What is better- INNOVATION OR IMITATION??????

You might be thinking this is a very simple question to answer and the definite answer to the question is "innovation".But it is not always true. Sometime copying with efficiency and efficacy leads to greater success than the innovation itself.(creative imitation).

Even the regulatory bodies allows copying without the breakage of law. Everything cannot be invented.Many companies are running successfully just because they can copy well.

Studies showed that imitators do at least as well and often better from any new product than innovators do. Followers have lower research-and-development costs, and less risk of failure because the product has already been market-tested.

Legal Imitation: When you can copy the product but without involving the name of the company.Sometime the process cannot be imitated ,sometimes the product depending upon the law and rights initiated.

And who says that only small companies or startups copy.Even big companies like Apple have copied .The iPod was not the first digital-music player; nor was the iPhone the first smartphone or the iPad the first tablet. Apple imitated others’ products but made them far more appealing. The pharmaceutical industry is split between inventors and imitators.

 Some innovators, such as Pfizer, have joined the copycats, starting generic-drugs businesses themselves. The multi-billion-dollar category of supermarket own-label products is based on copying well-known brands, sometimes down to details of the packaging. Fast-fashion firms have built empires copying innovations from the catwalk.”

Today is the world of who can present their product well and the product is able to justify itself in the eyes of the customers.It should provide benefits to the customer and then your product whether it is innovated or imitated will be a success.

Also there is a limitation to innovation but not to imitation as imitation doesn't just mean copying. It requires skills because it might be possible that the company that is innovating may not be so good in its product and you come out with a better version of it in terms of quality,preferences,benefits ,stability,durability etc.

 There is another point to this that, Innovators as a group get only a small fraction of the value of an innovation. Typically, the better returns go to business people often derided as copycats.For Example, innovated new products but lost out in the marketplace to others afterward. Among them, Diners Card created credit cards but lost the market to MasterCard and Visa , EMI created CAT scans but the market today is dominated by General Electric.

                                     

Coming to the Emerging countries like India  etc it is said that they should go for imitation rather than innovation because innovation requires lots of investment along with a lot of time and India is just beginning to mark its economic growth and its better to have something rather than nothing and We have seen earlier that most of the successful companies have copied in an efficient way and have made them Market leaders.

Imitation also gives you the benefit of lower risk of failure as the risk has been subdued by the innovating company.So if you are low on investment you can go for imitation rather than innovation.

All these points are not to deny that innovation does not work.

Innovation is the seed which on nourishment will let a plant(copiers) grow upon it.If there is no innovation there cannot be anything to copy.Innovation requires resources,time,skill ,competencies etc and once these grow as core competency of the innovating company no copier can take its position.

So both are good in two different situation.Check out which one will you prefer.

Why some products fail in the market?

“Make sure you are building The Right It before you build It right.”

This is very important for new ventures of products because if we are not clear enough about what we want to make and offer how can we guarantee that the customer will get a clear idea and understand our product.

The market is loaded with lots of products and everyday few products gets added on the existing list but very few get success while others just stay as substitute and still others gets removed from the market.
Why does this happens?Why few products are successful while others don't get the taste of success?
So I came with my new Blog about why few products fail in the market.

Its not always that the product made is a failure.A product can fail due to other reasons also.

The philosophy of F.L.O.P can explain it easily why the products fail.It states that product may fail due to Failure of Launch or at Operations or at Premise.
So what does these three means.
First,Failure at launch means that that the product was bought in the right time,at the right place at a right price but the awareness of the product was not there in the market which led to its failure. It happens when not enough awareness is made on social sites,news,other medias etc.So proper preparation should be made in advance of  product launch to make the upcoming product known to the market.

Second,Failure at Operations means that the product had a great launch and initially early adopters accepted the product.But as time passes by there are some technical(reliability,reusability ,durability etc) or non technical defects which gets the product bad reviews and ultimately the customers move away from the product.

Third,Failure at Premise,the products were well built (solid, reliable, stable) and the teams responsible for the launch did a great job; there was a lot of buzz and, sometimes, even strong initial sales and adoption. But after a short while, even though the product did exactly what it was designed to do–and did it well–people realized that they didn’t really need it or want it after all. The people who had already bought it stopped using it, and those who were thinking of buying it changed their mind and went after the next new thing.

There are a few examples that stand out as so colossal you have to wonder what the company was thinking. Still, others seem to have just been a case of bad timing, bad marketing and bad luck.

Product failures allows those in the planning and implementation process to learn from the mistakes of other product and brand failures. Each product failure can be investigated from the perspective of what, if anything, might have been done differently to produce and market a successful product rather than one that failed. The ability to identify key signs in the product development process can be critical. If the product should make it this far, assessing risk before the product is marketed can save an organization’s budget, and avoid the intangible costs of exposing their failure to the market.

Few examples of product failures of different companies are..

• New Coke

The new coke which was bought in by the Coca-Cola company as a strategy to fight the Cola war during the 80s. But sometime the brand name is so important as in this case that the Neew Coke was not accepted in the market and the company ultimately decided to get back to its original name CocaCola.

• Crystal Pepsi

Pepsi introduced this clear cola in the early 1990s. Unlike other clear carbonated drinks, this one didn't have a lemon/lime flavor - yet it didn't quite have a normal cola flavor either. Despite a very expensive media blitz, this see-through soda just didn't catch on. 

• Ford Edsel

Ford came out with the new car named Ford Edsel but the timing for the launch was not correct and hence The Edsel has become synonymous with failure, and it is well known as a marketing catastrophe, but the 1958 recession certainly played a large part in its undoing.

• Mc Donald's Arch Delux

McDonald's also fell prey to this with the release of the Arch Deluxe menu in the '90s. No one was fooled when Mickey-D's claimed to have moved into the fine dining racket just by slapping a tomato on top of a burger. McDonald's reportedly spent $100 million on advertising the failed line.

So we can see that even top companies of the world has suffered due to failure products. Customers are the ultimate decision maker and no one can fool them. Everything has to be planned right from the idea till the execution of the plan and even the its maintenance and market occupancy rate and improvement too.So its not an easy task to get away just by bringing in product.Actually the story begins here...

If you want to be an entrepreneur or manager you should definitely know this...HOW TO MANAGE A PRODUCT PORTFOLIO..

A company at its inception comes out with one or two products but as time move ahead the product portfolio gets bigger and managing those needs some knowledge and as the complexity rises a process has to be developed to check that all products of the portfolio are well managed and new products also gets its share as needed.
To start with,Let me tell you about how the entire working goes on..

 IDEAS:
ideas for new products is the input and is the reason to have a process in the first place. Ideas should come from many different sources including both internal and external stakeholders.

The portfolio management process as shown consists of three primary activities including
 1) the portfolio process,
 2) a resource allocation process, and
3) generation of a consolidated project plan.

The process is iterative and will be repeated formally maybe 2-4 times per year, but product and senior management should be spending a considerable amount of time outside the formal process to engage key personnel in all business functions.

PORTFOLIO PROCESS
The portfolio process is how the business prioritizes existing and potential new projects and culminates in a portfolio document that can be in the form of an Excel spreadsheet. The rows list all active and potential projects in order of business priority. The columns would typically include the current priority, a “scorecard” ranking number, the project status and phase, and the project type.

RESOURCE ALLOCATION PROCESS

The next step is to take this list of projects and align them with resources.

For existing projects, it is much easier to determine resource requirements compared to future projects where there may not even be a clear definition, but you have to start somewhere and consider resources in making decisions on the portfolio. The important thing to remember for all involved is that the further out you go, and the less defined the future projects are, the higher the uncertainty in the projections. The second comment is that because of resource constraints, some projects that are ranked lower than others may be worked on sooner just because of resource availability.

CONSOLIDATED PROJECT PLAN
The consolidated project plan, or road map attempts to communicate to the organization when specific new products will come to market. Depending on the type of industry and cycle time, it might provide a current snapshot of what the organization believes is possible over the next several years.  It will list projects that are active where the new product will be introduced in the short to medium term, and other projects where either minimal or no resources have been committed, may have very limited definition, and are projected to come to market in the medium to long term.

The key areas where senior management can support the process.

1)First, the senior manager must make the process a priority and be engaged and supportive.

2)Another key role of senior management is maintaining a balanced portfolio. Just as with any investment portfolio, you need a good mix of projects from incremental, new-to-the-firm, and radical. No firm can survive in the long run by focusing on only one type. Another key role of senior management is maintaining a balanced portfolio. Just as with any investment portfolio, you need a good mix of projects from incremental, new-to-the-firm, and radical. No firm can survive in the long run by focusing on only one type.

3)They also need to guard against listening exclusively to current customers and pushing the boundaries of  existing technology past the point where customers value the next generation product.

4)It is important that the senior manager hear and listen to all the voices and not let decisions be driven to a particular outcome. It is important that the culture support an open and honest discussion about project risk.

 The senior manager, therefore, has to walk a fine line to make sure all the voices and opinions are heard, but not let the process bog down to the point where no decisions are made or are made late.

I think after reading the process you would have got a little knowledge of how to carry on your business.

Do you know about Product life Cycle?

We all know something or the other about the Product Life Cycle.It is a four stage cycle starting with the Introduction stage and then the Growth Stage followed by Maturity Stage and finally the decline stage,

At its core, the PLM process aims to establish and protect information defining the product. This information is then shared with stakeholders to ensure that the product remains in focus and a priority proactively to ensure it is managed in the best possible way. The three core principles therefore are:
Provision of secure and managed access of the product information
Maintenance of information integrity throughout the life of the product
Management of business processes that will use, share and build on this information

But have we ever thought that the product life cycle have significance apart from just a diagram .Yes,Product life Cycle has Strategic importance to the company.

The actual story begins after the product life cycle is constructed.

Many questions arises like:

Given a proposed new product or service, how and to what extent can the shape and duration of each stage be predicted?
Given an existing product, how can one determine what stage it is in?


Given all this knowledge, how can it be effectively used?

Each of the above question needs to be strategically dealt with.


INTRODUCTION STAGE

All depends upon the product’s complexity, its degree of newness, its fit into consumer needs, and the presence of competitive substitutes of one form or another.


Few products don't need to be marketed. They are so essential and needed in the market that the automatically make their space in the market. Eg. Medicines of some fatal disease.


Customer-oriented new product development is one of the primary conditions of sales and profit growth.


And being a new product we cannot even say whether they will have any life cycle or not.It may not have growth at all.Instead they may be falling continuously . The fact is, most new products don’t have any sort of classical life cycle curve at all and may completely go the negative way.



GROWTH STAGE


In this stage the product is accepted in the market and sales begins to boom and enters the growth stage. Potential competitors who got a hint of the market growth come into play and design similar products by bringing in either a photocopy of it or some product with some development or some change in the specifications and at this point product and brand differentiation begin to develop.


there is a fight for customer patronage which brings in new set of problems.. But the policies and tactics now adopted will be neither freely the sole choice of the originating producer, nor as experimental as they might have been during Stage I.


Some of these will begin to charge lower prices because of later advances in technology, production shortcuts, the need to take lower margins in order to get distribution, and the like.








MATURITY STAGE


In this stage all the requirements are fulfilled and the product is well accepted in the market .Only production needs to be fulfilled as per the population need.Not much investment is needed in this stage.However the price war is prominent in this stage and the companies fight for minute specifications differentiation and customers build in brand preferences in this stage.


Retailers and distributors will now frequently have been reduced largely to being merchandise-displayers and order-takers. In the case of branded products in particular, the originator must now, more than ever, communicate directly with the consumer.


DECLINE STAGE


When the product comes to the decline stage the industry gets transformed.As it is the decline stage the companies tries its best to make the product to survive and may take many aggressive decisions. Consumers get bored. The only cases where there is any relief from this boredom and gradual euthanasia are where styling and fashion play some constantly revivifying role.

All the products in the market goes through these stage.It just depends upon when and which product is in which stage.The companies try to keep its product in the growth or maturity stage which are cash generators.But if there are many products which are in different stages then a proper balance of investment,product extension,newer technology etc has to be maintained otherwise the product will reach the last stage very soon and those in the last stage will get removed from the market without any notice.

So, we should always keep a keen eye on,in which stage is our product/products are.

what is price?

 price is a component of a transaction that takes place between two parties and refers to what must be given up by one party (i.e., buyer) in order to obtain something from another party (i.e., seller). this view of price provides a  limited explanation of what price means to the parties in the transaction. In fact, price means different things to different people in any transactions.:

Buyers’ View –price refers to what must be given up to obtain benefits especially  financial consideration (e.g., money) in exchange for acquiring access to a good or service. But financial consideration is not always what the buyer gives up. Sometimes there is an exchange of products.

Sellers’ View - price reflects the revenue generated for each product sold and, thus, is an important factor in determining profit. price also serves as a marketing tool and is a key element in marketing promotions.

what is pricing?

Pricing is a technique of fixing an appropriate price of any product or service by determining what value the producer will get when the trade will be carried out.

Thus pricing methods helps to set the prices so that both the producer and the customer are on equal stand and are relevant with the product being offered to the customer.

The prime motive of every business is to earn profit and it can be best realised by using the best pricing methods.

Factors affecting Pricing

Organisational and marketing objectives

Pricing decisions are guided by the overall objectives of the company. 

Corporate objectives can be wide and  may include different objectives which are related to each other across various functions.

 there are four key objectives in which price plays a central role. Mostly one of these objectives will be followed, though the marketer may have different objectives for varied products. The four main marketing objectives affecting price include:

• Return on Investment (ROI) – A firm may decide on an objective that all its products attain a certain percentage return to the organization’s spending in marketing those product. The level of return along with an estimated sales will determine appropriate pricing levels need to meet the ROI objective.
• Cash Flow – Pricing of products such that sales revenue will at least cover product production and marketing costs to meet its expenses while efforts are made to establish the product in the market. 
• Market Share –an objective of gaining a hold in a new market or retaining a certain percent of an existing market. For new products under this objective the price is set artificially low in order to capture market and will be increased as the product becomes more accepted  For existing products, firms may use price decisions to insure they retain market share in instances where there is a high level of market competition and competitors who are willing to compete on price.
• Maximize Profits – Older products has little incentive to introduce improvements to the product (e.g., demand for product is declining) and will continue to sell the same product at a price premium for as long as some in the market is willing to buy.

Pricing Objectives

Survival

Prices are flexible. To increase sales the company can lower the price.The company uses a survival-based price objective when it's willing to accept short-term losses for the sake of long-term viability.

Profit

Price has both direct and indirect effects on profits of a company.. The direct effect is the price covers the cost of producing the product. The indirect influence how many units sell. The number of products sold influences profit through economies of scale.. The primary objective of pricing is to maximize price for long-term profitability.

Sales

Sales-oriented pricing objectives will boost volume or market share. A volume increase means increase in  company's own sales across specific time periods. A company's market share measures its sales against the sales of other companies in the industry. both are independent of each other.

Status Quo

A status quo price objective focuses on maintaining market share, Status quo pricing may have a stabilizing effect on demand for a company's products.

Costs

 the starting point for setting a product’s price is to first determine how much it will cost to get the product to their customers. The price customers pay must exceed the cost of producing a good or delivering a service.

 the marketer will consider all costs needed to get the product to market including those associated with production, marketing, distribution and company administration etc. These costs can be divided into two main categories:

Fixed Costs - these represent costs the marketing organization incurs that are not affected by level of production or sales. From the marketing side, fixed costs may also exist in the form of expenditure for fielding a sales force, carrying out an advertising campaign and paying a service to host the company’s website etc. These costs are fixed because there is a level of commitment to spending that is largely not affected by production or sales levels.

Variable Costs – These costs are directly associated with the production and sales of products and, consequently, may change as the level of production or sales changes. Typically variable costs are evaluated on a per-unit basis since the cost is directly associated with individual items. there are also marketing variable costs such as coupons, which are likely to cost the company more as sales increase (i.e., customers using the coupon). Variable costs, especially for tangible products, tend to decline as more units are produced. This is due to the producing company’s ability to purchase product components for lower prices since component suppliers often provide discounted pricing for large quantity purchases.

Determining individual unit cost can be a complicated process. While variable costs are often determined on a per-unit basis, applying fixed costs to individual products is less straightforward. For example, if a company manufactures five different products in one manufacturing plant how would it distribute the plant’s fixed costs (e.g., mortgage, production workers’ cost) over the five products?

Other marketing Mix Variables

Marketing strategy concerns the decisions that help the company fulfill its target market and attain its business and marketing objectives. Price, of course, is one of the key marketing mix decisions and since all marketing mix decisions must work together, the final price will be affected by how other marketing decisions are made. For instance, marketers selling high quality products would be expected to price their products such that which will add to the value of product being at a high-level.
 Not all companies view price as a key selling feature. Some firms wants to be market leaders in product quality, concentrating on a strategy that highlights non-price benefits (e.g., quality, durability, service, etc.).
Such non-price competition helps companys' avoid price wars between competitive firms that follow price as a key selling feature.

Channel member expectation

Pricing gets affected by the members of distribution channel.
When the necessity and objective of channel members match with pricing policy of the marketer distribution will be possible. The discount given to wholesalers or retailers forms an important component in the profit to middlemen. So, the price determiner should have knowledge about the distributors' attitude towards the price and at what price will they sell the products. Without written agreement, manufacturers cannot provide authority or direct the middlemen to fix final price.
 Distribution partners expect to receive financial compensation for their efforts, which usually means they will receive a percentage of the final selling price. This percentage or margin between what they pay the marketer to acquire the product and the price they charge their customers must be sufficient for the distributor to cover their costs and also earn a desired profit.

customer interpretation and response

 expectations of customers and channel partners is the most obvious factor that influences the price.While making a purchase decision customers assess the overall “value” of a product before they assess the price. marketers needs to conduct customer research to determine what “price points” are acceptable.If it is not acceptable it could discourage customers from purchasing.

competition

Marketers will look to market competitors for indications of how price should be set. consumer products researching competitive pricing is relatively easy, particularly when Internet search tools are used. Price analysis can be somewhat more complicated for products sold to the business market since final price may be affected by a number of factors.

Analysis of competition will include pricing by direct competitors, related products and primary products.

Direct Competitor Pricing – Almost all marketing decisions, including pricing, will include evaluation of competitors’ offerings. The impact of this information on the actual setting of price will depend on the competitive nature of the market.  Marketers must not only research competitive prices but must also pay close attention to how companies will respond to the pricing decisions. For instance, in highly competitive industries, such as gasoline or airline travel, competitors may respond quickly to competitors’ price adjustments.

Related Product Pricing - Products that offer new ways to solve customer needs may look  pricing of products that customers are currently using even though these other products may not appear to be direct competitors. For example, a marketer of a new online golf instruction service that allows customers to access golf instruction via their computer may look at prices charged by local golf professionals for in-person instruction to gauge where to set their price. 

Primary Product Pricing - marketers may sell products viewed as complementary to a primary product. For example, Bluetooth headsets are considered complementary to the primary product cellphones. The pricing of complementary products may be affected by pricing changes made to the primary product since customers may compare the price for complementary products based on the primary product price. 

Legal and Regulatory Issues

Marketers must be aware of regulations that impact how price is set in the markets in which their products are sold. These regulations are primarily government enacted. Price regulations can come from any level of government and vary widely across areas. For instance, in some industries, government regulation may set price ceilings while in other  there may be price floors . Additional areas of potential regulation include: deceptive pricing, price discrimination, predatory pricing and price fixing.

Finally, when selling beyond their home market, marketers must recognize that local regulations  make pricing decisions different for each market. This is a concern when selling to international markets where failure to consider regulations can lead to penalties.So there should be clear understanding of regulations in each market they serve.