Chapter 10 Developing and Managing Products

Categories of New Products New-To-The-World New Product Lines Product Line Additions Improvements/Revisions Repositioned Products Lower-Priced Products Six Categories of New Products

Successful New-Product Development Process New Product Success Factors Long-Term Commitment New Product Strategy Capitalize on Experience Establish an Environment

New-Product Development Process New-Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product

SoftBook IBM Electronic Newspaper Rocket e-book BMW R 1200 C Design Awards for 1999 Polaroid PopShot iMac Voice-Egg Nissan SUT (Sports Utility Truck)

usually before any prototype has Concept Test A test to evaluate a new-product idea, usually before any prototype has been created.

Choosing a Test Market Similar to planned distribution Relative isolation and free of influences Advertising availability; multiple media Diversified cross section No atypical purchase habits Representative population/income Not overly used or easily “jammed” Year-round sales stability Available research/audit and retailers

Why New Products Fail No discernible benefits Poor match between features and customer desires Overestimation of market size Incorrect positioning Price too high or too low Inadequate distribution Poor promotion Inferior product

Where is E-Comm Going to Grow? Degree of Consideration Low High Magazines Recorded Music Flowers Books Business Supplies Abrasives Financial Services Travel Software PCs Industrial Machinery Efficiency of the On-Line Sales Channel Low High Where is E-Comm Going to Grow? Paper Goods Hand Tools Consumer Electronics Food, Drink Medicine Clothes House Paint Home Appliances Furniture Source: Forrester Research Banners Only Micro-Site Destination Site

Success Factors Factors in Successful New Products Match between product and market needs Unique but superior product Benefit to large number of people Factors in Successful New Products

Categories of Adopters Laggards Late Majority Early Majority Early Adopters Innovators Categories of Adopters in the Diffusion Process

Product Life Cycle Time Dollars Product Category Profits Category Sales Introductory Stage Growth Maturity Decline

Product Characteristics and the Rate of Adoption Trialability Observability Relative Advantage Compatibility Complexity Product Characteristics Predict Rate of Adoption

Marketing Strategies for PLC INTRODUCTION GROWTH MATURITY DECLINE Product Strategy Distribution Promotion Pricing Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.

Diffusion Process and PLC Curve Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Diffusion Introduction Growth Maturity Decline Sales