Presentation on theme: "New-Product Development and Product Life-Cycle Strategies"— Presentation transcript:
1New-Product Development and Product Life-Cycle Strategies
2Improving New-Product Success To create successful new products, the company must:Understand its consumers, markets, and competitorsANDDevelop products that deliver superior value to customers.
3New Product Development Process New Product Idea Generation Systematic Search for New Product Ideas Obtained From Employees and Also From:CompetitorsCustomersDistributorsSuppliers
4New Product Screening Estimate Market SizeProduct PriceDevelopment Time & CostsManufacturing CostsRate of ReturnEvaluate the idea against a set of general company criteria.
5New Product Concept Development 1. Develop New Product Ideasinto Alternative DetailedProduct ConceptNew Product Concept Development2. Concept Testing - Test theNew-Product Concepts withGroups of Target Customers3. Choose the One That Has theStrongest Appeal to TargetCustomers
6New Product Marketing Strategy Target MarketMarketing Mix StrategyMarketing BudgetSales & Profit GoalsReview of above to See ifThey Satisfy Company ObjectivesNew Product Marketing Strategy
7New Product Test Marketing Positioning strategyAdvertisingDistributionPricingBrandingPackagingBudget levels
8Product Life Cycle (Fig. 9-2) TimeProductDevelop-mentIntroductionProfitsSalesGrowthMaturityDeclineLosses/Investments ($)Sales andProfits ($)Sales and Profits Over the Product’s Life From Inception to Demise
9Introduction Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceLow salesHigh cost per customerNegative or lowCreate product awareness and trialOffer a basic productUsually is highDistributionHigh distribution expensesAdvertisingSpending is high to inform consumers
10Growth Stage of the PLCSummary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceRapidly rising salesAverage cost per customerRising profitsMaximize market shareOffer new product features and modelsRemain where they are or fall slightlyDistributionIncrease number of distribution outletsAdvertisingEducating consumers and meeting competition
11Maturity Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceBegin to slowLow cost per customerHigh profits, then lower profitsMaximize profits while defending market shareMay modify productMay declineDistributionBuild more intensive distributionAdvertisingStress brand differences and benefits
12Maturity Stage of the PLC Modifiying the MarketCompany tries to increase consumption of the current productModifying the ProductChanging characteristics such as quality, features, or styles to attract new usersModifying the Marketing MixCompany tries to improve sales by changing one or more marketing mix elements
13Decline Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceDeclining salesLow cost per customerDeclining profitsReduce expenditure and maintain, harvest, or drop the productPhase out weak itemsCut priceDistributionSelective: phase out unprofitable outletsAdvertisingReduce to level needed to retainhard-core loyal customers
14Discussion QuestionPick a soft drink, car, or food product, and trace the product’s life cycle.Project when the product might enter a decline stage and discuss strategies to reverse the decline.This is an action-oriented discussion question intended to get the student to apply the information and knowledge gained from the text material to a “real-world” example. The instructor can apply more structure by specifically assigning which product the students will use (the instructor could select from any of the areas mentioned in the question) or the class can be divided into teams and given the assignment. However, the method of administration, the instructor should allow enough time to discuss the results of the project so all students can benefit from the learning experience.Students should carefully follow the life cycle description given in the chapter (See Table 9-2 for a good summary of the stages or Marketing at Work 9-3 for a practical application illustrations). If there is deviation, the student should be asked to explain the rationale for the deviation. In addition, students should be asked how they drew their conclusions on the decline of their chosen product. Factors that contributed to the decline should be discussed. How could the decline be reversed (if at all)?