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Product Design AndProduct Development With
Product Life-Cycle
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Objectives
Definition and Process of product design
Understand how companies find anddevelop product ideas.
Learn the steps in the new-productdevelopment process.
Know the stages of the product life cycle.Understand how marketing strategieschange during the products life cycle.
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Product Design
Definition:
Product design is the process of creating anew product to be sold by a business to its
customers.
A very broad concept, it is essentially theefficient and effective generation and
development of ideas through a process that
leads to new products.
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Product Design Process
The design process follows a guideline
involving three main sections:
Analysis
Concept
Synthesis
-
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Definition
Product Development
Development of original products, productimprovements, product modifications, and newbrands through the firmsown R & D efforts.
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New products can be obtained via
acquisition or
development.
New products suffer
from high failure rates.
Several reasons
account for failure.
Product Development
Strategy
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Major Stages in
Product Development
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Product Development Process:
Stage 1: Idea Generation
Internal idea sources:
R & D
External idea sources:
Customers,
competitors,
distributors, suppliers
Product Development
Strategy
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Product Development
Strategy
New Product Development Process:
Stage 2: Idea Screening
Product development
costs increase dramatically
in later stages.Ideas are evaluated
against criteria;
most are eliminated.
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New Product Development Process:
Stage 3: Concept Development and Testing
Product concepts provide
detailed versions of new
product ideas.Consumers evaluate
ideas in concept tests.
Product Development
Strategy
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New Product Development Process:
Stage 4: Marketing Strategy Development
Strategy statements describe:
The target market, product positioning, and
sales, share, and profit goals for the first few
years. Product price, distribution, and marketing
budget for the first year.
Long-run sales and profit goals and the
marketing mix strategy.
Product Development
Strategy
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New Product Development Process:
Stage 5: Business Analysis
Sales, cost, and profit
projections
Stage 6: ProductDevelopment
Prototype development
and testing
Product Development
Strategy
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New Product Development Process:
Stage 7: Test Marketing
Standard test markets
Controlled test markets
Simulated test markets
Stage 8:
Commercialization
Product Development
Strategy
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Product Life Cycle
Product life cycle is a business analysis that
attempts to identify a set of common stages
in the life of commercial products, in other
words the 'Product Life cycle'
PLC is used to map the lifespan of the
product, i.e. the stages through which aproduct goes during its lifespan
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Sales and Profits
Over A Products Life
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Product Life-Cycle Strategies
Productdevelopment
Int roduct ion
Growth
Matur i ty
Decline
Begins when thecompany
develops a new-product idea
Sales are zero
Investment costsare high
Profits arenegative
PLC Stages
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Product Life-Cycle Strategies
Productdevelopment
Int roduct ion
Growth
Matur i ty
Decline
Low sales
High cost per
customeracquired
Negative profits
Innovators are
targeted
Little competition
PLC Stages
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Product Offer a basic product
Price Use cost-plus basis to set
Distr ibut ion Build selective distribution
Advert is ing Build awareness among
early adopters and dealers/resellers
Sales PromotionHeavy expenditures to
create trial
Marketing Strategies:
Introduction Stage
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Product Life-Cycle Strategies
Productdevelopment
Int roduct ion
Growth
Matur i ty
Decline
Rapidly risingsales
Average cost percustomer
Rising profits
Early adopters aretargeted
Growingcompetition
PLC Stages
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Product Offer product extensions,
service, warrantyPrice Penetration pricing
Distr ibut ion Build intensive distribution
Advert is ing Build awareness andinterest in the mass market
Sales PromotionReduce expendituresto take advantage of consumer demand
Marketing Strategies:
Growth Stage
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Product Life-Cycle Strategies
Productdevelopment
Int roduct ion
Growth
Matur i ty
Decline
Sales peak
Low cost per
customer
High profits
Middle majority
are targeted
Competition
begins to decline
PLC Stages
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Product Diversify brand and models
Price
Set to match or beat competition
Distr ibut ion Build more intensivedistribution
Advert is ing Stress brand differencesand benefits
Sales PromotionIncrease to encouragebrand switching
Marketing Strategies:
Maturity Stage
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Product Life-Cycle Strategies
Productdevelopment
Int roduct ion
Growth
Matur i ty
Decline
Declining sales
Low cost per
customer
Declining profits
Laggards are
targeted
Declining
competition
PLC Stages
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Product Phase out weak items
Price
Cut price
Distr ibut ion Use selective distribution:phase out unprofitable outlets
Advert is ing Reduce to level needed toretain hard-core loyalists
Sales PromotionReduce to minimallevel
Marketing Strategies:
Decline Stage
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