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New Product Strategy Why do new products fail? Inability of the company to match up its offerings to the needs of the customers www.electrolux.se/screenfridge/start.htm.

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Presentation on theme: "New Product Strategy Why do new products fail? Inability of the company to match up its offerings to the needs of the customers www.electrolux.se/screenfridge/start.htm."— Presentation transcript:

1 New Product Strategy Why do new products fail? Inability of the company to match up its offerings to the needs of the customers www.electrolux.se/screenfridge/start.htm

2 Categories of New Product 1.New-to-the-world product Product that are inventions; products that change consumption behavior 2.New category entries Products that take a firm into a category new to it. Products are not new to the world

3 Categories of New Product 3.Additions to product lines (product line extension) Products that are line extensions to firm’s current markets – Hallmark’s email greeting cards 4.Product improvements Improved performance; greater perceived value – Windows XP

4 Categories of New Product 5.Repositionings Products retargeted for a new use or application Market penetration strategy 6.Cost reductions: new products that provide similar performance at a lower cost

5 Applications: Ensuring Success 1.Product Improvement Make the use easier: ask customers why they don’t use the product as much Packages that can be placed directly in a microwave Frozen waffles

6 Applications: Ensuring Success 2.Revitalize the brand: introduce some energy, vitality, and buzz into brand name Abercrombie and Fitch

7 Applications: Ensuring Success 3.New category entries: find commonality in distribution, marketing, or brand name recognition. Family branding: Gerber baby clothes, Pierre Cardin wallets, Benihana frozen entrees

8 Challenge in Developing New Products Need to shorten products “time to market” -Reduce time between idea generation and product availability -A short “time to market” can create a competitive advantage

9 Challenge in Developing New Products Research – need for timely and accurate information: tracking competitors and customers; tracking marketing environment Is new product development consistent with organizational mission and objectives?

10 Challenge in Developing New Products Will customers benefit? Are there manufacturing, marketing, or distribution cost efficiencies with the new product? Schwinn - exercise bicycles

11 Challenge in Developing New Products Does the firm have the needed competencies and resources in R&D, manufacturing, and marketing to successfully develop product? Adding wood stains to a line of paints: includes totally new manufacturing effort, raw materials technology, or marketing effort.

12 Sales & Profit Life CyclesIntroductionGrowthMaturityDecline Time Sales & profits ($)

13 Product Life Cycle Introduction - low sales; negative profits; high costs: technological problems, recover R&D Create product awareness and trial; samples/coupons to induce trial; price skimming to recoup development costs; price penetration to capture market share

14 Product Life Cycle Growth – rapidly rising sales; rising profits; growing competition Maximize market share; improve product quality; add new features

15 Product Life Cycle Maturity – peak sales; high profits Maximize profit; defend market share; enter new market segments (diet cola); win competitors customers (Pepsi-Cola)

16 Product Life Cycle Decline – declining sales and profits; causes of decline: technological advances; change in consumer tastes; competition Reduce expenditure and “milk” the brand/product - cut costs

17 Product Life Cycle Implications Different products have different life spans (length and shape of PLC) Anticipate differences in sales over time and develop appropriate strategies

18 Product Life Cycle Time


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