1. Developing and Managing Products
Chapter 9
Developing and Managing Products
Prepared by
Deborah Baker
Texas Christian University
Chapter 9 Ver 2e
Chapter 9

2. Chapter 9 Objectives
1. Explain the importance of developing new products and describe the six categories of new products.
2. Explain the steps in the new-product development process.
3. Explain the concept of product life cycles.
4. Explain the diffusion process through which new products are adopted.
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3. Categories of New Products
New-To-The-World
New Product Lines
Six
Categories of
New
Products
Product Line Additions
Improvements/Revisions
Repositioned Products
Lower-Priced Products
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4. The New-Product Development Process
New Product Success Factors
Long-Term Commitment
New Product Strategy
Capitalize on Experience
Establish an Environment
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5. New-Product Development Process
New-Product Strategy
Idea Generation
Idea Screening
Business Analysis
Development
Test Marketing
Commercialization
New Product
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6. Sources of New-Product Ideas
Idea Generation
Customers
Employees
Distributors
Competitors
R & D
Consultants
Creative Thinking
Sources of New-Product Ideas
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7. Considerations in Business Analysis Stage
Preliminary Demand
Cost
Sales
Profitability
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8. Development Phase Decisions
Creation of prototype
Packaging
Branding
Labeling
Promotion strategy
Pricing
Distribution
Technical production feasibility
Final government approvals if needed
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9. Criteria for Choosing a Test Market
Test Marketing
Criteria for Choosing a Test Market
Similar to planned distribution
Relative isolation
Advertising availability
Diversified cross section
No atypical purchase habits
Representative population
Typical per capita income
Not overly used
Not easily “jammed”
Year-round sales stability
No dominant TV; multiple media
Available retailers
Available research/audit
Free of unusual influences
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10. Four Stages of Product Life Cycle
Time
Dollars
Product
Category Profits
Category Sales
Introductory
Stage
Growth
Maturity
Decline
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11. Full-Scale Launch of New Products
Introductory Stage
Full-Scale Launch of New Products
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production costs
Negative profits
Promotion focuses on awareness and information
Intensive personal selling to channels
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12. Offered in more sizes, flavors, options
Growth Stage
Offered in more sizes, flavors, options
Increasing rate of sales
Entrance of competitors
Market consolidation
Healthy profits
Promotion emphasizes brand ads
Goal is wider distribution
Prices normally fall
Development costs are recovered
Economies of scale
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13. Many consumer products are in Maturity
Maturity Stage
Many consumer products are in Maturity
Declining sales growth
Saturated markets
Cosmetic product changes
Extending product line
Marginal competitors drop out
Heavy promotions to dealers and consumers
Prices and profits fall
Niche marketers emerge
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14. Rate of decline depends on adoption of substitute products
Decline Stage
Rate of decline depends on
change in tastes or
adoption of substitute products
Long-run drop in sales
Competitors forced out of market
Small specialty firms manufacture product
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15. Implications for Marketing Management
Promote more frequent use
Find new uses
Find new target markets
New distribution channels
Price below market
Strategies to
Prevent Decline Phase
Dramatic new guarantee
Change ingredients
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16. Marketing Strategies During 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.
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17. Categories of Adopters in the Diffusion Process
The Spread of New Products
Innovators
Categories of Adopters in the Diffusion Process
Early Adopters
Early Majority
Late Majority
Laggards
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18. Percentage of Adopters
Categories of Adopters
Percentage of Adopters
Time
Innovators
2.5%
Early
Adopters
13.5%
Late
Majority
34%
Laggards
16%
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19. Product Characteristics Predict Rate of Adoption
Complexity
Product Characteristics Predict Rate of Adoption
Compatibility
Relative Advantage
Observability
Trialability
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20. Product Life Cycle & Diffusion Process
Introduction
Growth
Maturity
Decline
Product
life cycle
curve
Early majority
Late majority
Early adopters
Innovators
Laggards
Diffusion
curve
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