Presentation on theme: "New Product Development and Product Life-Cycle Strategies"— Presentation transcript:
1 New Product Development and Product Life-Cycle Strategies Md. Abdur RobB PHARM, MBA, PGD in DP
2 Major Stages in New Product Development Idea generation: systematic search for new ideasInternal sources: brainstormingExternal sources: customers, competitors, distributors and suppliersIdea screening: identify good ideas and drop poor onesUsefulness to consumersGood for companyFit with objectives and strategiesHave the resourcesAdd value
3 Major Stages in New Product Development Concept development: detailed version of the product concept in meaningful consumer termsConcept testing: testing new-product concepts for consumer appealMarketing strategy: initial strategy for product concept:Target market, positioning, and sales, market share, and profit goalsPrice, distribution, and marketing budgetStrategy statement, long-run sales, profit goals, and marketing mix
4 Major Stages in New Product Development Business analysis: review of sales, costs, and profit projections to determine if they meet company objectives.Product development: developing the product concept into a physical productLarge investmentBuilding a prototypeTesting for safety, durability,and acceptability
5 Major Stages in New Product Development Test marketing: testing the product in more realistic market settingsDetermine the target market profileAssess consumer acceptability, trial, repeat purchase rateEvaluate trade reception and distribution penetrationDesign effective media plansStandard test marketsControlled test marketsSimulated test market
6 Major Stages in New Product Development Commercialization: introducing a new product into the marketIntroduction timingMarket rollout or full-scale introductionSequential product developmentSimultaneous (team-based) product development
11 BCG MATRIX is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multi-products.Relative Market ShareCash GenerationMarket Growth rateCash UsageLow HighHigh LowIt is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categoriesIt is based on the combination of market growth and market share relative to the next best competitor.
12 STARS High growth, High market share Stars are leaders in business.They also require heavy investment, to maintain its large market share.It leads to large amount of cash consumption and cash generation.Attempts should be made to hold the market share otherwise the star will become a CASH COW.CASH COWS Low growth , High market shareThey are foundation of the company and often the stars of yesterday.They generate more cash than required.They extract the profits by investing as little cash as possibleThey are located in an industry that is mature, not growing or declining.
13 DOGS Low growth, Low market share Dogs are the cash traps.Dogs do not have potential to bring in much cash.Number of dogs in the company should be minimized.Business is situated at a declining stage.QUESTION MARKS High growth , Low market shareMost businesses start of as question marks.They will absorb great amounts of cash if the market share remains unchanged.Why question marks?Question marks have potential to become star and eventually cash cow but can also become a dog.Investments should be high for question marks.
14 WHY BCG MATRIX?To assess :Profiles of products/businessesThe cash demands of productsThe development cycles of productsResource allocation and ivestment decisionsBENEFITSBCG MATRIX is simple and easy to understand.It helps to quickly and simply screen the opportunities open, and helps to think about how can make the most of them.It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.
16 Ansoff MatrixLong-term business strategy is depend on planning for their introduction of products and serviceAnsoff Matrix represents the different options open to a marketing manager when considering new opportunities for sales growth
17 Existing PRODUCTS NewINCREASING RISKExistingMARKETSNewMARKET PENETRATIONSell more in existing MarketsThis is the objective of higher market share in existing marketStrategy: advertisement, awareness , trial, low price
18 MARKET EXTENSION/ DEVELOPMENT Existing PRODUCTS NewINCREASING RISKExistingMARKETSNewMARKET PENETRATIONSell more in existing MarketsMARKET EXTENSION/ DEVELOPMENTAchieve higher sales/market share of existing products in new marketsThis is the strategy of selling an existing product to new markets.Strategy: selling to an overseas market, or a new market segment
19 Strategy: Develop new product, new test, new product personality Existing PRODUCTS NewINCREASING RISKExistingMARKETSNewMARKET PENETRATIONSell more in existing MarketsPRODUCT DEVELOPMENTSell new products in existing marketsMARKET EXTENSIONAchieve higher sales/market share of existing products in new marketsStrategy: Develop new product, new test, new product personality
20 This is the most risky of all four strategies Existing PRODUCTS NewINCREASING RISKExistingMARKETSNewMARKET PENETRATIONSell more in existing MarketsPRODUCT DEVELOPMENTSell new products in existing marketsMARKET EXTENSIONAchieve higher sales/market share of existing products in new marketsDIVERSIFICATIONSell new products in new marketsThis is the process of selling different, unrelated goods or services in unrelated marketsThis is the most risky of all four strategiesStrategy: Develop new geographic or new location, Develop product to fulfil customer demand
21 SummaryThe matrix identifies different strategic areas in which a business COULD expandManagers need to asses the costs, potential gains and risks associated with the other options