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1. Chapter Nine New-Product Development and Product Life-Cycle Strategies 2. New-Product Development and Product Life-Cycle Strategies <ul><li>New-Product…
  • 1. Chapter Nine New-Product Development and Product Life-Cycle Strategies
  • 2. New-Product Development and Product Life-Cycle Strategies <ul><li>New-Product Development Strategy </li></ul><ul><li>New-Product Development Process </li></ul><ul><li>Managing New-Product Development </li></ul><ul><li>Product Life-Cycle Strategies </li></ul><ul><li>Additional Product and Service Considerations </li></ul><ul><li>Topic Outline </li></ul>
  • 3. New-Product Development Strategy <ul><li>Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product </li></ul><ul><li>New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development </li></ul><ul><li>Two ways to obtain new products </li></ul>
  • 4. New-Product Development Reasons for new product failure
  • 5. New-Product Development Process Major Stages in New-Product Development
  • 6. New-Product Development Process <ul><li>Idea generation is the systematic search for new-product ideas </li></ul><ul><li>Sources of new-product ideas </li></ul><ul><li>Internal </li></ul><ul><li>External </li></ul><ul><li>Idea Generation </li></ul>
  • 7. New-Product Development Process <ul><li>Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs </li></ul><ul><li>External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms </li></ul><ul><li>Idea Generation </li></ul>
  • 8. New-Product Development Process <ul><li>Identify good ideas and drop poor ideas </li></ul><ul><li>R-W-W Screening Framework: </li></ul><ul><ul><li>Is it real? </li></ul></ul><ul><ul><li>Can we win? </li></ul></ul><ul><ul><li>Is it worth doing? </li></ul></ul><ul><li>Idea Screening </li></ul>
  • 9. New-Product Development Process <ul><li>Product idea is an idea for a possible product that the company can see itself offering to the market </li></ul><ul><li>Product concept is a detailed version of the idea stated in meaningful consumer terms </li></ul><ul><li>Product image is the way consumers perceive an actual or potential product </li></ul><ul><li>Concept Development and Testing </li></ul>
  • 10. New-Product Development Process <ul><li>Concept testing refers to testing new-product concepts with groups of target consumers </li></ul><ul><li>Concept Development and Testing </li></ul>
  • 11. New-Product Development Process <ul><li>Marketing strategy development refers to the initial marketing strategy for introducing the product to the market </li></ul><ul><li>Marketing strategy statement includes: </li></ul><ul><ul><li>Description of the target market </li></ul></ul><ul><ul><li>Value proposition </li></ul></ul><ul><ul><li>Sales and profit goals </li></ul></ul><ul><li>Marketing Strategy Development </li></ul>
  • 12. New-Product Development Process <ul><li>Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives </li></ul><ul><li>Marketing Strategy Development </li></ul>
  • 13. New-Product Development Process <ul><li>Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments </li></ul><ul><li>Requires an increase in investment </li></ul><ul><li>Marketing Strategy Development </li></ul>
  • 14. New-Product Development Process <ul><li>Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings </li></ul><ul><li>Provides the marketer with experience in testing the product and entire marketing program before full introduction </li></ul><ul><li>Marketing Strategy Development </li></ul>
  • 15. New-Product Development Process <ul><li>Types of Test Markets </li></ul>
  • 16. New-Product Development Process <ul><li>Advantages of simulated test markets </li></ul><ul><ul><li>Less expensive than other test methods </li></ul></ul><ul><ul><li>Faster </li></ul></ul><ul><ul><li>Restricts access by competitors </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Not considered as reliable and accurate due to the controlled setting </li></ul></ul><ul><li>Marketing Strategy Development </li></ul>
  • 17. New-Product Development Process <ul><li>Marketing Strategy Development </li></ul>
  • 18. New-Product Development Process <ul><li>Commercialization is the introduction </li></ul><ul><li>of the new product </li></ul><ul><li>When to launch </li></ul><ul><li>Where to launch </li></ul><ul><li>Planned market </li></ul><ul><li>rollout </li></ul><ul><li>Marketing Strategy Development </li></ul>
  • 19. Managing New-Product Development <ul><li>Successful new-product development should be: </li></ul><ul><li>Customer centered </li></ul><ul><li>Team centered </li></ul><ul><li>Systematic </li></ul>
  • 20. Managing New-Product Development <ul><li>Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences </li></ul><ul><li>Begins and ends with solving customer problems </li></ul><ul><li>New-Product Development Strategies </li></ul>
  • 21. Managing New-Product Development <ul><li>Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage </li></ul><ul><li>Increased control in risky or complex projects </li></ul><ul><li>Slow </li></ul><ul><li>New-Product Development Strategies </li></ul>
  • 22. Managing New-Product Development <ul><li>Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness </li></ul><ul><li>New-Product Development Strategies </li></ul>
  • 23. Managing New-Product Development <ul><li>Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas </li></ul><ul><li>Creates an innovation-oriented culture </li></ul><ul><li>Yields a large number of new-product ideas </li></ul><ul><li>New-Product Development Strategies </li></ul>
  • 24. Product Life-Cycle Strategies <ul><li>Product Life Cycle </li></ul>
  • 25. <ul><li>Product development </li></ul><ul><ul><li>Sales are zero and investment costs mount </li></ul></ul><ul><li>Introduction </li></ul><ul><ul><li>Slow sales growth and profits are nonexistent </li></ul></ul><ul><li>Growth </li></ul><ul><ul><li>Rapid market acceptance and increasing profits. </li></ul></ul><ul><li>Maturity </li></ul><ul><ul><li>Slowdown in sales growth and profits level off or decline </li></ul></ul><ul><li>Decline </li></ul><ul><ul><li>Sales fall off and profits drop </li></ul></ul>Product Life-Cycle Strategies
  • 26. Product Life-Cycle Strategies <ul><li>Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity </li></ul>
  • 27. Product Life-Cycle Strategies
  • 28. Product Life-Cycle Strategies <ul><li>Slow sales growth </li></ul><ul><li>Little or no profit </li></ul><ul><li>High distribution and promotion expense </li></ul><ul><li>Introduction Stage </li></ul>
  • 29. Product Life-Cycle Strategies <ul><li>Sales increase </li></ul><ul><li>New competitors enter the market </li></ul><ul><li>Price stability or decline to increase volume </li></ul><ul><li>Consumer education </li></ul><ul><li>Profits increase </li></ul><ul><li>Promotion and manufacturing costs gain economies of scale </li></ul><ul><li>Growth Stage </li></ul>
  • 30. Product Life-Cycle Strategies <ul><li>Slowdown in sales </li></ul><ul><li>Many suppliers </li></ul><ul><li>Substitute products </li></ul><ul><li>Overcapacity leads to competition </li></ul><ul><li>Increased promotion and R&D to support sales and profits </li></ul><ul><li>Maturity Stage </li></ul>
  • 31. Product Life-Cycle Strategies <ul><li>Market modifying </li></ul><ul><li>Product modifying </li></ul><ul><li>Marketing mix modifying </li></ul><ul><li>Maturity Stage Modifying Strategies </li></ul>
  • 32. Product Life-Cycle Strategies <ul><li>Maintain the product </li></ul><ul><li>Harvest the product </li></ul><ul><li>Drop the product </li></ul><ul><li>Decline Stage </li></ul>
  • 33. Product Life-Cycle Strategies <ul><li>Summary of Product Life Cycle </li></ul>
  • 34. Additional Product and Service Considerations <ul><li>Public policy and regulations regarding developing and dropping products, patents, quality, and safety </li></ul><ul><li>Product Decisions and Social Responsibility </li></ul>
  • 35. Additional Product and Service Considerations <ul><li>Determining what products and services to introduce in which countries </li></ul><ul><li>Standardization versus customization </li></ul><ul><li>Packaging and labeling </li></ul><ul><li>Customs, values, laws </li></ul><ul><li>International Product and </li></ul><ul><li>Service Marketing—Challenges </li></ul>
  • 36. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc.   Publishing as Prentice Hall
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