1. New-Product Development and Product Life-Cycle Strategies

2. Improving New-Product Success
To create successful new products, the company must:
Understand its consumers, markets, and competitors
AND
Develop products that deliver superior value to customers.

3. New Product Development Process New Product Idea Generation
Systematic Search for New Product Ideas Obtained From Employees and Also From:
Competitors
Customers
Distributors
Suppliers

4. New Product Screening Estimate
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
Evaluate the idea against a set of general company criteria.

5. New Product Concept Development
1. Develop New Product Ideas
into Alternative Detailed
Product Concept
New Product Concept Development
2. Concept Testing - Test the
New-Product Concepts with
Groups of Target Customers
3. Choose the One That Has the
Strongest Appeal to Target
Customers

6. New Product Marketing Strategy
Target Market
Marketing Mix Strategy
Marketing Budget
Sales & Profit Goals
Review of above to See if
They Satisfy Company Objectives
New Product Marketing Strategy

7. New Product Test Marketing
Positioning strategy
Advertising
Distribution
Pricing
Branding
Packaging
Budget levels

8. Product Life Cycle (Fig. 9-2)
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth
Maturity
Decline
Losses/
Investments ($)
Sales and
Profits ($)
Sales and Profits Over the Product’s Life From Inception to Demise

9. Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative or low
Create product awareness and trial
Offer a basic product
Usually is high
Distribution
High distribution expenses
Advertising
Spending is high to inform consumers

10. Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer new product features and models
Remain where they are or fall slightly
Distribution
Increase number of distribution outlets
Advertising
Educating consumers and meeting competition

11. Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Begin to slow
Low cost per customer
High profits, then lower profits
Maximize profits while defending market share
May modify product
May decline
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits

12. Maturity Stage of the PLC
Modifiying the Market
Company tries to increase consumption of the current product
Modifying the Product
Changing characteristics such as quality, features, or styles to attract new users
Modifying the Marketing Mix
Company tries to improve sales by changing one or more marketing mix elements

13. Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and maintain, harvest, or drop the product
Phase out weak items
Cut price
Distribution
Selective: phase out unprofitable outlets
Advertising
Reduce to level needed to retain
hard-core loyal customers

14. Discussion Question
Pick a soft drink, car, or food product, and trace the product’s life cycle.
Project when the product might enter a decline stage and discuss strategies to reverse the decline.
This is an action-oriented discussion question intended to get the student to apply the information and knowledge gained from the text material to a “real-world” example. The instructor can apply more structure by specifically assigning which product the students will use (the instructor could select from any of the areas mentioned in the question) or the class can be divided into teams and given the assignment. However, the method of administration, the instructor should allow enough time to discuss the results of the project so all students can benefit from the learning experience.
Students should carefully follow the life cycle description given in the chapter (See Table 9-2 for a good summary of the stages or Marketing at Work 9-3 for a practical application illustrations). If there is deviation, the student should be asked to explain the rationale for the deviation. In addition, students should be asked how they drew their conclusions on the decline of their chosen product. Factors that contributed to the decline should be discussed. How could the decline be reversed (if at all)?