1. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 10: Product Management and New-Product Development

2. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill When you finish this chapter, you should 10-2 Chapter 10 Objectives 1. Understand how product life cycles affect strategy planning. 2. Understand what is involved in designing new products and what “new products” really are. 3. Understand the new-product development process. 4. See why product liability must be considered in screening new products. 5. Understand the need for product or brand managers. 6. Understand the important new terms.

3. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Product Life Cycle 10-3 Exhibit 10-1 Total Industry Profit + – $ 0 Market Introduction Market Growth Market Maturity Sales Decline Time Total Industry Sales

4. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Introducing New Products Managing Mature Products Future Adaptation New Markets Dying Products Budget / Rate of Growth Persuasion / Less Profit New or Improve? New Strategies Phase Out Focus: Planning for Life Cycle Stages 10-4

5. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Screening Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Idea Evaluation Concept testing Customer reactions Rough estimates of cost, sales, profits Development R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate 10-5 Exhibit 10-4 New-Product Development Process

6. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Long-Run Consumer Welfare Immediate Satisfaction Desirable Products Pleasing Products Salutary Products Deficient Products High Low High Low Types of New Product Opportunities 10-6

7. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Issues Top Level Support Market-Guided R & D Integration & Coordination Authority 10-7 New-Product Development Management

8. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Product Life Cycle Market Introduction Market Growth Market Maturity Sales Decline Fashion Fad New Product FTC Consumer Product Safety Act Product Liability Concept Testing Product Managers Brand Managers 10-8 Key Terms