Classification & Structure of Sales organization

Classification of Sales Organisation:

Based on three structural variables, different organization structures can be described viz. – formal and informal organizations, horizontal and vertical organizations, centralized and decentralized organizations, line and staff organizations

1. Formal organizations have rigid structures and reporting relationships which often result in poor flow of communication.
2. Informal organizations do not have a rigid hierarchical structure, set communication channels or reporting relationships.
3. Vertical organization structure is a traditional management structure with authority being the basis of control.They have more hierarchical levels.
4. Horizontal organization is one in which both management levels and departmental boundaries are reduced greatly.
5. Decentralized sales organization is one in which each division within the organization has its own sales force to sell the products of that division alone.

Structure of the Sales Organisation:

The following factors are to be taken into consideration while designing the structure of a sales organisation:

1. Nature of the market
2. Sales policies of the enterprise
3. Nature of the product
4. Number of products
5. Availability of financial resources
6. Level of distribution system
7. Size of the company
8. Price of the product
9. Ability of the professionals
10. Position of competitors’

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Sales Organization

Meaning and Definitions:

Sales organisation is a structural framework, specifying the formal authority and responsibility between persons working in the organisation. It consists of group of individuals working jointly to attain qualitative and quantitative selling objectives.
In the words of C. L. Boiling,"A sales organization serves as the unified contact or relationship point with customers. Building a separate sales organisation allows for continuous interaction with customers to obtain valuable information about their problems, suggestions, and future demands. A sales organization is set up for achieving the desired success in selling operations, where the ability of each salesperson is utilized to the optimum level to enable successful selling operations."

Sales Organisation Characteristics:

• Sales organisation is a part of the total enterprise dealing with sales activities.
• It consists of a group of people engaged in selling activities.
• It works for the attainment of common objectives of selling.
• There exist formal and informal relationships between persons engaged in selling activities.
• It defines the duties, responsibilities and rights of people in the selling jobs.
• It establishes departmentalization of selling activities separately.
• It is a means to the efficient execution of the sales functions and accumulation of resources to perform those functions.
• The success of sales organisation depends on the unified and coordinated efforts of salespersons.
• The selling organisation acts under the direct control the sales manager.

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Functions of Sales Management

General Functions of Sales Management:

The general functions of sales management are as follows:

1. Preparing the Sales Plan
2. Recruiting the right people to execute the sales plan
3. Training the people selected to build competency in achieving the targets set and fulfilling the organization’s objectives.
4. Defining the sales territories
5. Specifying the sales quota to be achieved for each territory
6. Defining the remuneration and reward system for the sales force
7. Providing welfare and healthcare facilities to the sales force
8. Devising a sales force development program
9. Analyzing past performance with the current performance and making predictions on demand
10. Coordinating with the marketing department and the consumers
11. Sales planning and sales policies
12. Pricing policy and price fixing
13. Advertising and sales promotion
14. Scientific salespersonship, management and control of sales force
15. Marketing research
16. Planning and control of sales operations and control of sales costs
17. Selection and management of channels of distribution
18. Branding, packing and labeling
19. After sales service, if necessary
20. Integration and coordination of all functions

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Sales Management 2

Sales Management – Basic Objectives:

There are three basic objectives of sales management viz. increasing sales volume, contributing to company profits and long term growth of an organization.

Some other objectives of sales management are as follows:

1. Revenue Generation – One of the main objectives of sales management is to generate revenue for the organization. The sales department is solely responsible to bring in the money.
2. Increase Sales Volume – Through efficient sales management, the organization wishes to increase the number of units sold. This will ensure that the production facilities do not remain idle and are utilized to the fullest.
3. Sustained Profits– Sales management has an objective of improving the profits of the organization through effective planning, coordination and control. Sales management strives to increase sales and reducing costs, this ensures good profits for the organization.
4. Organization Growth – With the sustained and continuous sales management techniques, the organization tends to gain market share and results in growth of the organization.
5. Market Leadership – With increased sales volumes and profits, ‘sales management’ enables an organization to become the market leader.
6. Converting Prospects to Customers – Getting prospects to become customers is an art and a science, it requires good planning and sustained efforts. This is accomplished through sales management.
7. Motivate the Sales Force – One of the core objectives of sales management is to motivate the sales force. Selling is a very stressful task, achieving sales targets can become very challenging. Therefore, the sales management task is to ensure that the sales force is continuously motivated through proper incentives and reward systems.
8. Compliment Marketing Activities – Sales management’s task is to support the marketing functions of the organization. Marketing and sales need to go hand in hand to achieve the desired results.

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Sales management

Sales Management – Meaning and Definitions:

Sales management specifically contributes to achieve the marketing objectives of a firm. In fact, sales managers set their personal selling objectives and formulate the personal selling policies and strategies.The word sales management is a combination of two words- sales and management. Sales is the art of planning in the mind of another a motive which will induce favourable action.
According to American Marketing Association, sales management is “the planning, direction and control of professional selling including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating to the personal sales force.” It is also often referred to as management of the personal selling part of a company’s marketing function.
Sales is the only function in an organization that generates revenue or income for a company and hence it needs to be managed properly. The financial results of a company depend upon the performance of the sales department.

There are four major branches (all interrelated) in successful sales management:

1. Top Level Policy Planning, which establishes a framework of policy within which the sales objectives of a com­pany or institution may be achieved, depending on an individual company’s particular situation,
2. Line and Staff Operational Plan­ning, through which procedures are established in advance, against which the quality and quantity of work may be controlled,
3. Organization, the setting up of a structure of responsibilities and normal interrelations—charting the organization, assigning responsibility, delegating authority, tracing accountability, and clarifying the character of collaboration, and
4. Administration, by which management meets planned objectives through guidance and evaluation of activity, including Sales Training, Motivation, Coordination, and Execution.

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Advantages & Disadvantages of MIS

Advantages of MIS:

• Improves quality of an organization or an information content by providing relevant information for sound decision making.
• MIS change large amount of data into summarize form and thereby avoid confusion which may an answer when an information officer are flooded with detailed fact.
• MIS facilitates integration of specialized activities by keeping each department aware of problem and requirements of other departments.
• MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance.

Disadvantages of MIS:

• Too rigid and difficult to adapt.
• Resistance in sharing internal information between departments can reduce the effectiveness.
• Hard to quantify benefit to justify implementation of MIS.
• Quality of output of an MIS is directly proportional to quality of input and processes.

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MIS (Management Information System) and How it Works?

What is MIS?
MIS is the use of information technology, people, and business processes to record, store and process data to produce information that decision makers can use to make day to day decisions. The full form of MIS is Management Information Systems. The purpose of MIS is to extract data from varied sources and derive insights that drive business growth.

The need for MIS
The following are some of the justifications for having an MIS system:

• Decision makers need information to make effective decisions. Management Information Systems (MIS) make this possible.
• MIS systems facilitate communication within and outside the organization – employees within the organization are able to easily access the required information for the day to day operations.
• Facilitates such as Short Message Service (SMS) & Email make it possible to communicate with customers and suppliers from within the MIS system that an organization is using.
• Record keeping – management information systems record all business transactions of an organization and provide a reference point for the transactions.

Components of MIS
The major components of a typical MIS long-form (Management Information System) are:

• People – people who use the information system.
• Data – the data that the information system records.
• Business Procedures – procedures put in place on how to record, store and analyze data.
• Hardware – these include servers, workstations, networking equipment, printers, etc.
• Software – these are programs used to handle the data. These include programs such as spreadsheet programs, database software, etc.

How MIS Works?
A management information system (MIS) is a computerized database of financial information organized and programmed in such a way that it produces regular reports on operations for every level of management in a company.

• It is usually also possible to obtain special reports from the system easily.
• The main purpose of the MIS is to give managers feedback about their own performance; top management can monitor the company as a whole.
• Information displayed by the MIS typically shows "actual" data over against "planned" results and results from a year before; thus it measures progress against goals.
• The MIS receives data from company units and functions.
• Some of the data are collected automatically from computer-linked check-out counters; others are keyed in at periodic intervals.
• Routine reports are preprogrammed and run at intervals or on demand while others are obtained using built-in query languages; display functions built into the system are used by managers to check on status at desk-side computers connected to the MIS by networks.
• Many sophisticated systems also monitor and display the performance of the company's stock.

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Comparison between Price, Cost and Value

Price can be understood as the money or amount to be paid, in order to get something. Cost is the amount incurred in the production of goods, i.e. it is the money value of the resources involved in producing something. Conversely, value implies the utility of worth of the commodity of service for an individual.

A market is a place where millions of products and services offered for sale to the public, which are different size, shape, color, nature, functioning, and many other respects. The first thing that comes to our mind, whenever we go and buy a product is, what is the price of the good or service? How much does it cost? What is its value for us? There are slight and subtle differences between price, cost, and value, which is important to learn.

Comparison between Price, Cost and Value:

Comparison Basis	Price	Cost	Value
Meaning	Price is the amount paid for acquiring any product or service.	Cost is the amount incurred in producing and maintaining something.	Value is the utility of a good or service.
Ascertainment	Price is ascertained from the consumer's perspective.	Cost is ascertained from the producer's perspective.	Value is ascertained from the user's perspective.
Estimation	Through Policy	Through Fact	Through Opinion
Impact of variations in market	Prices of product increase or decrease.	Cost of inputs rise or fall.	Value remains unchanged.
Money	It can be calculated in terms of money.	It can also be calculated in monetary terms.	It is not calculated in terms of money.

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Difference between Price, Cost and Value

Definition of Price:
Price is the amount of money paid by the buyer to the seller in exchange for any product and service. The amount charged by the seller for a product is known as its price, which includes cost and the profit margin. For example- If you buy a product for Rs 250, then it is the price of that product.

Definition of Cost:
Cost is the amount incurred on the inputs like land, labour, capital, enterprise, etc. for producing any product. It is the amount of money spent by the company in the manufacturing of a product. For example- If a company manufactures shoes, then the expenses incurred on raw materials, salaries, rent, interest, taxes, duties, etc. determines the cost of the product.

Definition of Value:
Value is the usefulness of any product to a customer. It can never be determined n terms of money and varies from customer to customer. For example- If you are going to a gym by spending 1000 bucks a month, the output seen is worth the expense, then it is the value that you create for a gym, regarding the service being offered there. Here the worth is its value.

Differences between Price, Cost and Value:

Price	Cost	Value
Price is what you pay for goods or services you acquire	Cost is the amount of inputs incurred in producing a product	Value is what goods or services pay you i.e. worth
Price is calculated in numerical terms	Cost is also calculated in numerical terms	Value can never be calculated in numbers
Price is same for all the customers	Cost is also same for all the customers	Value varies from customer to customer
Price is estimated through the price policy	Cost is assessed on actual expenditure incurred on manufacturing a particular product	The estimation of value is based on customer’s opinion.
The Ups and downs in the market will affect the price of any product	The Ups and downs in the market will affect the cost of any product	Value remains unaffected
The ascertainment of price is done with the view of the consumer	The cost is ascertained from producer’s view	The ascertainment of value is done from the user’s point of view

Examples For Differentiation:

Price Vs Cost:

If you purchase a brand new Car, then the amount you pay to the car seller for its acquisition is its Price while the amount invested in manufacturing the car is its Cost. Normally, the price of any goods or services is more than its cost because the price includes the profit margin.

Cost Vs Value

If you are a watch manufacturer and produce millions of watch on a daily basis, then the cost of production is your prior concern and not the value of the product. You may try to achieve the economies of scale i.e. more production at less cost. Whereas in the case of the customer, the purpose for which the watch is purchased must be fulfilled irrespective of the cost incurred in its production. A customer must feel the worth of purchasing the watch in terms of its price.

Value Vs Price

This can be explained easily with the popular example given by Prof. Adam Smith about water and diamond. Water is much important for us to survive still it is of low price, while the diamond is just used for ornamentation and nobody dies without it, is priced very high. The reason behind this is its value, as the value of water is much for us, it is available at a low price, while the value of a diamond is less for us. Therefore, it is priced very high.

In simple words, Price is the money paid to the seller; Cost is the amount of inputs involved in the manufacturing of product and value is what product or service pay to the customer.

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Marketing Planning

What is marketing ? मार्केटिंग क्या है ?

“Marketing is about satisfying consumer needs and wants through an exchange” -Philip Kotler.
“ग्राहक की ज़रूरतों को विनिमय के द्वारा पूरा करने को मार्केटिंग कहते है.” – फिलिप कोटलर

“ Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value.” – Philip Kotler.
“किसी भी बनाए गए उत्पादों को ग्राहकों को चिपकाना, यह मार्केटिंग नहीं है,बल्कि ग्राहकों को वास्तविक मूल्य देना इसे मार्केटिंग कहते है.” - फिलिप कोटलर

Introduction :-

Generally, हमें लगता है की Marketing का मतलब Advertising या Promotion होता है, लेकिन असल में Advertising और Promotion, Marketing के प्रकार है | Marketing का मतलब बहुत गहरा है | इसकी की आवश्यकता सभी कंपनियों को अपने product या सर्विस, ग्राहक तक पहुंचाने के लिए, और ग्राहक को संतुष्टि प्राप्त कराने के लिए ली जाती है | Customer satisfaction, कंपनी को अपने लक्ष्य को पूरे करने में मदद करता है, जो कि Marketing से पूरा किया जा सकता है |
ग्राहक बाजार के राजा होते हैं | ग्राहकों के लिए आवश्यकता एवं जरूरियातो को पूरा करने में marketing की सहायता ली जाती है | ज्यादा से ज्यादा ग्राहकों को संतुष्टि प्राप्त कराने की कोशिश Marketing में की जाती है |

Meaning :-

Marketing में मुख्य रूप से तीन बातों का समावेश होता है और वह है Awareness, Attraction, Satisfaction.

• सबसे पहले ग्राहकों को कंपनी के product या सर्विस के बारे में कैसे जानकारी देने का काम किया जाता है. जो कि हम विविध माध्यमों में देख सकते हैं |
  जैसे की launch programme, advertising, promotion medias.
• ग्राहकों को product या सर्विस की जानकारी मिल जाने के बाद, ग्राहक product सर्विस को नज़दीक से जानने की चाह रखते हैं |
• कंपनी अपने product या सर्विस के विविध features ग्राहक के बीच में रख देती है, जिससे कि ग्राहक को product या सर्विस के बारे में पता चल सके और इसका उपयोग कैसे कर सकते हैं वह भी बताया जाता है |
• एक बार ग्राहक के मन में अपने product व सर्विस की जगह बना लेने के बाद काम करने की बारी कंपनी की आती है |
• कंपनी अब ग्राहक को कैसे संतुष्टि दे सके इस पर काम करती है |
  जैसे कि after sale service, discounts, quick delivery, qualitative products, best price.

4 P’s of marketing क्या है :-

नीचे दिए गए चार Marketing के pillars है. जिसकी मदद से हम Marketing का पूरा मतलब समझ सकते हैं :

• Product
• Price
• Place
• Promotion

1. PRODUCT :-
   Product चीजों का मिश्रण है. जो कि ग्राहक की आवश्यकताओं के अनुसार बनाया जाता है | जिससे कि कंपनी अधिक से अधिक मात्रा में profit कर सके |
   ग्राहकों की इच्छाओं और जरूरतों के अनुसार Product तैयार किया जाता है | जिसमें नीचे दिए गए मुद्दों का समावेश होता है :-
   • Product line: related product का ग्रुप
   • Product width: Product line की संख्या
   • Product depth: Variety of Products
   • Product length: कुल item की संख्या Product line में
   सबसे पहले कंपनी को अपने Product या सर्विस को तय करना होता है. यह निर्णय Market research की मदद से लिया जा सकता है | हम HUL का उदाहरण भी ले सकते हैं कि कंपनी किस प्रकार का Product या सर्विस ग्राहक तक पहुंचाना चाहती है | इस तरह से कंपनी का Product mix तैयार होता है |
2. PRICE :-
   एक बार प्रोडक्ट बन जाने के बाद उसकी price के बारे में सोचा जाता है जो price प्रोडक्ट की sell पर असर करती है | price का निर्धारण profit margin, supply, demand, marketing strategy पर impact करता है। अगर आपकी प्रोडक्ट अच्छी है, और मांग ज्यादा है, तो price बढा सकते है। किसी भी प्रोडक्ट की price को market रीसर्च करके decide किया जाता है। product पर discount दिया जाता है, जिससे ग्राहक लालच में आकर उसे खरीद लेता है।
   product की price decide करने के लिए कुछ pricing marketing strategy होती है । जिसमे से कुछ हमने नीचे बताई है :
   • Cost-Plus Pricing
     यह method में प्रोडक्ट के सारे costs जोड दिए जाते हैं और सारे खर्चे जोड़ देने के बाद profit margin भी जोड़ा जाता है | इसे Cost-Plus Pricing कहा जाता है।
   • Demand Pricing
     Demand supply पर यह pricing काम करती है। अगर डिमांड ज़्यादा है, तो price बढ़ा दी जाती है और demand काम हो तो price घटा दी जाती है।
   • Competitive Pricing
     Industries में एक product के कई सारे manufacturer होते है। इस वजह से सब कमसे काम प्राइस रखते है। ऐसे माहौल में product की Competitive Price रखनी पडती है।
   • Markup Pricing
     Retailers ज्यादातर इस pricing को रखते है | वह किसी whole seller से माल खरीद कर उस पर markup price लगाके उसे कुछ discount पर बेचते है।
   • Psychology of Pricing
     यह लोगो की psychology पर जुडी हुई pricing है |
     जैसे 499/- 599/- 139/- ऐसी pricing से लोगो को product थोडी सस्ती लगती है और वह उनपर आकर्षित हो जाते है।
   
   Product चीजों का मिश्रण है, जो कि ग्राहक की आवश्यकताओं के अनुसार बनाया जाता है | जिससे कि कंपनी अधिक से अधिक मात्रा में profit कर सके |
   ग्राहकों की इच्छाओं और जरूरतों के अनुसार Product तैयार किया जाता है | जिसमें नीचे दिए गए मुद्दों का समावेश होता है :-
   • Product line: related product का ग्रुप
   • Product width: Product line की संख्या
   • Product depth: Variety of Products
   • Product length: कुल item की संख्या Product line में
3. PLACE :-
   किसी भी product को तैयार करने के बाद उसे ग्राहक तक पहुंचाने की प्रक्रिया को place कहते है । यह बहुत जरुरी है, की product की physical distribution होनी चाहिए |
   Physical distribution का मतलब product को सही समय पर और सही जगह पर पहुंचना ।
   Channels of distribution की मदद से physical distribution possible होती है, जोकि बहुत सारी है |
   Marketer को product की transport और फिजिकल handling की सही system develop करनी होती है।
   Distribution channels मार्केटिंग में महत्त्व भूमिका प्रदान करती है :
   • Channels जगह, उपयोगिता, और समय निर्धारित करती है ।
   • इससे manufacturer से goods के distribution का भार उठा लेती है और manufacturer अपने काम पर focus कर सकता है ।
   • इससे मार्किट में नयी products को introduce करने में आसानी होती है ।
   • Demand और supply को match करने में मदद मिलती है ।
   Place mix में नीचे दी गयी चीजे involve होती है :
   • Distribution of channels
   • Channel coverage
   • Inventory
   • Dealer relation
   • Locations
   • Transport
   Product चीजों का मिश्रण है, जो कि ग्राहक की आवश्यकताओं के अनुसार बनाया जाता है | जिससे कि कंपनी अधिक से अधिक मात्रा में profit कर सके |
   ग्राहकों की इच्छाओं और जरूरतों के अनुसार Product तैयार किया जाता है | जिसमें नीचे दिए गए मुद्दों का समावेश होता है :-
   • Product line: related product का ग्रुप
   • Product width: Product line की संख्या
   • Product depth: Variety of Products
   • Product length: कुल item की संख्या Product line में
4. PROMOTION :-
   • Promotion mix में नीचे दी गयी चीजों का समावेश होता है :
     • Personal selling
     • Direct marketing
     • Advertising
     • Publicity
     • Public relations
     • Sales
   
   • Marketing mix में प्रमोशन महत्व का role अदा करता है।

नीचे promotion के importance समझाये गये हैं :-

• प्रमोशन products और services के लिए demand पैदा करती है |
• यह मार्किट में प्रोडक्ट को introduce कराने में मदद करती है.
• Advertising लोगो को product के बारे मे information देने में उन्हें educate करने के लिए काम आती है।
• Personal selling buyer के साथ पर्सनल ब्रांडिंग बनती है।
• Sales promotion activities जैसे की after sales service, warranties, आदि product की sale बढाती है |
• Public relation buyer, suppliers, dealers के साथ अच्छा रिश्ता बनाती है।

Types of marketing :-

Marketing के प्रकार नीचे बताये है :

1. Traditional marketing
2. Digital marketing
3. Word of mouth

1. Traditional marketing
   Newspaper, templates, banners, TV (Television) आदि traditional मार्केटिंग के उदहारण है ।
   इसमें direct selling, और physical advertising involve होती है | आज के समय में traditional marketing कम होती जा रही है |
2. Digital marketing
   Online, internet के द्वारा मार्केटिंग की जाती है, उसे digital marketing कहते है | digital मार्केटिंग में एक सबसे बड़ा फायदा यह है, की आप अपने बजट के हिसाब से promotion कर सकते है | आप user के interest के मुताबिक audience को target कर सकते हो | आज के समय में बडे brands भी डिजिटल मार्कटिंग की तरफ जाने लगे हैं ।
3. Word of mouth
   ये मार्केटिंग depend करती है की आप आपने Customer के ऊपर क्या प्रभाव छोड़ते है. अगर आपने आपने customer को अच्छा product दे रहे है तो वो आपने दोस्तों और रिश्तेदारों को इसके बारे में बताएगे. ये ट्रेडिशनल मार्केटिंग में बहुत ज़रूरी होता है |

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SWOT Analysis

SWOT Analysis was first used to analyze businesses. Now it's often used by governments, nonprofits, and individuals, including investors and entrepreneurs.

KEY TAKEAWAYS :-

• SWOT analysis is a strategic planning technique that provides assessment tools.
• Identifying core strengths, weaknesses, opportunities, and threats lead to fact-based analysis, fresh perspectives and new ideas.
• SWOT analysis works best when diverse groups or voices within an organization are free to provide realistic data points rather than prescribed messaging.

Using internal and external data, a SWOT analysis can tell a company where it needs to improve internally, as well as help develop strategic plans.

Example of SWOT Analysis:

In 2015, a Value Line SWOT analysis of The Coca-Cola Company noted strengths such as its globally famous brand name, vast distribution network and opportunities in emerging markets. However, it also noted weaknesses and threats such as foreign currency fluctuations, growing public interest in "healthy" beverages and competition from healthy beverage providers.
Its SWOT analysis prompted Value Line to pose some tough questions about Coca-Cola's strategy, but also to note that the company "will probably remain a top-tier beverage provider" that offered conservative investors "a reliable source of income and a bit of capital gains exposure."
Five years later, the Value Line SWOT analysis proved effective as Coca-Cola remains the 6th strongest brand in the world (as it was then). Coca-Cola's shares (traded under ticker symbol KO) have increased in value by over 60% during the five years after the analysis was completed.

Advantages of SWOT Analysis:

A SWOT analysis is a great way to guide business-strategy meetings. It's powerful to have everyone in the room to discuss the company's core strengths and weaknesses and then move from there to define the opportunities and threats, and finally to brainstorming ideas. Often times, the SWOT analysis you envision before the session changes throughout to reflect factors you were unaware of and would never have captured if not for the group’s input.

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SWOT framework in an Organization

SWOT Analysis is a simple but useful framework for analyzing your organization's strengths, weaknesses, opportunities, and threats.
It helps you to build on what you do well, to address what you're lacking, to minimize risks, and to take the greatest possible advantage of chances for success.
It can be used to kick off strategy formulation informally, or in a more sophisticated way as a serious strategy tool. You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.
When carrying out your analysis, be realistic and rigorous. Apply it at the right level, and supplement it with other option-generation tools where appropriate.

What Is a SWOT Analysis?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis is a technique for assessing these four aspects of your business.
You can use SWOT Analysis to make the most of what you've got, to your organization's best advantage. And you can reduce the chances of failure, by understanding what you're lacking, and eliminating hazards that would otherwise catch you unaware`s.
Better still, you can start to craft a strategy that distinguishes you from your competitors, and so compete successfully in your market.

How to Do a SWOT Analysis?

For Example:

Gather a team from a range of functions and levels in your organization. Use Brainstorming techniques to build a list of ideas about where your organization currently stands. Every time you identify a Strength, Weakness, Opportunity, or Threat, write it down in the relevant part of the grid.

Strengths
Strengths are things that your organization does particularly well, or in a way that distinguishes you from your competitors. Think about the advantages your organization has over other organizations. These might be the motivation of your staff, access to certain materials, or a strong set of manufacturing processes.

Weaknesses
Now it's time to consider your organization's weaknesses. Be honest! A SWOT Analysis will only be valuable if you gather all the information you need. So, it's best to be realistic now, and face any unpleasant truths as soon as possible.
Weaknesses, like strengths, are inherent features of your organization, so focus on your people, resources, systems, and procedures. Think about what you could improve, and the sorts of practices you should avoid.

Opportunities
Opportunities are openings or chances for something positive to happen, but you'll need to claim them for yourself!
They usually arise from situations outside your organization, and require an eye to what might happen in the future. They might arise as developments in the market you serve, or in the technology you use. Being able to spot and exploit opportunities can make a huge difference to your organization's ability to compete and take the lead in your market.

Threats
Threats include anything that can negatively affect your business from the outside, such as supply chain problems, shifts in market requirements, or a shortage of recruits. It's vital to anticipate threats and to take action against them before you become a victim of them and your growth stalls.
Think about the obstacles you face in getting your product to market and selling. You may notice that quality standards or specifications for your products are changing, and that you'll need to change those products if you're to stay in the lead. Evolving technology is an ever-present threat, as well as an opportunity!
Always consider what your competitors are doing, and whether you should be changing your organization's emphasis to meet the challenge.

How to Use a SWOT Analysis?
Once you've examined all four aspects of SWOT, you'll likely be faced with a long list of potential actions to take. You'll want to build on your strengths, boost your weaker areas, head off any threats, and exploit every opportunity.
But, before you leap into action, look for potential connections between the quadrants of your matrix. For example, could you use some of your strengths to open up further opportunities? And, would even more opportunities become available by eliminating some of your weaknesses?

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Product Pricing

Product Pricing: You can call a product strategy to be the vision of the product. If a company launches a product, then it has a vision of where the product will reach. The product strategy is the bare bone planning of the steps to ensure the product reaches the desired space. Such a strategy helps in setting the right direction for the product. Product strategy helps in deciding the basic elements of a product such as its marketing mix and its design. At the same time, it also helps in targeting the product to the right segment, product line stretching etc. All this will be discussed in the steps to develop a product strategy.

Methods of Pricing strategy

1. Geographical Pricing
   Geographical pricing adjusts the selling price of a product or service according to a customer’s location.
   Geographical pricing is a pricing model where the final price of the product is decided on the basis of the geography or the location where the product is being sold. When an organization is operating in multiple countries or multiple regions within a country, then they have to implement geographical pricing as per the local taxation laws and local requirements.
   Types Of Geographic Pricing
   • FOB Origin -
     FOB-origin pricing is a geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the location.
     FOB origin implies that the purchaser takes complete ownership.FOB Origin refers to the authorized fact that buyer assumes title or control of goods the time when freight carrier receives or signs the bill of landing at the origin pick-up location. FOB Origin thus refers to the legal fact that purchaser will take full accountability during the time of carrier delivery.
   • Uniform Delivery Pricing-
     Uniform delivery Pricing (UDP) includes all expenses of transportation and place where the seller recollects the control and responsibility of the group until they are delivered to the customer.
   • Zone Pricing-
     Zone pricing is known as a pricing method where all consumes within a distinct area of region is charged equal prices.
   • Basing Point Pricing-
     Base point pricing also known as delivered pricing refers to a process where a customer must pay a price for a product which includes freight costs which do not depend on the location of the trader.
   • Freight-Absorption Pricing-
     In this pricing method, manufacturers takes into account some or majority of the freight or transportation expenses involved in transporting the products to the customers.
2. Discount and allowance pricing-
   A Discount is a straight reduction in price during a stated period of time. There are many forms of discounts:
   • Cash discount - it’s when the buyer pays the bill in advance. For example if I sell tables to Mobilia, and they usually pay me within 30 days, I can tell them that ill give them a 2% discount on the price of the table if they pay me within 10 days- this type of policy improves cash flow and reduces the risk of bad depts. it’s also a way of encouraging fast payment.
   • Quantity discount - it’s when you give a discount because the buyer buys a large volume of products. For example if you sell toilet paper to WalMart, if they buy 100 pack they pay 3$ per pack but if they buy more than 100 packs they get to pay 2$ per pack. In this case, with the competition act, discounts must be offered equally to all customers. This type of discount provides an incentive to the customer to buy more from one given seller.
   • Seasonal discount - it’s when you give a price reduction to buyers because they buy the product out of season. For example a ski manufacturer will sell skis to a retailer at a lower price if the retailer buys it during the summer. Seasonal discounts allow the seller to keep production steady during an entire year.
     When you offer a discount there are three kinds of way to go about doing it.:
     • Non- Cumulative discount - it’s when you want to make a big sale ASAP so you go to the buyer and you tell him if you buy 10 thousand units I will give you 10% off. However, this kind of discount only happens when you decide, not every time that buyer wants to buy things from you.
     • Cumulative discount - it’s when you add up what that buyer bought during the year and if it adds up to 10 thousand units then ill give you a reduction. In this case you want to get a long term relationship with the consumer.
     • Functional discount - its when the buyer does something for you in exchange for a discount. If for example I sell toilet paper to IGA. There are usually at the end of the aisle but I can give IGA a discount if they put my toilet paper in the beginning of the aisle so that everyone can see it.It’s basically a discount made to perform a function.
       Then we have Allowances - it’s another form of price reduction.
   • Promotional allowances - they are payment or price reduction to reward dealers for participating in advertising and sales support programs.
3. Promotional Pricing:
   The Promotional Pricing is a sales promotion technique, wherein the firm reduces the price of a product drastically, but for a short period.
   Companies adopt several promotional pricing schemes, some of them are listed below:
   • Special-Event Pricing: Companies offer discounts and rebates on festivals, during the off-seasons with the intention to pull as many customers as possible.
   • Cash Rebates: The consumer goods companies viz. Automobile sector, electronics industry, cellular industry, etc. offers the cash rebates on their items if purchased in a particular time period.
   • Loss-Leader Pricing: Often the big retailers or supermarkets reduce the price of a well-known brand with the intention to have an additional store traffic.Through this strategy, the retailers try to compensate their margin loss from the additional sales achieved from additional 
   • Low-interest financing: Nowadays, especially the cellular companies are offering an easy EMI scheme with less rate of interest, so as to boost the sale of their mobile sets.
   • Warranties and service contracts: The companies offer the extended warranties and free services of the product to the customers.
   • Psychological Discounting: This type of promotional pricing is very much visible these days. Under this strategy, the companies artificially set the high price of the product and then offer it at substantial savings, such as an item was of RS 359, but now it is available at just Rs 259.
4. Price Discrimination:
   In price discrimination, the seller will charge the buyer the absolute maximum price that he is willing to pay. Companies use price discrimination in order to make the most revenue possible from every customer. This allows the producer to capture more of the total surplus by selling to consumers at prices closer to their maximum willingness to pay.
   An example of price discrimination would be the cost of movie tickets. Prices at one theater are different for children, adults, and seniors. The prices of each ticket can also vary based on the day and chosen show time. Ticket prices also vary depending on the portion of the country as well.
   Different Types of Price Discrimination:
   • First Degree Price Discrimination - Also known as perfect price discrimination, first-degree price discrimination involves charging consumers the maximum price that they are willing to pay for a good or service.
   • Second Degree Price Discrimination - Second-degree price discrimination involves charging consumers a different price for the amount of quantity consumed. Examples include:
     • A phone plan that charges a higher rate after a determined amount of minutes are used
     • Reward cards that provide frequent shoppers with a discount on future products
     • Quantity discounts for consumers that purchase a determined number of more of a certain good
   • Third Degree Price Discrimination - Also known as group price discrimination, third-degree price discrimination involves charging different prices depending on a particular market segment or consumer group. It is commonly seen in the entertainment industry.
     For example, when an individual wants to see a movie, prices for the same screening are different depending on if you are a minor, adult, or senior.
5. New product Pricing:
   Pricing strategies tend to change as a product goes through its product life cycle. One stage is particularly challenging: the introductory stage. This is called New Product Pricing. When companies bring out a new product, they face the challenge of setting prices for the very first time. Two new product pricing strategies are available:
   
   • Price-Skimming and Market-Penetration Pricing
   Let’s learn more about these two new product pricing strategies.
   1. Price-Skimming – New Product Pricing:
      The first new product pricing strategies is called price-skimming.Price-skimming calls for setting a high price for a new product to skim maximum revenues layer by layer from those segments willing to pay the high price.As a result of this new product pricing strategy, the company makes fewer but more profitable sales.
      
      An example for a company using this new product pricing strategy is Apple. When it introduced the first iPhone, its initial price was rather high for a phone. The phones were, consequently, only purchased by customers who really wanted the new gadget and could afford to pay a high price for it. After this segment had been skimmed for six months, Apple dropped the price considerably to attract new buyers. Within a year, prices were dropped again. This way, the company skimmed off the maximum amount of revenue from the various segments of the market.
      
      
   2. Market-Penetration Pricing – New Product Pricing:
      The opposite new product pricing strategy of price skimming is market-penetration pricing. market-penetration pricing refers to setting a low price for a new product to penetrate the market quickly and deeply. Thereby, a large number of buyers and a large market share are won, but at the expense of profitability. The high sales volume leads to falling costs, which allows companies to cut their prices even further.
      
      An example is the giant Swedish furniture retailer Ikea. By introducing products at very low prices, a large number of buyers is attracted, making Ikea the biggest furniture retailer worldwide. Although the low prices make each sale less profitable, the high volume results in lower costs and allows Ikea to maintain a healthy profit margin.
6. Product mix pricing:
   Before proceeding towards the topic “product mix pricing strategies in marketing” first you should be aware of this common marketing terms “product mix”. Here I am mentioning three most common definitions of product mix
   1. The product mix is the collection of all those products and services that a particular company offers in the market.
   2. The set of all product line or item which a particular seller offers to sale.
   3. The number of all product of similar nature or kind offered by a particular seller for sale.
   Types of Product Mix Pricing Strategies:
   When the product is a part of product mix or portfolio, companies adopt five kinds of pricing strategies in marketing which are as under-
   1. Product Line Pricing : Product line pricing is setting the price on the base of cost difference between different products in a product line. Marketer also keeps in mind the customer evolution of different features and also competitive prices.
   2. Optional Product Pricing : This strategy is used to set the price of optional products or accessories along with a main product. For example refrigerator comes with optional ice maker or CD players and sound systems are optional product with a car.
   3. Captive Product Pricing : this strategy used for setting a price for a product that must be used along with a main product, for examples blades with razor and films with a camera. Gillette sells low priced razors but company make money on the replacement of cartridges.
   4. By-Product Pricing : By-product pricing is determining of the price for by-products in order to make the main product’s price more attractive and competitive. For example processing of rice results in two by-products i.e. rice husk and rice brain oil, and sugar cane with husk. Now if company sells husk and brain oil to other consumers, they will generate extra revenue by adopting this by-product pricing.
   5. Product Bundle Pricing : This is a common price and selling strategy adopted by many companies. Companies offer the bundles at the reduced price. This strategy helps many companies to increase sales, and to get rid of the unused products. This bundle pricing strategy also attracts the price conscious consumer. Best example is anchor toothpaste with brush at offered lower prices.
   Conclusion:
   In conclusion it is clear that pricing strategies play the most unique role in that it changes often, most volatile business strategy and is dependent and interactive. Pricing makes a product attractive or non-attractive.

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Strategies at various stages of Product Life Cycle

Strategies followed During Various Stages of Product Life Cycle are :-

1. Strategies during Product Development Stage:
   • Focus is on product
   • Emphasis is on cost reduction
   • Trials are the main tools
   • Exploring of the market starts
   • Publicity of the product (about its coming)
   • Minimum expenses to be maintained during this period
   • Production capacity must be looked after
   • Quality must be checked
   • Focus on work is to be given
   • A good introducer of the product is required
   • In-house working should be emphasised.
2. Strategies during Introduction Stage:
   • Persuade people to try the products.
   • Stress should be on advertising to inform the customer about the product
   • Give introductory offers by providing some attractive gifts to entice the customers.
   • Give a valid reason to the customers to buy the product
   • Dealers should be given good discounts
   • There should be selective distribution to focus on target customers
   • Skimming pricing should be followed to earn higher profits in the initial stages
   • Removing the product deficiencies must be focused on
3. Strategies during Growth Stage:
   • Aggressive advertising is required to stimulate the sales of the product
   • Availability of the product should be ensured to a large number of customers
   • Modifications or new versions of the product are required to be introduced to fulfill the requirement of different customer classes. Strengthening of the distribution channels are required so that the product is easily available wherever required.
   • Focus should be on developing the brand image through promotional activities
   • Competitive prices must be maintained to grab the market.
   • Activities should be customer oriented, an emphasis should be given on customer services to satisfy them to a maximum level.
4. Strategies during Maturity Stage:
   • More and more emphasis is required on the brand image in order to differentiate the product from products of the competitors.
   • More benefits may be provided to the customers e.g. extending the warranty period, guarantee period etc.
   • Change in packaging may be introduced (Reusable packaging).
   • Packaging may be used as a silent salesman by making it more attractive.
   • Requirement to explore the new markets for the product.
   • New uses of the product may be developed.
   • New users of the product may be developed.
   • New Technology can be adopted to enhance the quality of the product.
   • New features can be added to enhance the value of the product.
5. Strategies during Decline Stage:
   • More emphasis on the promotional schemes.
   • Distribution cost should be reduced and the benefit should be transferred to the customers
   • More value addition to the product can be done.
   • Packaging will play a very important role at this stage also, so it should be focused on.
   • Cost of production should also be reduced.
   • Economy packs of the products should be introduced.
   • Try to increase the life of the stage.
   • Emphasis is on sales volume with minimum profit margins

If after all these efforts company fails to restore its position in the market, than the best thing for the company is to take out their existing product from the market and come up with a new product comprising of unique features that can hit the market.

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Five stages of Product Life Cycle

Five stages of Product Life Cycle are discussed below:

1. Introduction Stage :-
   At this stage the product is launched into the market, hence awareness and acceptances are minimal. So here the emphasis should be on promotional activities so as to acquaint customers with the product and gain acceptance.
   In the initial stage with distinctive speciality a firm can charge a high price but as this characteristic fades away and the product becomes a pedestrian one, he has to either soften the pricing or bring a change in the product to create some fresh interest so as to compete well with the new products that have entered the market.
   Advertising and sales promotions are extensively used in order to build awareness, encourage evaluation and trial and initial adoption.
2. Growth Stage :-
   During this stage mass market acceptance will take place through early adopters. Growth will be rapid, profits will emerge and all initial costs covered during this period. This stage is marketed by increase in the number of competitors, major product improvements, etc.
   Intensifying competition might lead to price reductions. An expansion of the distribution network will be sought in order to facilitate market penetration in view of increasing pressure from competitors.
3. Maturity Stage :-
   When the product reaches maturity, sales growth continues but at a diminishing rate due to declining number of potential customers. This stage represents the most competitive stage in the life of a product but one in which profits are flowing in steadily. Special promotional efforts are needed to attract new users to the product. During this stage emphasis is given in opening new distribution channels and retail outlets.
4. Saturation Stage :-
   There are now many competitors in the market, profits per unit have further declined and there is no growth in sales. It is time to consider new markets, changes in prices, promotion and introduction of new product versions or new products.
5. Decline Stage :-
   The product reaches a stage of declining sales as it faces competition from better products or better substitutes developed by the competitors. At this stage the product has to be redesigned or the cost of production reduces so that they can continue to make some contribution to the company.
   The manufacturer may have to accept the gradual decline and ultimate withdrawal of the product from the market or may try to revitalize it by introducing new product applications, new packaging, a different advertising theme, new selling methods, new distribution channels or new markets.

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Comparison between Product Life Cycle and Human Life Cycle

Philip Kotler, “The product life-cycle is an attempt to recognise distinct stages in the sales history of the product.”

Like a human being, a product has also a certain length of life. Again, like a human being, a product has also to pass through certain identifiable stages in its life. As the life of a human being can be divided into six stages — Infant, Childhood, Youth, Adult, Old and Death, in the same manner life of a product can also be divided into six parts — (1) Introduction, (2) Growth, (3) Maturity, (4) Saturation, (5) Decline, and (6) Obsolescence. These six stages are collectively known as the Life-cycle of a product.

The main stages of the product life cycle, when compared with human life cycle, stated above, give following result –

1. Introduction [birth] – researching, developing and then launching the product
2. Growth [adolescence] – when sales are increasing at their fastest rate
3. Maturity [youth] – sales are near their highest, but the rate of growth is slowing down, e.g., new competitors in market or saturation
4. Decline [death] – final stage of the cycle, when sales begin to fall

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Product Life Cycle Working

Products, like people, have life cycles. The product life cycle is broken into four stages: introduction, growth, maturity, and decline. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.
The process of strategizing ways to continuously support and maintain a product is called Product life cycle management.

KEY TAKEAWAYS

The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
The product life cycle is defined by four stages: introduction, growth, maturity, and decline.

How Product Life Cycles Work:

1. A product begins with an idea, and within the confines of modern business, it isn't likely to go further until it undergoes research and development and is found to be feasible and potentially profitable. At that point, the product is produced, marketed, and rolled out.
2. The product introduction phase generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits. Assuming the product is successful, it enters its growth phase. Demand grows, production is increased, and its availability expands.
3. As a product matures, it enters its most profitable stage, while the costs of producing and marketing decline. However, it inevitably begins to take on increased competition as other companies emulate its success, sometimes with enhancements or lower prices. The product may lose market share and begin its decline.
4. Important:The stage of a product's life cycle impacts the way in which it is marketed. A new product needs to be explained, while a mature product needs to be differentiated.
5. The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.

The Disadvantages of Life Cycle Management:
Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle, the introductory stage. The failure comes only after the investment of substantial money and time into research, development, and production.

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Product Life Cycle - Factors, Techniques, Performances, Pros and Cons

6 Important Factors Affecting Product Life Cycle:

There are many factors affecting life-cycle of a product. The statement of Joel Dean is very important in this regard. He said, “The length of the product life-cycle is governed by the rate of technical change, the rate of market acceptance and the case of competitive entry.”

Some of the important factors affecting life-cycle of a product are discussed here under:

1. Rate of Technical Changes:
   Life-cycle of a product depends upon the rate of technical changes taking place in the country. If technical changes take place in the country at a very high rate, the life-cycle of the products in that country will be very limited because new and improved products take place of the old products.
   On the other hand, if the rate of technical changes in a country is not so high, the life-cycle of the products in that country may be longer. For example, rate of technical changes in India is lower when compared with that of the other developed countries. As a result of it, the life-cycle of products in our country is higher than that of the developed countries.
2. Rate of Market Acceptance:
   The length of life-cycle of products in a country depends upon the rate of market acceptance in the country also. If the customer of a country accepts a new product very fast, the life-cycle of products in such country will be very limited because the customers, who have accepted a product so fast, can accept another product on next day and the product may stand out of the market.
   On the other hand, if the customers of a country accept a product gradually, the life-cycle of products in such country may be quite long. For example, the rate of market acceptance in our country is very low and therefore, the life-cycle of most of the products in our country is quite long.
3. Ease of Competitive Entry:
   The success or failure of a product in the market depends to a large extent upon the situation of competition in the market. If the competitors can enter into a market very easily, the life-cycle of the product will be very short because the competitors can make the products out. On the contrary, if the competitors cannot enter into a market so easily, the life-cycle of products in such market can be fairly long.
4. Risk Bearing Capacity: The enterprises having more risk bearing capacity can keep their products standing in the market for a long period because they can face all the challenges of market effectively. On the other hand, the enterprises having less risk bearing capacity are unable in facing the challenges of the market, life-cycle of their products is curtailed to short.
5. Protection by Patent:
   If the patent of a product is getting registered, the life-cycle of the product can be fairly long, and if the patent of a product is not getting registered, the life-cycle of the product is cut short.

Marketing Techniques Used to Improve Sales in Product Life Cycle:

These strategies extend the life of the product before it goes into decline. Again businesses use marketing techniques to improve sales.An efficient system of store keeping has the following objects:

The techniques are:

1. Advertising:
   It is a good technique to try to gain a new audience or remind the current audience. Tata Nano was revived through heavy advertising. Even Cadbury adopted the new positioning technique by highlighting the fact that it made a good gift and a chocolate is good on happy occasions with a nice catchy phrase “kuch meetha ho jaye”.
2. Price Reduction:
   This technique is always more attractive to customers. Airtel significantly lowered the price to remain in competition.
3. Adding Value:
   The company, under this approach adds new features to the current product, such as video messaging on mobile phones. An I-Phone performing the features of a Laptop. AN LCD being made Pen Drive compatible.
4. Explore New Markets:
   When there is no scope to sell further in the domestic market, it is better for the company to try selling abroad. All the hand set manufactures for mobile phones are exploring the villages and small towns for their cheaper versions of which the stocks are lying with them, but there is no demand in the Metros and the big cities.
5. New Packaging:
   When the old packaging has lost its attractiveness, then brightening up old packaging, or subtle changes such as putting crisps in foil packets be done by the company. All cosmetics companies have repackaged the lipsticks differently for the teenagers and for the older women. Even the vermilion which has been mostly popularised by the TV serials is coming in the stick form and not powder form, so that it does not smudge.

Performance in Different Phases of Product Life Cycle:

Performance in different phases of product life cycle can be studied under four parameters-:

Although several parameters such as strategy, risk, profits etc., Can be considered, but for simplicity sake, only four parameters have been taken.

1. Product:
   This parameter shows that in the first stage of PLC, the quality of product may not be good, but as the product market grows and feed backs are received, there is advancement in product quality, followed by superior quality and standardization in the maturity stage. The decline stage sets in only because the company stops paying heed to market feedback and segmentation.
2. Marketing:
   Under the introduction stage, market penetration is done through heavy advertising and skimming. In the second stage the sales increase and the advertisement costs reduce, in the maturity stage good segmentation is done and by this time there is a slack in aggressive marketing which leads to low sales and declining interest of consumers in the product.
3. Buyer Behavior:
   The buyer behaviour is also worth considering as in the start stages the buyer is reluctant to buy the product and he has to be pushed into buying, soon this changes in the growth stage where the acceptance from buyer comes and soon he reaches the saturation in the maturity stage. In the last decline stage, the buyers are not interested in buying the product.
4. Competition:
   Similarly, when competition is considered, there are few competitors in the introduction stage, then there are huge buyers in the growth stage then there is a shakeout and the company loses some buyers in the maturity stage. Finally at the end stage, which is the decline stage, there may be too less competition or very fierce competition due to which the company might have vanished from the market.

Advantages and Disadvantages of Product Life Cycle:

Advantages of Product Life Cycles:

1. It helps in Understanding Marketing and Development of product. From a marketing and business development perspective, this is one of the strongest advantages of product life cycles
2. For consumers, the product life cycle has generally positive implications by driving innovation, which leads to products that are more effective
3. It helps the marketing division to know the time when innovations are required in the product
4. PLC leads to capture of market in the maturity stage
5. It lets the management know when to discard the product

Limitations of Product Life Cycle:

1. All products follow PLC, But PLC varies a lot, unfortunately, it is applied without any distinction, although is different for different types of products
2. It appears that life comes to an end with decline, but there are examples when after decline the product may have found new popularity and rejuvenation
3. Nothing helps to identify when a product moves from one stage to another. It makes the task of forecasting difficult
4. The model worked well when the environment was relatively stable, not subject to uncertainty as it is today
5. Streetwise marketers point out those unusual circumstances that might interfere with expected life cycle behaviour. It may result in different shape of PLC
6. The life cycle of a product is dependent on sales to consumers. All consumers do not buy in the introductory stage. Some people buy early, others buy after their friends have bought. For any product to be successful it must be bought by early adopters
7. PLC is a metaphor. Products are not organic, and as such do not have to die
8. It attempts to describe only the pattern of evolution
9. There is no scientific basis
10. The pattern may not be the same to all industries
11. All products do not pass through all the stages of PLC

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New Product Development (NPD)

Concept of New Product Development(NPD):
A new product concept is basically a blueprint for your idea. When developing a new product concept, we should list features and benefits of our product that may appeal to our customers. Do a research, conduct focus groups and one should determine our target audience thorough market research.

3 Steps To Build An Effective Concept Test -
Step 1: Choose your test methodology
Step 2: Design and field your study
Step 3: Identify the most promising product concept

Needs of New Product Development(NPD):

1. Company growth
2. Higher profit margins
3. Business planning
4. Utilisation of excess capacity
5. Recycling of waste product
6. Improvement and development of existing firms
7. Improvement and development of existing processes
8. Introduction of novel production process

Meaning of Product:
Since 1575, the word “product” has referred to anything produced. In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retail, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods. Commodities are usually raw materials such as metals and agricultural products, but the term can also refer to anything widely available in the open market.

The Six Categories of New Products:

1. New-to-the-world Products (really new Products)
2. New-to-the-firm Products (new Product Lines)
3. Additions to existing Product Lines.
4. Improvements and Revisions to existing Products.
5. Repositionings.
6. Cost Reductions.

Techniques of New Product Development(NPD):

1. Prototyping
2. Lean strategy
3. Trick for design
4. Framework
5. Scalable product
6. Test driven development
7. Version control

Process of New Product Development (NPD):

1. Idea Generation
   The first stage of the New Product Development is the idea generation.This stage involves creating a large pool of ideas from various sources, which include –
   • Internal sources – many companies give incentives to their employees to come up with workable ideas.
   • SWOT analysis – Company may review its strength, weakness, opportunities and threats and come up with a good feasible idea.
   • Market research – Companies constantly reviews the changing needs, wants, and trends in the market.
   • Customers – Sometimes reviews and feedbacks from the customers or even their ideas can help companies generate new product ideas.
   • Competition – Competitors SWOT analysis can help the company generate ideas.
2. Idea Screening
   Ideas can be many, but good ideas are few. This second step of new product development involves finding those good and feasible ideas and discarding those which aren’t. Many factors play a part here, these include –
   • Company’s strength,
   • Company’s weakness,
   • Customer needs,
   • Ongoing trends,
   • Expected ROI,
   • Affordability, etc.
3. Concept Development & Testing
   A concept is a detailed strategy or blueprint version of the idea. Basically, when an idea is developed in every aspect so as to make it presentable, it is called a concept. All the ideas that pass the screening stage are turned into concepts for testing purpose. You wouldn’t want to launch a product without its concept being tested. The concept is now brought to the target market. Some selected customers from the target group are chosen to test the concept.
4. Marketing Strategy Development:
   • The marketing strategy statement consists of three parts –
     • The first part describes the target market, the planned product positioning and the sales, market share and profit goals for the first few years.
     • The second part of the marketing strategy statement outlines the product’s planned price, distribution, and marketing budget for the first years.
     • The third part of the marketing strategy statement describes the planned long run sales, profit goals and marketing mix strategy.
5. Business Strategy Analysis & Development
   The testing results help the business in coming up with the final concept to be developed into a product. It’s time for it to analyse and decide the marketing, branding, and other business strategies that will be used. Estimated product profitability, marketing mix, and other product strategies are decided for the product.
6. Product Development
   Once all the strategies are approved, the product concept is transformed into an actual tangible product. This development stage of new product development results in building up of a prototype or a limited production model. All the branding and other strategies decided previously are tested and applied in this stage.
7. Test Marketing
   Unlike concept testing, the prototype is introduced for research and feedback in the test marketing phase. Customers feedback are taken and further changes, if required, are made to the product. This process is of utmost importance as it validates the whole concept and makes the company ready for the launch.
8. Commercialization
   The product is ready, so should be the marketing strategies. The marketing mix is now put to use. The final decisions are to be made. Markets are decided for the product to launch in. This stage involves briefing different departments about the duties and targets. Every minor and major decision is made before the final introduction stage of the new product development.

Diagram Representation of Process of New Product Development(NPD)

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Marketing Mix 7P’s

The 7Ps model is a marketing model that modifies the 4Ps model.

The 7Ps is generally used in the service industries.

Who created the 7Ps model :-

The 7Ps model was originally devised by E. Jerome McCarthy and published in 1960 in his book Basic Marketing. A Managerial Approach.
We've created the graphic below so you can see the key elements of the 7Ps marketing mix.

The 4Ps vs The 7Ps :-

The 4Ps were designed at a time where businesses were more likely to sell products, rather than services and the role of customer service in helping brand development wasn't so well known. Over time, Booms and Pitner added three extended ‘service mix P’s': Participants, Physical evidence and Processes, and later Participants was renamed People. Today, it's recommended that the full 7Ps of the marketing mix are considered when reviewing competitive strategies.
The 7Ps helps companies to review and define key issues that affect the marketing of its products and services and is often now referred to as the 7Ps framework for the digital marketing mix.
Companies can also use the 7Ps model to set objectives, conduct a SWOT analysis and undertake competitive analysis. It's a practical framework to evaluate an existing business and work through appropriate approaches whilst evaluating the mix element as shown below and ask yourself the following questions:

1. Products/Services: How can you develop your products or services?
2. Prices/Fees: How can we change our pricing model?
3. Place/Access: What new distribution options are there for customers to experience our product, e.g. online, in-store, mobile etc.
4. Promotion: How can we add to or substitute the combination within paid, owned and earned media channels?
5. Physical Evidence: How we reassure our customers, e.g. impressive buildings, well-trained staff, great website?
6. People: Who are our people and are there skills gaps?
7. Partners: Are we seeking new partners and managing existing partners well?.

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