Copyright © 2007 Pearson Education Canada 9-1 Chapter Nine New Product Development and Product Life Cycle Strategies with Duane Weaver

Copyright © 2007 Pearson Education Canada 9-2 Why Develop New Products? ?

Copyright © 2007 Pearson Education Canada 9-3 Why Develop New Products? Follow changing market demands. Remain competitive. Keep up to changing technology. Replace dying products. Refresh and evolve existing products. Diversify product offering to reduce risk.

Copyright © 2007 Pearson Education Canada 9-4 Obtaining New Products Acquire. –Patents. –Licenses. –Companies. Develop. –New products. –Modifications to existing products. –Improvements to existing products.

Copyright © 2007 Pearson Education Canada 9-5 Some Succeed – Most Fail Successful new products. –Offer a unique superior product. –Have a well-defined product concept. Products fail. –Market size may have been overestimated. –Poor quality or design. –Incorrect positioning, pricing or promotion. –Does not deliver superior value.

Copyright © 2007 Pearson Education Canada 9-6 New-Product Failures Only 10% of new products are still on the market and profitable after 3 years. Failure rate for industrial products is as high as 30%. –Overestimation of market size. –Design problems. –Incorrectly positioned, priced or advertised. –Pushed despite poor marketing research findings. –Development costs. –Competition.

Copyright © 2007 Pearson Education Canada 9-7 Disciplined Development Process 1.Idea generation. 2.Idea screening. 3.Product concept. 4.Marketing strategy. 5.Business analysis. 6.Product development. 7.Test marketing. 8.Commercialization.

Copyright © 2007 Pearson Education Canada 9-8 Product Life Cycle Development – No customers, no profits, heavy spending. Introduction – Early adopter customers, no profits, high launch costs. Growth – Early majority customers, rapid sales growth and revenues. Maturity – Late majority customers, flat sales, declining profits. Decline – Laggard customers, declining sales, replaced by new products. Disposal – often forgotten step – product is recycled, returned, replaced, wears out

Copyright © 2007 Pearson Education Canada 9-9 Product Life Cycle Lengths Product class has the longest life cycle (e.g. gas-powered cars). Product form tends to have the standard PLC shape (e.g. dial telephone). Brand PLCs can change quickly because of changing competitive attacks and responses (e.g. Tide, Cheer).

Copyright © 2007 Pearson Education Canada 9-10 Style, Fashion and Fads Style is a basic and distinctive mode of expression (e.g. formal clothing, Danish modern furniture). Fashion is a popular style in a given field (e.g. business casual). Fad is a fashion that enters quickly, is adopted quickly and declines fast (e.g. pet rocks).

Copyright © 2007 Pearson Education Canada 9-11 That’s All Folks!