MODULE

IN

PRODUCT
MANAGEMENT
BY:

PERLA B. PATRIARCA
Asso. Prof. 1
Faculty, CBA-Department of
Marketing Management
 PREFACE

This is a module compiled by PERLA B. PATRIARCA from the following references:

“Marketing Shift” by: Go, Josiah; “In Depth: A Guide to Successful Business
Planning”,by: Agustin-Acierto, Marife, et.al.”Product Strategy and Management”by:
Baker, Michael and Hart,Susan and “Marketing Management” in the Philippine Setting
by: Edgar P. Del Val

OVERVIEW

The cover page used are brand marks and brand names under University IPs. These
are copyrighted researches from students during the second semester of School year
2019-2020.

These are the three product entries : (1) Chiwarma Chicken Pita); (2) Branana Rice
bran cupcakes and cookies and (3) Beeda Honey bagoong; from the University IPs
which was launched in the market during the SUC-CHED Product Expo-2020 held last
March 9-11, 2020 at the Trinoma Mall, Quezon City. The IPMO Team from the Office of
the Vice-President for Research, Extension and Development accepted the challenge
for the very first time in the history of the Polytechnic University of the Philippines (PUP)
to produce University-owned products; a test marketing strategy to determine its
acceptability. After the 3-days product expo-it was a positive result—there is product
acceptance, so what we need at the moment is to further enhance the taste, package
and label design of all three products and be ready to such towards commercialization,
but—the University must collaborate with industries, look for partnership to sustain
production like spin-offs to address financial needs moving towards small scale (phase
1) production, this is the sad but challenging part since the University do not have
enough resources to produce such products, hence conceptualizing “Technology
Business Incubator” TBI is one factor to possibly reach the commercialization stage.
(Commercialization shall be discussed in the next chapters of this module)

TABLE OF CONTENTS

I. Review and Introduction

II. Review: Understanding examining Consumer Behaviour
III. The New Product Development
IV. The Idea on Management for New Product Development
V. Screening of New Product Ideas
VI. The Business Analysis
VII. The Product Testing
VIII. Product Management and Strategy on Product Introduction (initiate a
successful product launching)
IX. The The 7-Product Life Cyle
X. Understanding the decision to delete the product in the market
XI. Public health issues (Covid-19 Pandemic)

………Simple Outline of Marketing Plan…………….

CHAPTER 1

I. Review and Introduction

Chapter Objectives: At the end of the chapter students will be able:

 To review the basic and fundamental aspects of marketing

 To match innovative products to available resources and identify its target market
 To review and fully understand the Product Life Cycle

NOTE: this
illustration shall be
discussed on the next chapter.

During the ancient time, the essence of “exchange” like the “barter trade” plays
significant role in business even in the absence of monetary value, and that is already
marketing—“making transactions” to another over a product or service in accordance
with individual needs towards their convenience and satisfaction.
Marketing is said to be a “way of life”; part of our daily routines. From its fundamentals,
we learned the Marketing mix, its importance and significance as well as the basic
functions listed below:
 Buying
 Selling
 Distribution
 Research
 Pricing
 Product management
 Promotion

Figure -1
Figure-1 shows that product management is a continues process, it the product does
not perform well in the market, research to find out reasons in order to match it with your
target market hence, innovation and changes must be done, then go back to market,
make necessary assessment and establish good rapport with the consumer by applying
the “push”strategy , observe their behaviour, talk to them, ask their findings about your
product, it will help.

Identifying the needs of consumers in the community, their purchasing power affects the
business of marketing people in determining target market through market
segmentation, develop pricing strategy that match the financial capability of the target
market other than product and services below which are considered “marketable
products”:
 Tangible products
Example: Food

 Intangible products (service) (Additional presentation on this part)

 Persons/famous personalities (being paid for product endorsements )

 Ideas (Facebook of Mark Zuckerberg)

 Places/area/location
  Professionals services

 Software applications

DEFINITIONS OF TERMS:

According to William J. Stanton, “Marketing is a total system of business activities

designed to plan, price, promote and distribute want-satisfying products and services to
present and potential customers.” but, I added from its definition after the last
sentence,”in order to achieved organizational objectives, which is to gain profit”. On the
part of company, their intention is to distribute their “produced” product towards
dealer/distributors and moving such towards final buyers and that is their main
objectives of producing products.

PRODUCT:
 is defined as “anything that satisfies” human being.
 An item offered for sale. It can be physical or in virtual or cyber form. It is made
at a cost and sold for a price, “which is equal to its value” depending on its
quality, quantity, size, value and the satisfaction it provides to consumer.
https://m.economictimes.com

CHAPTER TEST:
1. Define Product based from your own understanding.
 Differentiate tangible from intangible product
2. What will be the effect to the seller if, before product launching—seller
already identifies its target market-according to their behavioral pattern?
please list down.
3. What are the functions of Marketing you remember the most significant in
our daily life, why?

CHAPTER II

II. Review on Understanding and examining Consumer Behaviour

Chapter Objectives:
At the end of this chapter, you should be able to:
 Learn brief introduction about Consumer Behavior
 Understand and define Consumer Behavior
 Identify and differentiate types of Consumer
 Identify Models of consumer behavior
 Determine how do attitudes and values influence consumer behaviour

In a glimpse, many brands of different product categories becomes available in store

shelf space, point-of-purchase (POPs ) creatively displayed in supermarket, malls, retail
stores, these strategy dominates specifically the “No-buying-buyers” into “yes-buying-
buyers”. These are only some motivational factors that might change consumer mind
and their buying perspective. At the present time, Consumers buying decision become
complex as compared before, where people live on a simple life, having less “wants
and needs”. Now, “Consumers feel almost an assault to their visual senses when
walking down supermarket aisles and seeing all the wide different brands properly
displayed on racks. This scenario has become a challenge for many brand people
hence, made marketers realize that marketing and selling are an exercise in futility if
one is not able to win the buyers positive response.

Decades back, a marketer’s life was a lot simpler. Having a superior product or service
and making it available everywhere were the key ingredients to successful marketing.
Products and services with huge advertising budgets scored better than others with less
budget. But those with lesser budget still stood a good chance for as long as their
products and services were made available at the point of sale, at this point logistics
and product placement and distribution played a very important role in reaching
wherever consumers are. There were fewer choices back then unlike today, a lot of
products with different brands are available anytime, anywhere..
Today, the obstacles are much greater. The battlefront is not just at the point of
purchase. There is a huge battlefield outside the retail area. What is imperative is for
the marketer to win over the consumer while still outside the selling are
Dr. Karen V. De Asis, “Color Folders in the Mind: A Branding Story”, prologue, page 11, 2007

Consumer Behavior defined:

 The study of individuals, groups, or organizations and all the activities associated
with the purchase, use and disposal of goods and services, including the
consumer's emotional, mental and behavioral responses that precede or follow
these activities.

 According to Jacob Jacoby (1976), consumer behavior reflects the totality of

consumers’ decisions with respect to the acquisition, consumption and
disposition of goods, services, time and ideas by decision making.

 is the study of how people make decisions about what they buy, want, need, or
act in regards to a product, service, or company. It is critical to understand
consumer behavior to know how potential customers will respond to a new
product or service. It also helps companies identify opportunities that are not
currently met.

With these definitions, according to Williams (Consumer Behavior, 1982) has

the following significant findings not only on price elasticity but to the
Marketing Mix:
1. “Consumers tend to be more price-elastic towards an impending price
increase than what actually takes place when the price increase happens.”
Claimed price elasticity tends, therefore, to be greater than realized price
elasticity.
2. “Consumers appear to be more sensitive to price decreases than to price
increases. They are more ‘downside elastic’ than being ‘upside elastic’.”
3. “The consumer’s price elasticity is observed to diminish when shopping with
a friend or when being persuaded by a salesman perceived as an expert.”
Consequently, it seems to increase when shopping alone and when the
consumer feels self-confident about her own buying decision. Josiah Go,
Chiqui Escareal-Go, “Fundamentals of Marketing in the Philippine Setting”
p.304, 2nd ed. 2010

Two (2) General Classifications of Buyers:

1. Ultimate buyers – Consumers who make a purchase for their immediate

and/or personal consumption. The transfer of goods or services ends up.

2. Industrial buyers/Business Market – Those who make a purchase with the

intention of re-selling goods/services for profit. More transfer of goods is
expected through different channels (channels members) with the use of
effective means of transportation, as such, price of the product/service
increases.

Types of Consumer (According to their behavioral pattern):

 Hot-temper
 Argumentative
 Low thinker
 Choosy
 Brand loyalists
 Sophisticated
 Pickle-minded
 Intelligent
  Comparative
 Bargain hunter
 Decided/sure buyer
 Undecided
 Understanding

Buying Motives (Reasons Why do People Buy)

 Needs and Wants
 Motivation
 Attitudes
 Family Orientation
 Culture
 Social Class
 Group Influence
 Innovation
 Environment
 Peers
 Nature of work
CHAPTER TEST
1. Describe yourself as to what type of buyer? If you are the seller,what do you
think would be the best and effective strategy in order to get your “Yes” and
therefore convinced you to buy the product.
2. What are the common reasons why you involved into buying? List down types of
product you usually purchase, why?
3. How does the present situation “pandemic” affects your buying behaviour?
4. What makes you satisfy after or in buying a product?

CHAPTER III

III. The New Product Development

This chapter intended to provide overview to identify tasks required to
generate new product ideas and how to successfully launch the product in the
market.
Chapter objectives:
 Understand various approaches to modelling the development of new
products
 Appreciate the more recent developments in thinking about how to
model new product development
 Be able to present a product plan for the organization of people
involved in the development of new product.
New Product Development
Process

STRATEGIES
 Observe the present situation
 Adopt to available resources
 Extend product lines
 Envision the future needs and demand in the community
 Adopt product and brand stretching if needed
 Change, improve and innovate existing products
IDEA GENERATION
First is to determine what product/service has a great needs in your chosen location, by
an identified segment of target market
Example: Nowadays, there is high demand for the following products/services:
 Healthcare services
 Alcohol
 Germicidal hand washing (bar soap, liquid soap)
 Face mask
 Face shield
There are internal and external sources of product ideas:
Internal sources:
 R & D team
 Technical department
 Product design and engineering work on developing applications and
technologies which will be translated into new product ideas
 Collaboration with other companies
 Brainstorming

External sources:
 Competitors
 Customers
 Distributors
 Inventors and Universities are fertile repositories of information from which new
product ideas come
However, all sources of ideas, may have to be organized in such a way as to
extract ideas. In short, the sources have to be activated. “Product Strategy and
Management”Michael Baker and Susan Hart, pp.162
 SCREENING AND EVALUATION

Brainstorming is the key to screen and evaluate different ideas generated by the
researchers and/or inventors.

This is the stage where an assessment from the team as to the extent of demand
for the ideas generated and of the capability by company has to make the
product. Having said the first several evaluative stages, only a rough
assessment can be made of an idea, which will not yet be expressed in terms of
product and label design, materials, sales ,marketing, finance and production, to
assess whether the idea has potential, is practical, would fit a market demand
and could be produced by existing plant, and to estimate the payback period.
The net result of this stage is a body of ideas which are acceptable for further
development. Product Strategy and Management”Michael Baker and Susan Hart, pp.162

At this point, meetings and brainstorming is needed to further discuss

findings during the evaluation stage.

BUSINESS ANALYSIS

Analysing the general business condition basically is a must in order to make a

wise financial forecast for your product. Below are the three approaches on
financial analysis:
1. Review basic financial concepts (profit projection also included)
2. Explore techniques to determine potential financial performance of new
product (which never exist/manufactured)
3. Introduce the specialist research-based techniques which have been
developed to help decision makers to decide whether to go or not-to-go in
the development of the new product concept.

Basic Financial Concepts:

1. Unit sales (expected)
2. Revenues (Net sales value)
3. Production costs (fixed and variable)
4. Direct marketing costs
5. Incremental profit (expected)

DESIGN AND DEVELOPMENT

Product design- is conceptualizing a new kind of product idea and for the inventors and
company’s R & D to develop such idea into creating a new product provided it is
supported by complete resources hence, product development stage is set.

This is the part where an identity for the product is given from the following:
 Brand name
 Label
 Label design
  Package type
 Package design
 Colors
 Brand marks
 Quantity
 Pricing
 And other basic marketing and business strategy

TESTING
Test Marketing is defined as” the process which follows product development
and testing and precedes launch and commercialization”. “Product Strategy and
Management”Michael Baker and Susan Hart, pp.358

Test Marketing as described in most texts is focused on the launch of some

popular brands. Despite the absolute importance of such launches, some
company constitutes a minority of the instances when an organization is
launching a new product or service into marketplace.

As a result, accelerating technological change and increased competition, time to

market has become a critical success prompting some firms to avoid the loss of
time implicit in a test marketing activity.

With a clear understanding of markets, effective marketing research and the

benefits of information technology, with the more professional approaches to the
NPD process, many innovators/inventors do not expect to acquire sufficient
benefit from a test market to warrant the expense and delays for the product to
be distributed in the market.

Test Marketing (Two Primary Objectives) :

1. Mechanical-to assess arrangement for handling and storing of materials,
producing and distributing the product in good condition and monitoring a
distributor/retailer performance’. Most concern is to monitor the “pilot run
for production” and if found to be successful, then the distribution will gear
up to “full-scale manufacturing and sales”. It seems that the product trial
depends very much on the novelty of the product and/or market in terms
of the innovator’s past experience.
2. Commercial-Deals in the selling and moving the product towards the
consumer.
With these two objectives, some of the purposes may also have to considered:
 Providing forecasts of national sales
 Evaluating the mix elements working together (packaging, price, merchandising,
retailing, distribution, advertising, sales promotion)
 Assess the speed of gaining distribution
 Assess the speed of gaining trial
 See how competitors react
 Provide evidence for or against full launch
 Enable the training of production, sales and distribution personnel
 Provide proof of financial viability for investment
GUIDE FOR EFFECTIVE TEST MARKETING:
1. Design the test to find an answer to a single major issue
 2. Incorporate the test into an overall marketing plan
3. Set target at the same level as national expectations
4. Be completely objective in evaluating results
5. Benefit from comparative testing where possible
6. Profit from professional advice
7. Select a representative area
8. Allow sufficient time to set up the test properly
9. Establish a test base against which to measure subsequent changes
10. Carefully analyse competitors market shares
11. Welcome exposure to competitive retaliation during the test
12. Examine retailer cooperation and support
13. Examine repeat sales pattern
14. Coordinate advertising and promotion
15. Avoid using methods during the test which will not be repeated during the
expansion period
16. Evaluate all possible factors which influence sales
17. Avoid interference with the test once it is lauanched
18. Adjust result to changes which may occur in the market prior to expansion or
market launch
19. Allow sufficient time for the test to mature and for the results to be analysed
20. Employ proper research procedures, and budget to allow sample size and design
indicated by the test problem
COMMERCIALIZATION
This is the last stage of the New Product Development Process but doesn’t mean that
the work of the researchers ends here.

• Commercialization” refers to the process of deriving income or profit from a

technology, such as the creation of a spin-off company, or through
licensing, or the sale of the technology and/ or IPRs. (Section 4(p) of
Republic Act 10055 or the Philippine Technology Transfer Act of 2009
•
NOTE: Powerpoint presentations will be shown and discussed on this part about the University
IPs and the strategies on how to move such IPs towards commercialization

CHAPTER TEST

1. What are the two sources of product ideas in the NPD process
2. Do you think brainstorming is effective during the NPD process? Why?
3. List down the significant aspects of conducting business analysis before or
during the product development process NPD
4. How important is product design towards product acceptance in the market?
5. Which among the things discussed in Chapter -3 you related the most? Why?

CHAPTER IV

IV. The Idea Management for New Product Development

Chapter Objectives:
  To introduce the concept of idea management rather than idea
generation
 To describe sources of new ideas
 To describe methods of activating sources of ideas
 To introduce the notion of creativity in idea management
Learning Objectives: This chapter will help you
 Be able to gather internal sources of new product ideas from within
the company
 Be able to apply techniques associated with idea generation for new
product development
 Appreciate the role of creativity in idea generation for new product
development
As discussed from the previous chapters, product ideas can be generated from:
 Meetings
 brainstorming
 formal and informal discussion,
 interview,
 observation and other sources and proper screening of all data gathered is
needed. Many ideas are available at the start of the process and all of which can
be subjected to evaluation, further development and further evaluation from a
variety of perspectives, such as:
 Marketing
 Design
 Manufacturing
 Pricing
 Distribution
 Purchasing
 Target market segmentation
 And others….
According to business experts, the setting of clear innovation goals within separate
strands on development, defined “newness” which is also means “novelty”-quality of
being new, original, unusual or never been introduced in the market before. (Please
refer to Chapter III- where internal and external sources of product ideas have been
discussed)

CHAPTER TEST
1. What is “Novelty” product
List down examples
2. What do you think are the basis of product concept evaluation based from the
given variety of perspectives given above?
3. What is target market segmentation? How is it being done to make it effective?

CHAPTER V

V. Screening of New Product Ideas

 At the end of this chapter, students should be able to:
 Define screening in its place in the NPD process
 Discuss the errors and risks in screening
 To put forward a new simplified screening procedure
 Know the limitations of screening
“Screening” as defined: process of evaluating new products ideas, and the product
itself, but to simplify, “Screening” could be a way to provide the conceptual and physical
developments that the new product undergoes moving on its full product launch.
Screens for new product types:
 New to the world
 New to the market
 New to the company
 A new (additional) product line item

Reasons for Screening and Evaluation of product ideas:

1. Technical development
- Assessment of design
- Production
- Functional feasibility
- Specifications
- Market/commercial viability
2. Identifying ideas
-develop concept out of the identified ideas
-determine technical feasibility
-determine market potential

Screening is important in order to determine the future success or failure of a

new product introduced in the market

Risks in Screening: result of the screening depends on how top management

view the risks like:
- Killing off product ideas which may have potential in the market
- Developing product ideas which might fail in the mark

Types of Screening Strategy:

 Growth role
-enter a new category of business that represents a ‘net addition’ to the
company’s portfolio
- expand a company’s global market share within a product category
-deliver price advantage which will allow the company to increase market share
at the expense of the competition
-create a whole new category of product-market, strategically expanding sales
 Category
-has proven consumer attractiveness
-is not dominated by one or two major players
-demonstrate growth potential
-has room for additional products which might offer benefits to the consumer
 Strategic role
-technologically superior to products currently available
-capitalize on existing distribution and delivery systems
-allow the company to develop technical or marketing skills in a new sphere
 -are aimed at growth markets
-will use up excess capacity
 New product role (as discussed previously)
-new to the world
-new to the market
-new to the company
-a new (additional) product line item
 Internal strength
-makes use of patented technology (Note: power point lecture will be presented
Focusing on copyrights, trademark, licensing, etc.)
-increases the use of an ‘efficient manufacturing system’
-capitalizes on existing marketing and sales effort
-exploits technological, engineering, design or marketing skills
 Financial risk- a comprehensive
-expected revenue
-ROI
-pre-tax profit contribution
-gross margin
-return on net assets

NOTE: Clearly, a comprehensive financial analysis must occur and the earlier in
the process, the better.

To sum up, it has been suggested that, despite the relative unreliability of the
screening stage, still… it is an important step in the new product development
process.

ILLUSTRATION : A Simplified Screening Procedure

Stages in Development
New Product Strategy Statement Evaluation Pattern

Idea Generation

Checklist on key areas

Must be situation-specific

Screening

Concept development

Internal (functional) and external

Concept Testing (customer)

Evaluation of Non–defined dimension

 Business Analysis Comparison of costs, demand, appeal
And competition to evaluate precise
Payback, break-even and so on

CHAPTER TEST
1. Among the stages in the NPD, which do you think the most important and
why?
2. Do you think as a marketer, are you capable of preparing a comprehensive
financial analysis? If yes, why and why not?
3. What is the best way of removing/killing off a product/brand from the
market, why?
4. Differentiate the following based on your own understanding:
a. New to the world product
b. New to the Market product
c. New to the Company product
d. Additional product line
NOTE: Optional, you may or may not give examples
CHAPTER VI

Chapter VI: The Business Analysis

At the end of this Chapter, students should be able to:
 Understand the key components of a business analysis for new product
development
 Be aware of problems associated with business analysis techniques
 Know how to distinguish the basic financial analysis from the entire
evaluation required to make the Go-No go decision
 Be able to do the basic financial calculations for NPD
In the previous chapters, you have learned the screening strategy,the
development process, the launch, marketability, product appeal, and the
customer . Most likely…analysing the general business condition is another very
important aspect during the NPD stage. Determining the costs of the entire
product development process, such as:
 Product costs
 Production and design costs
 Market adoption
 Eventual profitability

Considerations on Business Analysis:

1. Fixed and variable costs
2. Direct marketing costs
a. Advertising
 b. Sales and promotional materials
c. Other sales-related extraordinary items (sales conference,meetings,etc)
3. Incremental profit-the profit gain or loss associated with a given managerial
decision. When incremental profit is negative total profit declines.
Similarly, incremental profit is positive(and total profit increases) if the
incremental revenue associated with a decision exceeds the incremental
costs. (please see illustration below for an easy understanding)

Basic financial summary for new product X (000)

Year 1 Year 2 Year 3 Year 4 Year 5

Net sales value 1,000 1,500 2,000 3,000 4,000
Fixed costs 1,000 200 50
Variable costs 500 750 1,000 1,500 2,000
Marketing costs 200 300 350 300 300
Incremental costs (700) 250 600 1,200 1,700
Cumulative profit contribution (700) (450) 150 1,350 3,050

This illustrates several factors which are typical of financial issues in NPD. First,
note the relationship between NSV and VC,VC are shown to be half NSV, for
purpose of clarity, but the important issue is that VC represent a constant
proportion of sales, precisely because they do vary with the increase in sales
volume. A second issue worth noting is the high FC in the first few years of the
product’s life. Since FC are “written down” year by year, they become, over time,
less important in the profit profile of the product. Looked at another way, the first
few years of a products profitability are bound to be affected by a
‘disproportionately’ high level of FC. This is why competent financial analysis
must go further than the launch and immediate post-launch period if it is to serve
as a useful decision aid.

Financial Techniques for New Product Development

1. Sales Forecasting – with (2) categories:

1.1 before test marketing- sales forecast will be based on the data collected
during the screening, concept evaluation phases: estimation of market
size, market growth rate, market share of current product, market
segments
1.2 after test marketing-forecast where is data are already available,
compared to before test, less estimated data is expected
2. Sensitivity analysis
3. Cannibalization assessment
4. Break-even analysis
CHAPTER TEST
1. What is meant by the following acronyms?
a. NSV
b. FC
c. VC
2. Give at least (2) sales forecast for a hypothetical product in the next 2 years for
the following products, choose only one:
a. Face shield
b. Face mask
c. Multivitamins
3. What is meant by cannibalization? Give example
 CHAPTER VII
Chapter VII – The Product Testing
At the end of this chapter, students should be able to:
 Discuss the importance of realism, sensitivity and validity in concept testing
 Understand the various objectives of concept testing
 Be able to take the necessary decisions to design and implement a concept
test
 Appreciate the specific issues of Beta testing
In the planning stage of development of physical products, once the major
“GO”decision has been taken, the actual product will be developed. A team will
be assigned to work for it, feasibility studies, cost analysis, alternative designs as
discussed in the previous chapters. The length of time to be devoted to the
physical development of the new product depends on its complexity.
 First version – prototype- it has to test whether it works in the way
intended by earlier design specifications. This requires functional testing.
Product Testing – must address not only whether the attributes have been
physically delivered s intended, but also whether the same promise of benefits
results from the collection of attributes. In other words, product testing must
assess whether the new product does, in reality, deliver the benefits that were
identified at the concept testing stage. (Example for discussion or to be given as
assignment for research)
 Train developed by 10 Filipino engineers from DOST
 Medicine/vaccine to cure Covid-19 (from Russia, China, USA, etc.)
 ABS-CBN black box
 GMA-7 Affordabox
(Please refer to the illustration below in relation to the previous lesson)
Purpose of Product Testing
The purpose of Product testing is to reduce risks further in the decisions leading
to the product launch. This is done by:
 Examining the extent to which the new product fulfils the promises
encapsulated in the concept statement
 Comparing the new product with its targeted competitive products
 Assessing how the product might be improved to conform better to buyer
expectations
 Evaluating the effect of changes to the product (content, materials, design,
positioning, price, etc.) on customer preference levels
 Reassessing the purchase intent (PI) for the new product, given its actual
attributes
 Testing the proposed advertising, selling and packaging associated with the
new product
Major Considerations during Product Test:
As with other stages in the NPD process, the product test encompasses a number
of subsidiary decisions, such as:
 Objectives setting: what purposes will the test satisfy?
Example: (1) to contribute to the positioning of the new product
(2) to contribute to the final selection of product features
(3) to contribute to market launch strategy
 Product-related decisions
(1) Presentation of the product may vary, “single best” or “product
variants”
(2) Blind or brand tests
(3) Explanation and supervision of tests
 Sample selection
(1) Identification of testers
(2) Panels or adhoc surveys
(3) Sample size (as previously discussed)
 Location of the product test
(1) Own laboratory
(2) Central location
(3) Location of use-could be in consumer house or workplace
 Data collection method-previously discussed in the concept testing,
however, to further recap, please refer to the following:
(1)face to face collection method
(2)malls/streets intercept tests
(3)hall tests and laboratory tests (all require the presence of the tester)
(4) and other strategies of data gathering
 Measurement technique
 (1)Monadic and comparative approaches in product testing-we can relate
the monadic/comparative choice to the issues of:
a. realism
b. sensitivity and validity
(2) Scaling techniques in product testing – this refer to the nature of scaled
used (could be small or large or full production batch) depending on the
quantity of production during the testing

Results of Product Testing:

With the type of information collected, the developers should be in a position to

know:
 Whether or not the new product appeals to the target market
 Whether or not the new product compares favourably with competitive or
substantive offerings
 How the product might be improved
 The proportion of testers who have expressed purchase intention

CHAPTER TEST

1. Assignment for research, please conduct a research in any (2) of the

following product/invention listed below:
a. Train developed by 10 Filipino engineers from DOST
b. Medicine/vaccine to cure Covid-19 (from Russia, China, USA, etc.)
c. ABS-CBN black box
d. GMA-7 Affordabox
2. After being familiar with any 2 of the listed product, discuss the most
effective product testing strategy/ies, and why do you say so?
3. What are the various purposes of product testing in NPD?

CHAPTER VIII- IX
(Combined all stages of Product Life Cycle)

Chapter VIII-Product Management and Strategy on Product Life Cyle

(A look at Commercialization: test marketing and launching the new product)
a) 4 Stages of PLC
b) 7 Stages of PLC
At the end of this Chapter, students should be able to:
 Understand the role and nature of test marketing
 Know how to set up an effective test marketing operations
 Be familiar with the advantages and disadvantages of test marketing
  Know why accelerating the new product development process (time to market) is
vital to competitive success
 Understand the importance of identifying potential early adopters of a new
product and be familiar with factors involved in this process
 Recognize the importance of communication in introducing new products to the
marketplace

The Product Life Cycle: (4-stages)

NOTE: The 7-Stages of the Product Life Cycle

A separate file of Powerpoint Presentation shall shown on “share screen”

TEST MARKETING - a phase in the process which follows product development

and testing and precedes launch and commercialization. It must be best to
combined with the “product launch”
Its Objectives: (mechanical objective and commercial objective)
 Mechanical objective-to assess arrangements for handling and storing
materials, producing and distributing the product in good condition, and
monitoring a distributor/retailer performance; hence it can be seen as a
pilot run for production and distribution prior to gearing up for full-scale
manufacturing and sales. It would seem that whether one requires such a
trial run depends very much upon the “novelty” involved and the
innovator’s experience of producing or distributing the product/service in
question is little or none, then a trial run would seem more necessary or
beneficial than in cases where the firm is launching a brand extension into
existing market.
  Commercial objective-Commercial refers to activities of commerce-business
operations intended for an exchange on the market with the goal of
earning profits. www.investopedia.com
If you are to be asked, how and when to use either of these objectives, in mature
markets where consumer behaviour is well understood and market share,
particularly of the major suppliers, is strongly established, the second Commercial
objective of test marketing is more likely to prevail. Under these circumstances two
major sub-objectives or purposes may be distinguished:
1. Providing forecast of national sales (forecasting already discussed previously)
2. Evaluating the mix elements working together
 Packaging
 Price
 Retail merchandising (now online selling/distribution)
 Advertising
 Sales promotion
As such, these two major sub-objectives provide the opportunity to:
 Assess the speed of gaining product distribution
 Assess the speed of gaining product trial
 See how competitors will react
 Provide evidence for or against full launch
 Enable the training of production, sales and distribution personnel
 Provide proof of financial viability for investment
In seeking to assess the impact of each of these variables, the tester will wish to
measure three main kinds of reactions:
1. Consumer
2. Competitors Known as the 3 Cs
3. Company (the trade) Of Marketing

Guidelines for effective Test Marketing:

Below are 20 steps taken from ACNielsen (A major international research company)for
the conduct of an effective test market summarized as follows:
1. Design the test to find an answer to a single major issue
2. Incorporate the test into an overall marketing plan
3. Set targets at the same level as national expectations
4. Be completely objective in evaluating results
5. Benefit from comparative testing where possible
6. Profit from professional advice
7. Select a representative area
8. Allow sufficient time to set up the test properly
9. Establish a test base against which to measure subsequent changes
10. Carefully analyse competitors market share
11. Welcome exposure to competitive retaliation during the test
12. Examine retailer cooperation and support
13. Examine repeat sales pattern
14. Coordinate advertising and promotion
15. Avoid using methods during the test which will not be repeated during the
expansion period
16. Evaluate all possible factors which influence sales
17. Avoid interference with the test once it is launched
18. Adjust results to changes which may occur in the market prior to expansion or
market launch
 19. Allow sufficient time for the test to mature and for the results to be analysed
20. Employ proper research procedures, and budget to allow sample size and design
indicated by the test problem
Its Limitations:

 Cost/budget
 Time
Time to Market:
 The time length of commitment
 Product line implications
 The need for secrecy
 The position of the competitors
Launching the New Product:
 Selection of launch strategy
 Timing
 Monitoring the launch
Selecting a Launch Strategy:
 The degree of novelty embodied in the new product or service
 The firm’s existing familiarity with the position in the intended market
 The current status of competition and the response anticipated to the launch of
the new product
 The resources available to the launch organization
COMMERCIALIZATION
This final stage of the initial development process is very costly. Decisions such as
when to launch the product, where to launch it, how and to whom to launch it will be
based on information collected throughout the development process. With regard to
timing, important considerations such as:
 Seasonality of the product/service
 Whether the launch should fit any trade or commercial event
 Whether the new product is a replacement for the old one
 Whether it is advantageous to be first to market (much debate exists regarding
this decision between product managers)
Note: A separate power point presentation shall be presented separately.
CHAPTER TEST
1. What are the primary objectives of Test Marketing?
2. What is “time to market”? Why has it become increasingly important to firms
developing new products?
3. Review the factors to be taken into account when deciding whether or not to
launch a new products.

CHAPTER X

Chapter X- Understanding the decision to delete the product in the market

Reasons for Product Deletion in the market:

  Low brand recall
 Low product acceptance
 Low sales
 Ineffective counter-strategy for competitors
 Etc.
Individual Activity/for research:
Please research on the previously existed product but finally, deleted in the market,
example:
 Mr. Clean – a detergent bar soap
 Lifebouy- a body/fragrance soap
 Etc.
CHAPTER TEST
1. What is Commercialization?
When do you think is the proper time to commercialize a new or improved
product?
2. List down the Causes of product failures
3. List down the causes of product success

ADDENDUM:

Outline of a Simple Marketing Plan

I. Introduction
Could be a page or two, it is the brief statement/rationale about the
launching of the brand
Example:
“This is a marketing plan for “Algae juice drink” which is made up
out of “Spirulina platensis”… a cultured spirulina where…..so forth
and so on……

II. Business Analysis

This is the “environmental analysis” or environment scanning. It
should be stated in a few paragraph and discuss business
environment aspects which could affect the brand positively or
negatively: economic conditions, financial condition,politico-legal,
socio-cultural forces and other pressures or trends perceived.
Also, the relevance of the environmental pressures to the product
launch should be explicitly stated.
III. Competitive Situation
Highlights of the total market potential, specific industry condition
as well as distribution streghts and weakness of competitors are
briefly discussed by geographical area, including the known
deployment of the sales force of different competitors.
IV. Market research results
This part presents the findings of the market research projects
undertaken by the firm for the brand. Assuming the firm has used
almost all the market research tools available the major findings in
the following projects are presented in capsule form:
  Focused group interviews
 Consumer attitude survey
 Trade survey
 Blind product tests
 Brand name test
 Package design test
 Advertising campaign studies (that may include)
a. Copy test
b. Prind Ad Comprehension test
c. TV storyboard comprehension test
d. Advertising recall survey
V. Sales and Distribution Strategy
This part covers the proposed selling and distribution strategies of
the firm. Sales targets by area are quantified, and timing of sales
by either, quarter or monthly or annual is specified.
Here, sales forecasting is applied.
VI. IMC Strategy
It depends on the product being launch and the company
resources, segmented target market, you can design and choose
which of the following is necessary:
a. Advertising
b. Sales promotion
c. Publicity
d. CSR
e. Etc.
VII. Profitability
This part of marketing plan presents the net income targets for the
brand, based on the sales targets, contribution to overhead and
profit and projected selling, advertising, and other marketing costs.