Presentation on theme: "9-1 New-Product Development and Product Life-Cycle Strategies."— Presentation transcript:
9-1 New-Product Development and Product Life-Cycle Strategies
9-2 Improving New-Product Success To create successful new products, the company must: Understand its consumers, markets, and competitors AND Develop products that deliver superior value to customers.
9-3 Customers Competitors Distributors Suppliers Systematic Search for New Product Ideas Obtained From Employees and Also From: New Product Development Process New Product Idea Generation
9-4 New Product Screening Estimate Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return Evaluate the idea against a set of general company criteria.
Develop New Product Ideas into Alternative Detailed Product Concept 2. Concept Testing - Test the New-Product Concepts with Groups of Target Customers 3. Choose the One That Has the Strongest Appeal to Target Customers New Product Concept Development
9-6 New Product Marketing Strategy Target Market Marketing Mix Strategy Marketing Budget Sales & Profit Goals Review of above to See if They Satisfy Company Objectives Target Market Marketing Mix Strategy Marketing Budget Sales & Profit Goals Review of above to See if They Satisfy Company Objectives
9-7 New Product Test Marketing Test: Positioning strategy Advertising Distribution Pricing Branding Packaging Budget levels
9-8 Time Product Develop- ment Introduction Profits Sales GrowthMaturityDecline Losses/ Investments ($) Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Life Cycle (Fig. 9-2)
9-9 Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative or low Create product awareness and trial Offer a basic product Usually is high Distribution High distribution expenses Advertising Spending is high to inform consumers Summary of Characteristics, Objectives, & Strategies Introduction Stage of the PLC
9-10 Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer new product features and models Remain where they are or fall slightly Distribution Increase number of distribution outlets Advertising Educating consumers and meeting competition Summary of Characteristics, Objectives, & Strategies Growth Stage of the PLC
9-11 Sales Costs Profits Marketing Objectives Product Price Begin to slow Low cost per customer High profits, then lower profits Maximize profits while defending market share May modify product May decline Distribution Build more intensive distribution Advertising Stress brand differences and benefits Summary of Characteristics, Objectives, & Strategies Maturity Stage of the PLC
9-12 Maturity Stage of the PLC Company tries to increase consumption of the current product Changing characteristics such as quality, features, or styles to attract new users Company tries to improve sales by changing one or more marketing mix elements
9-13 Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and maintain, harvest, or drop the product Phase out weak items Cut price Distribution Selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers Summary of Characteristics, Objectives, & Strategies Decline Stage of the PLC
9-14 Pick 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.