1. www.mhhe.com/fourps For use only with Perreault and McCarthy texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin CHAPTER TEN Product Management and New Product Development

2. 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. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

3. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Managing Products over Their Life Cycles Exhibit 10-1

4. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Introduction – Investing in the Future +

5. Monopolistic Competition Develops Innovation Attracts Competition Market Growth – Profits Go Up and Down © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Profits Peak and Then Decline Don’t Ignore Long-Term Competitive Trends!

6. Persuasive, More Costly Promotion Brands Are More Similar Greater Price Competition/Price Sensitivity Persuasive, More Costly Promotion Brands Are More Similar Greater Price Competition/Price Sensitivity © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Maturity – Sales Level Off, Profits Continue Down Maturity May Last a Long Time

7. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sales Decline – A Time of Replacement +

8. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Which Stage of the PLC?

9. AND © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Individual Brands Individual Brands May not follow the classic pattern May be introduced in market growth or maturity Not all brands are equally strong Market Definitions Market Definitions Should be carefully developed Different markets, different stages Contribute to the length of the cycle Product Life Cycles Should Be Related to Specific Markets

10. Can Be Tried Easy to Communicate Competitive Advantage Competitive Advantage Can Be Tried Easy to Communicate Competitive Advantage Competitive Advantage Easy to Use Compatible © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Life Cycles Vary in Length Some Products Move Fast

11. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Adoption

12. The Early Bird Usually Profits Product Life Cycles Are Getting Shorter The Early Bird Usually Profits Product Life Cycles Are Getting Shorter Fashions and Fads © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Other Issues in Product Life Cycle Length

13. Competitors May Help Adoption Anticipate Speed of Movement Consider the Four Ps Allocate Sufficient Money Allocate Sufficient Money Be Flexible © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Planning for Different Stages of the Product Life Cycle Market Introduction & Growth

14. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Managing Mature Products +

15. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Improve the Product or Develop a New One Exhibit 10-3

16. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Are Product Modifications Really New Products? +

17. Don’t Pull the Plug So Quickly Phase-out May Be Necessary © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Phasing Out Dying Products Profitability Product Line Customer Support Sales Decline Can Be Profitable

18. What Is a New Product? FTC Rule: 6 Months Ethical Dilemmas Exist New Product Planning © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

19. New Product

20. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin An Organized New Product Development Process is Critical Exhibit 10-4

21. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step 1: Idea Generation

22. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step 2: Screening

23. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step 3: Idea Evaluation

24. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step 4: Development

25. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step 5: Commercialization

26. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin New Product Development: A Total Company Effort Exhibit 10-6 +

27. Common in Large Companies Product/Brand Managers Some Are “Product Champions” Need for Product Managers © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

28. Product life cycle Market introduction Market growth Market maturity Sales decline Fashion Fad New product Federal Trade Commission (FTC) © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Terms Consumer Product Safety Act Product liability Concept testing Product managers Brand managers