, sales projections, and profitability analysis.
5. Product Development: If the product concept passes the business analysis stage, it moves to
development. This involves creating prototypes or samples and refining the product design,
features, and production processes.
6. Market Testing: The product is introduced to a limited market or test group to evaluate its
performance, gather customer feedback, and identify any issues that need to be addressed
before a full-scale launch.
7. Commercialization: Once the product passes market testing, it is ready for full-scale production
and launch. This stage includes finalizing the marketing strategy, distribution channels, and
promotional activities.
8. **Launch and Post-Launch Evaluation**: The product is launched into the market, and its
performance is closely monitored. This involves tracking sales, customer satisfaction, and
market response to make any necessary adjustments and improvements.

PRODUCT LIFE CYCLE

A product goes through different stages during its lifetime. The study of life cycle has important
implication for a marketer. Each stage has certain characteristics and accordingly requires some specific
marketing strategies. PLC thereby helps the marketer to adopt right strategies at times of crisis. The
stages and the respective marketing strategies are explained below:

1) Introduction
This is the first stage of product life, being introduced in the market. At this stage, the customer
is initially unaware about the product as a result of which sales are low, cost per unit is high and
thereby due to low sales profits are almost non-existent, and competition is also low.
Innovators try product in this stage.

Marketers must focus on: (Creating Awareness)

i) Promotion: Creating more awareness about the product. For this the tools of advertisement
and sales promotion are apt, essentially to incentivize the customer into trying the product.
ii) Product: To take the response and feedback from the customers and remove any
deficiencies from the product
iii) Price: Skimming the cream strategy is followed and high price in initial stage. (Opposite of a
penetration strategy
iv) Place: Selective distribution should be followed, time must be given to product to grow.
2) Growth Stage
In this stage product starts becoming popular for consumers, sales start improving, cost per unit is
high (low profits) and competition starts increasing.
 Early adopters try the product in this stage. (after its popularity)

Marketers must focus on: (Increasing Sales)

a) Product: Introduce new variants and improve existing quality
b) Price: Price is still high but low as compared to introduction stage.
c) Promotion: Expenditure on advertisement is still high, more focus on brand image development.
d) Place: Starts increasing the coverage area and availability of the product.
3) Maturity Stage
The product reaches its maximum sales point. Higher sales result in lower costs per unit, popularity
has peaked resulting in higher competition while profits reach highest level. Selling cost is lower as
compared to previous stage.
Masses have become aware of the product in this stage.

Marketers must focus on: (Retaining Current Customer)

a) Product: Create Product differentiation, (that is 2 products only with minor differences) strategy
to make the product attractive to new target markets
b) Price: Make the product affordable
c) Promotion: Focus on sales promotion strategy to attract more customers.
d) Place: Distribution must be more extensive and more middlemen involved.
4) Decline Stage
At this stage sales decrease leading to low profits, competition starts declining due to low
popularity. Customers start leaving the product except loyal ones. Firm must focus on minimizing
cost and reviving the product. Selling and related cost start declining.

Marketers must focus on:

a) Product: Give new life to the product by giving it new uses.
b) Price: Price Cut to retain loyal customers
c) Promotion: Focus on Sales promotion than advertising
d) Place: Distribution becomes selective
5) Abandonment Stage
Firm will abandon the product when the marketing strategy fails to revive the product from the
market to avoid further losses.
STRATEGIES OF PLC
1) At the time of introduction
a) A Rapid-Skimming Strategy: It means launching the new product with a high price and high
promotion.
b) Slow-Skimming strategy: It implies Launching the new product with a high price and low
promotion.
c) A rapid-penetration Strategy: It consists of launching the product with a low price and heavy
promotion.
d) A slow-penetration strategy: It consists of launching the new product with a low price and low
level of promotion.

2) At growth stage
a) Improve product quality and add new features and models.
b) Finding new distribution channels to gain additional product exposure.
c) Search out new market segments to enter.
d) Deciding the right time to lower prices in order to attract price sensitive buyers into the market.
3) At maturity stage
a) Market modification: Manager looks for new markets and market segments in which he has not
yet tried the product.
b) Product modification: Managers, here, try to increase the sales by initiating changes in the
product's characteristics that will attract new users or more usage from current users. Product
modifications can be Quality improvement, Feature improvement, Style improvement, etc.
c) Marketing mix modification: Here, the product manager can cut prices in order to attract new
customers or develop a more effective advertising campaign which attracts consumers'
attention and interest through sales promotion, like, gifts, contests, discounts, etc.
4) At decline stage