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9- 1Copyright 2012 Pearson Education

i t s good and

good for you

Chapter Nine

New-Product Development and

Product Life-Cycle Strategies

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New-Product Development andProduct Life-Cycle Strategies

New-Product Development

Strategy

New-Product DevelopmentProcess

Managing New-Product

Development


Additional Product and Service

Considerations

Topic Outline

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New-Product Development Strategy

Acquisitionrefers to the buying of a whole

company, a patent, or a license to producesomeone elses product

New product developmentrefers to original

products, product improvements, productmodifications, and new brands developedfrom the firms own research and

development

Two ways to obtain new products

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New-Product Development Process

Major Stages in New-Product Development

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Idea generationis the systematic search fornew-product ideas

Sources of new-product ideas Internal

External

Idea Generation

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Internal sourcesrefer to the

companys own formal research

and development, management

and staff, and intrapreneurialprograms

External sourcesrefer to sources

outside the company such as

customers, competitors,distributors, suppliers, and

outside design firms

Idea Generation

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Copyright 2012 Pearson Education


Inviting broad communities of people

customers, employees, independentscientists and researchers, and even the

public at largeinto the new-product

innovation process.

Crowdsourcing

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Identify good ideas and drop poor ideas

R-W-W Screening Framework: Is it real?

Can we win?

Is it worthdoing?

Idea Screening

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Product ideais an idea for a possible productthat the company can see itself offering

to the marketProduct conceptis a detailed version of the

idea stated in meaningful consumer

terms

Product imageis the way consumersperceive an actual or potential product

Concept Development and Testing

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Concept testing refers to testing new-product

concepts with groups of target consumers

Concept Development and Testing
http://www.questionpro.com/akira/showSurveyLibrary.do?surveyID=109&mode=1

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Marketing strategy development refers to

the initial marketing strategy for

introducing the product to the market Marketing strategy statement includes:

Description of the target market

Value proposition Sales and profit goals

Marketing Strategy Development

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Business analysisinvolves a review of the

sales, costs, and profit projections to find

out whether they satisfy the companys

objectives


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Involves the creation and testing of one or

more physical versions by the R&D or

engineering departments

Requires an increase in investment

Shows whether the product idea can be

turned into a workable product.

Marketing Strategy DevelopmentProduct development

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Test marketing is thestage at which theproduct andmarketing program

are introduced intomore realisticmarketing settings

Provides the marketer

with experience intesting the productand entire marketingprogram before fullintroduction


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Types of Test Markets

Standard testmarkets

Controlled test marketsSimulated test markets

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New-Product DevelopmentProcess

Advantages of simulated test markets

Less expensive than other test methods

Faster

Restricts access by competitors

Disadvantages

Not considered as reliable and accurate due

to the controlled setting


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When firms testmarket

New productwith largeinvestment

Uncertaintyabout product

or marketingprogram

When firms maynot test market

Simple lineextension

Copy ofcompetitorproduct

Low costs Management

confidence
http://www.decisioninsight.com/

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Commercializationis the introduction

of the new product

When to launch

Where to launch

Planned market

rollout


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Managing New-Product Development

Successful new-product development should

be:

Customer centered Team-based

Systematic

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Sequential new-product developmentcompany departments work closely

together individually to complete

each stage of the process beforepassing it along to the nextdepartment or stage

Increased control in risky or complexprojects but may be slow

New-Product Development Strategies

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Team-based new-product development

Company departments work closely

together in cross-functional teams,

overlapping in the product-

development process to save time andincrease effectiveness


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Systematic new-product development

innovative development approach that collects,

reviews, evaluates, and manages new-product

ideas

Creates an innovation-oriented culture

Yields a large number of new-product ideas


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Product Life Cycle

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Product development

Sales are zero and investment costs mount

Introduction

Slow sales growth and profits are nonexistent

Growth Rapid market acceptance and increasing profits.

Maturity

Slowdown in sales growth and profits level off ordecline

Decline

Sales fall off and profits drop


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Fads are temporary

periods of unusually

high sales driven by

consumer

enthusiasm and

immediate product

or brand popularity

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Slow sales growth

Little or no profit

High distribution and promotion expense

Introduction Stage

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Sales increase

New competitors enter the market

Price stability or decline to increase

volume

Consumer education

Profits increase

Promotion and manufacturing costs gain

economies of scale

Growth Stage

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Slowdown in sales

Many suppliers

Substitute products

Overcapacity leads to competition

Increased promotion and R&D to

support sales and profits

Maturity Stage

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Market modifying

Productmodifying

Marketing mix

modifying

Maturity Stage Modifying Strategies
http://www.1000uses.com/

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Maintain the product

Harvest the product

Drop the product

Decline Stage

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Additional Product and ServiceConsiderations

Public policy and regulations regarding developing

and dropping products, patents, quality, andsafety

Product Decisions and SocialResponsibility

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Additional Product and ServiceConsiderations

Determining what products

and services to introduce in

which countries

Standardization versus

customization

Packaging and labeling

Customs, values, laws

International Product andService Marketing

Challenges

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9 35Copyright 2012 Pearson Education

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.


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