Post on 30-May-2018
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PRODUCT
PRODUCT VARIETY
QUALITY
DESIGN
FEATURES WARRANTIES
SERVICES
BRAND NAME
SIZE & FORM
PACKAGING
RETURNS
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TimeIntroduction
Profits
Sales
Growth Maturity Decline
Sales and Profits Over the Products Life From
Development to Decline
Product Life Cycle
Development
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Product Life Cycle
Demand / Technology life Cycle
Product Form Life Cycle
Brand Life Cycle
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Time
Productcategory
profits
Productcategory
sales
IntroductoryIntroductorystagestage
GrowthGrowthstagestage
MaturityMaturitystagestage
Declinestage
Product Life Cycle
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The Shape of the Sales
Curve May Vary...
Time
Time Time
Time
Sa
les
Sa
les
Sa
les
S
al
es
TRADITIONAL FAD
SEASONAL (CYCLICAL) REVIVAL or NOSTALGIA
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Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
Promotion
Strategy
PricingStrategy
Limited models
Frequent
changes
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Limited
Wholesale/
retail distributors
Expanded
dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Awareness.
Stimulatedemand.Sampling
Aggressive ads.
Stimulatedemand
Advertise.
Promote heavily
Phase out
promotion
Higher/recoup
development
costs
Fall as result of
competition &
efficient produc-
tion.
Prices fall
(usually).
Prices
stabilize at
low level.
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SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low salesLow sales
High cost per customerHigh cost per customer
Negative or lowNegative or low
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Usually is high; use cost-plus formulaUsually is high; use cost-plus formula
DistributionDistribution High distribution expensesHigh distribution expenses
AdvertisingAdvertising Build product awareness among earlyadopters and dealers
Build product awareness among earlyadopters and dealers
Introduction stage
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SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising salesRapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer new product features, extensions,service, and warranty
Offer new product features, extensions,service, and warranty
Price to penetrate marketPrice to penetrate market
DistributionDistribution Increase number of distribution outletsIncrease number of distribution outlets
AdvertisingAdvertising Build awareness and interest in the massmarket
Build awareness and interest in the massmarket
Growth Stage
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SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profits, then lower profitsHigh profits, then lower profits
Maximize profits while defending marketshare
Maximize profits while defending marketshare
Diversify brand and modelsDiversify brand and models
Price to match or best competitorsPrice to match or best competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits
Maturity stage
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MarketMarket
ModificationModification
MarketMarketModificationModification
ProductProductModificationModification
ProductProductModificationModification
MarketingMarketingMixMix
ModificationModification
MarketingMarketingMixMix
ModificationModification
Maturity Stage Product DefenseStrategies
Maturity stage
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SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and maintain, reposition,harvest or drop the product
Reduce expenditure and maintain, reposition,harvest or drop the product
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retainhard-core loyal customers
Reduce to level needed to retainhard-core loyal customers
Decline stage
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NEW PRODUCT DEVELOPMENT
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Objectives
Challenges in New Product Development
(NPD)
Organizational Structure & NPD
Stages & Management of NPD
Diffusion & Adoption of New Products
Look at the Product lifecycle
Fads, style, etc
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Original products, product improvements,
product modifications and new brands that the
company develops through its own research anddevelopment.
What is new product
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Categories of New
Products
New-To-The-WorldNew-To-The-World
New Product LinesNew Product Lines
Product Line AdditionsProduct Line Additions
Improvements/RevisionsImprovements/Revisions
Repositioned ProductsRepositioned Products
Lower-Priced ProductsLower-Priced Products
SixCategories
ofNew
Products
SixCategories
ofNew
Products
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Not introducing a superior product
Overestimation of Market Size
Product Incorrectly Positioned, Priced orAdvertised
Blow out in costs of Product Development
Competitive Actions - price wars etc
Disharmony between marketing and R&D
Causes of new product
Failure
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To create successful new products, thecompany must:
understand its customers,markets and competitors,
develop products that deliversuperior value to customers.
Causes of new product
Failure
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New Product Development
Process
IdeaIdea
GenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
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OriginalProductsOriginalProducts
Product
Improvements
Product
Improvements
Product
Modifications
Product
Modifications
NewBrands
New
Brands
AcquiredCompaniesAcquired
Companies
Acquired
Patents
Acquired
Patents
Acquired
Licenses
Acquired
Licenses
Strategies for Obtaining New Product Ideas
New product
development strategies
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Step 1: Idea Generation
CustomersCustomers
EmployeesEmployees
DistributorsDistributors
CompetitorsCompetitors
R & DR & D
ConsultantsConsultants
Creative ThinkingCreative Thinking
Sources ofSources of
New-ProductNew-ProductIdeasIdeas
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
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Attribute Listing
The process of listing down
major attributes of existing
products & modifying each
attribute for an improved
product
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Forced Relationships
In this process several
objects are considered in
relationships with each
other to create a new
product.
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Morphological Analysis
This method calls for
identifying structural
dimensions of a problem and
exmining the relationship
amongst them.
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Need /problem
identification
This method calls for
identifying needs, problems
& even asking for ideas.
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Brainstorming
The process of getting a
group to think of unlimited
ways to vary a product or
solve a problem.
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Process to spot good ideas and drop poorones as soon as possible.
Many companies have systems for ratingand screening ideas which estimate:
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
Then, the idea is evaluated against a set ofgeneral company criteria.
Step 2: Idea Screening
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1. Develop New Product Ideasinto Alternative Detailed
Product Concepts
1. Develop New Product Ideasinto Alternative Detailed
Product Concepts
2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers
2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers
3. Choose the One That Has theStrongest Appeal to Target
Customers
3. Choose the One That Has theStrongest Appeal to Target
Customers
Step 3: Concept
Development & Testing
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Part Two Describes Short-Term:Products Planned Price
DistributionMarketing Budget
Part Two Describes Short-Term:Products Planned Price
DistributionMarketing Budget
Part Three Describes Long-Term:Sales & Profit GoalsPart Three Describes Long-Term:Sales & Profit Goals
Marketing Strategy Statement Formulation
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Step 4: Market Strategy
Development
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Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See ifThey Meet Company Objectives
If Yes, Move to
Product Development
If Yes, Move to
Product Development
If No, EliminateProduct Concept
If No, Eliminate
Product Concept
Step 5: Business Analysis
Step 6: Product development
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AdvertisingAdvertising
PackagingPackaging
ProductProductBudget LevelsBudget Levels
Positioning
Strategy
Positioning
Strategy
DistributionDistributionPricingPricing
BrandingBranding
Elements thatMay be Test
Marketed by a
Company
Test Marketing is the Stage Where the Product and
Marketing Program are Introduced into More RealisticMarket Settings.
Step 7: Test Marketing
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When?When?
Where?Where?
Commercialization is the Introduction of theNew Product into the Marketplace.
Step 8: Commercialization
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Step 8: Commercialization
ProductionProduction
Inventory BuildupInventory Buildup
Distribution ShipmentsDistribution Shipments
Sales TrainingSales Training
Trade AnnouncementsTrade Announcements
Customer AdvertisingCustomer Advertising
Steps inSteps inMarketing aMarketing aNew ProductNew Product
Steps inSteps in
Marketing aMarketing aNew ProductNew Product
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Diffusion
The process by which the adoption
of an innovation spreads.
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Categories of adopters
in Diffusion process
Innovators Early adopters
Early majority
Late majority Laggards
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P
ercentageo f
Ado
pters
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%
Laggards16%
Categories of Adopters
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Diffusion process and
product life cycle curve
InnovatorsEarly adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cyclecurvecurve
DiffusionDiffusioncurvecurve
Introduction Growth Maturity Decline
Sa
les
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Product characteristics
and the rate of adoption
Complexity
Compatibility
Relative advantage
Observability Triability
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Marketing implications of
the adoption process
Communication aids the diffusion process
Word-of-mouth
Direct from marketer