Product Development - David V. Tennant

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Twitter, Reddit, Facebook, and a host of other platforms. However, an online sales presence starts to encroach into the domain of Marketing.

      As noted earlier, the fundamental aim of sales is to sell products and obtain contracts: ultimately, to turn potential customers into current customers. Note that sales reps generally have goals to meet on a quarterly or yearly basis. This is typically a financial goal; for example, “Jill must bring in $400,000 dollars in revenue each quarter.” While the sales rep is concerned about meeting his or her sales goal, it is also important that products and services should have enough profit (also called “margin”) so the company makes enough money to stay in business – and ideally to grow.

      The marketing group, while concerned with sales and profits, plays a very different, but complementary role to sales. Marketing is integral to the financial health of a company and must support the sales team. Pick up any book on marketing, and you will learn about the four Ps:

       Product

       Promotion

       Pricing

       Placement.

      These are the marketing fundamentals, but true marketing can be very analytical, with spreadsheets, detailed market analyses, and estimated demand for the product. But first, let’s focus on the 4 Ps.

      The 1st P – Product

      It is not unusual for a Marketing Manager (sometimes called a Product Manager) to have the leadership role in the development of products and services. This will become apparent as our discussion unfolds.

      Figure 2.2 Product Lifecycle. Lumen Learning, viewed 15 February 2021. https://courses.lumenlearning.com/clinton-marketing/chapter/reading-stages-of-the-product-life-cycle/.

      Development stage –

       Product/project is funded, and design of prototype starts

       Prototype put through testing, and data collection

       Review of data; evaluation of results

       Changes in design and more testing

       Final product handed over to manufacturing or external group for production

      Introduction stage –

       The product is new to the market and demand will increase with time

       The cost per unit (or customer) is high

       Few if any competitors

       Sales are low and the product may be a money loser during the introductory stage

      Growth stage –

       Sales and revenue increase; the product is taking off in the marketplace

       Competitors are becoming aware of your activity and may start to develop a competing product

       Cost per unit (or customer) begins to decline

       Profit margins increase

      Maturity stage –

       Sales, revenues, and profits peak

       Cost per unit (or customer) is at the lowest point

       Competitors are now actively nipping at your heels

      Decline stage –

       Sales and revenue decline, leading to a decline in profit margin

       Cost per unit (or customer) is still low, but may rise with fewer units sold

       Competitors start to fall away. A few will remain, but with a reduced market there are less sales and therefore profits to share. The product may become stable with steady sales but will not see the heavy growth or revenues seen in the growth stage.

      Example of Product Displacement

      Figure 2.3 Nokia Phone. Isaac Smith / Unsplash

      Figure 2.4 Apple iPhone. Michal Weidemann / Unsplash

      Features – nice displays (computer screens), user friendly operation (electric vehicles), the wow factor (new and innovative, nobody does this – Wow!), and a variety of models to fit various budgets (low, middle, and high-end). The Apple iPhone definitely had the “wow” factor. Thirty years later, there are now competitors to the Apple iPhone.

      Specifications – a technical description or requirement of what the product can do. For example, if our new product is an electric motor for electric vehicles: the materials used to make the product (steel, stainless steel, etc.); the number of motor brushes and material; outputs –horsepower, torque; the range of temperatures for optimum operation, etc. If you pick up any standard-powered car brochure, specifications usually include items such as horsepower, torque, engine displacement, fuel requirements, etc. Specifications may sometimes be spelled out by the customer for special orders or custom applications.

      Warranties and guarantees – will your company stand behind its new product?

      Service Centers – what if I need service for my new scanner/printer? Where do I go? Is there a center nearby? Note: a service center can generate additional after-sale profits: think of automobile dealers and their service center networks.

      What Marketing Cannot Do