Presentation on theme: "New-Product Development and Product Life-Cycle Strategies"— Presentation transcript:
1 New-Product Development and Product Life-Cycle Strategies Chapter 9New-Product Developmentand ProductLife-Cycle Strategies
2 New-Product Development Strategies Strategies for Obtaining New Product IdeasAcquiredCompaniesOriginalProductsAcquiredPatentsProductImprovementsAcquiredLicensesProductModificationsNewBrands
3 Causes of New Product Failures Overestimation of Market SizeProduct Design ProblemsProduct Incorrectly Positioned, Priced or AdvertisedCosts of Product DevelopmentCompetitive ActionsTo create successful new products, the company must:understand its customers, markets and competitors,develop products that deliver superior value to customers.
4 New-Product Development Process MarketingStrategyBusinessAnalysisConceptDevelopmentand TestingProductDevelopmentIdeaScreeningTestMarketingIdeaGenerationCommercialization
5 New Product Development Process Step 1. Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:CustomersCompetitorsDistributorsSuppliers
6 New Product Development Process Step 2. Idea Screening Process to spot good ideas and drop poor ones as soon as possible.Many companies have systems for rating and screening ideas which estimate:Market SizeProduct PriceDevelopment Time & CostsManufacturing CostsRate of ReturnThen, the idea is evaluated against a set of general company criteria.
7 New Product Development Process Step 3. Concept Development & Testing 1. Develop New Product Ideasinto Alternative DetailedProduct Concepts2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers3. Choose the One That Has theStrongest Appeal to TargetCustomers
8 New Product Development Process Step 4. Marketing Strategy Development Marketing Strategy Statement FormulationPart One Describes Overall:Target MarketPlanned Product PositioningSales & Profit GoalsMarket SharePart Two Describes Short-Term:Product’s Planned PriceDistributionMarketing BudgetPart Three Describes Long-Term:Sales & Profit GoalsMarketing Mix Strategy
9 New Product Development Process Step 5. Business Analysis Review of Product Sales, Costs,and Profits Projections to See ifThey Meet Company ObjectivesNew Product Development Process Step 5. Business AnalysisStep 6. Product DevelopmentIf No, EliminateProduct ConceptIf Yes, Move toProduct Development
10 Elements that May be Test Marketed by a Company New Product Development Process Step 7. Test MarketingTest Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings.AdvertisingPackagingProductBudget LevelsPositioningStrategyDistributionPricingBrandingElements that May be Test Marketed by a Company
11 New Product Development Process Step 8. Commercialization Commercialization is the Introduction of the New Product into the Marketplace.When?Where?
12 Speeding Up Development SequentialSimultaneous (Team-Based)Step 1Step 2Step 3Step 4Step 1Step 2Step 3Step 4
13 Sales and Profits Over the Product’s Life From Introduction to Decline Product Life CycleSales and Profits Over the Product’s Life From Introduction to DeclineSales andProfits ($)SalesProfitsTimeProductDevelop-mentIntroductionGrowthMaturityDeclineLosses/Investments ($)
14 Introduction Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesLow salesCostsHigh cost per customerProfitsNegative or lowMarketing ObjectivesCreate product awareness and trialProductOffer a basic productPriceUsually is high; use cost-plus formulaDistributionHigh distribution expensesAdvertisingBuild product awareness among early adopters and dealers
15 Growth Stage of the PLCSummary of Characteristics, Objectives, & StrategiesSalesRapidly rising salesCostsAverage cost per customerProfitsRising profitsMarketing ObjectivesMaximize market shareProductOffer new product features, extensions, service, and warrantyPricePrice to penetrate marketDistributionIncrease number of distribution outletsAdvertisingBuild awareness and interest in the mass market
16 Maturity Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesPeak salesCostsLow cost per customerProfitsHigh profits, then lower profitsMarketing ObjectivesMaximize profits while defending market shareProductDiversify brand and modelsPricePrice to match or best competitorsDistributionBuild more intensive distributionAdvertisingStress brand differences and benefits
17 Maturity Stage of the PLC Maturity Stage Product Defense StrategiesProductModificationMarketModificationMarketingMixModification
18 Decline Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesDeclining salesCostsLow cost per customerProfitsDeclining profitsMarketing ObjectivesReduce expenditure and maintain, reposition, harvest or drop the productProductPhase out weak itemsPriceCut priceDistributionGo selective: phase out unprofitable outletsAdvertisingReduce to level needed to retainhard-core loyal customers