Plc & New Product Dev. Rg

8/6/2019 Plc & New Product Dev. Rg

1/22

9-1

New Product Development

and

Product Life-Cycle Strategies


2/22

9-2Causes of New Product FailuresCauses of New Product Failures

Overestimation of Market Size Product Design Problems

Product Incorrectly Positioned, Priced orAdvertised

Costs of Product Development Competitive Actions

To create successful new products, the

company must: understand its customers, markets and

competitors

develop products that deliver superior value tocustomers.


3/22

9-3


Process


Process

Idea Generation and Screening

Idea Screening

Concept Development and Testing

Marketing Strategy

Business Analysis

Product Development Test Marketing

Commercialization


4/22

9-4

CUSTOMERS

COMPETITORS

DISTRI

BUTORS

SUPPLIERS

Idea Generation is the SystematicSearch for New Product IdeasObtained Internally and From:

New Product Development ProcessStep 1. Idea Generation

New Product Development ProcessStep 1. Idea Generation


5/22

9-5

Process to spot good ideas and droppoor ones

Criteria Market Size

Product Price

Development Time & Costs

Manufacturing Costs

Rate of Return

New Product Development ProcessStep 2. Idea Screening

New Product Development ProcessStep 2. Idea Screening


6/22

9-6New Product Development ProcessStep 3. Concept Development & Testing

New Product Development ProcessStep 3. Concept Development & Testing

1. Develop Product Ideas intoAlternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

3. Choose the Best One


7/22


8/22

9-8

Business Analysis

Review of Product Sales, Costs,

and Profits Projections to See ifThey Meet Company Objectives

If Yes, Move to

Product Development

If No, Eliminate

Product Concept

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development


9/22

9-9New Product Development ProcessStep 7. Test Marketing

New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaign

in a small number ofrepresentative cities.

StandardTest Market

Full marketing campaign

in a small number ofrepresentative cities.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.


10/22

9-10

When? Where? ToWhom? How?

Commercialization is theIntroduction of the New Product

into the Marketplace.

New Product Development ProcessStep 8. Commercialization

New Product Development ProcessStep 8. Commercialization


11/22

9-11

PRODUCT LIFE CYCLEPRODUCT LIFE CYCLE

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)


12/22

9-12

Product Life Cycle Nothingoffers benefits

which last forever

Product Life Cycle Nothingoffers benefits

which last forever

Introduction

Growth Maturity &

saturation

Decline

Market

value/users

time


13/22

9-13Introduction Stage of the

PLC

Introduction Stage of the

PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low salesLow sales

High cost per customerHigh cost per customer

NegativeNegative

Create product awarenessand trial

Create product awarenessand trial

Offer a basic productOffer a basic product

Use cost-plusUse cost-plus

DistributionDistribution Build selective distributionBuild selective distribution

AdvertisingAdvertising Build product awareness amongearly adopters and dealers

Build product awareness amongearly adopters and dealers


14/22

9-14

INTRODUCTION STAGEINTRODUCTION STAGE

The seller tries to stimulate demand

Promotion campaigns increases to get public awareness

Explain how the product is used,

Features Advantages Benefits

You will lose money, but you expect to make profits in the future

Sales are low, and profits are below the line because your costs are

greater than the amount of money you make,you have negative profit

Need to spend a lot of money on promotion


15/22

9-15Growth Stage of the PLCGrowth Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Rapidly rising salesRapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer product extensions,service, warranty

Offer product extensions,service, warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Build intensive distributionBuild intensive distribution

AdvertisingAdvertising Build awareness and interest inthe mass market

Build awareness and interest inthe mass market


16/22

9-16

A lot is sold - The seller tries to sell as much as possible

Other competitor companies watch, and decide about joining inwith a competitor product

Growth will continue until too many competitors in the market -and the market is saturated

At the end of the growth stage, profits start to decline whencompetition means you have to spend more money onpromotion to keep sales going.

Spending money on promotion cuts into your profit

GROWTH STAGEGROWTH STAGE


17/22

9-17Maturity Stage of the PLCMaturity Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh profits

Maximize profit while defendingmarket share

Maximize profit while defendingmarket share

Diversify brand and modelsDiversify brand and models

Price to match or bestcompetitors

Price to match or bestcompetitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences andbenefits

Stress brand differences andbenefits


18/22

9-18

Many competitors have joined - the market is saturated

The only way to sell is to begin to lower the price - and profitsdecrease

It is difficult to tell the different between products since most

have the same F.A.B. - Features, Advantages & Benefits

Competition can get Nasty and commercials are intense

Persuasive Promotion becomes more important during this

stage

That is to say, you have commercials almost begging thecustomer to still buy your product because you still make it justas good.

MATURITY STAGEMATURITY STAGE


19/22

9-19Decline Stage of the PLCDecline Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Reduce expenditure and milk thebrand

Reduce expenditure and milk thebrand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase outunprofitable outlets

Go selective: phase outunprofitable outlets

AdvertisingAdvertising Reduce to level needed to retainhard-core loyal customers

Reduce to level needed to retainhard-core loyal customers


20/22

9-20

Newer products are now more attractive - even a low lowprice does not make consumers want to buy.

Profit margin declines - and so the only way to make money is

to sell a high volume

To increase volume you try to

1. Increase the number of customers - get new customers

2. Increase the amount each customer uses

DECLINE STAGEDECLINE STAGE


21/22

9-21

1. Increase frequency of use

by present customers

2. Add new users

3. Find new uses

4. Change product quality orpackaging

Extending the Product Life Cycle

Market

Modification

ProductModification

Purpose: to sell more product and cover original

investment


22/22

9-22

Overlap of Life Cycle for Products A and B

WINDOWS 95

1991 1995 1996 1997

WINDOWS 3.1

Date post:	07-Apr-2018
Category:	Documents
Upload:	vpremalatha
View:	217 times
Download:	0 times

Plc & New Product Dev. Rg

Documents