© 2002 pearson education canada inc. 9-1 mgt330f – october 29, 2003 review of upcoming...
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![Page 1: © 2002 Pearson Education Canada Inc. 9-1 MGT330F – October 29, 2003 Review of upcoming ‘deliverables’ Marketing in the News Group Presentations: “Landmark](https://reader035.vdocuments.net/reader035/viewer/2022062714/56649d455503460f94a22075/html5/thumbnails/1.jpg)
© 2002 Pearson Education Canada Inc.
9-1
MGT330F – October 29, 2003
• Review of upcoming ‘deliverables’
• Marketing in the News
• Group Presentations: “Landmark Sports”– Group 6: Auguston, et al– Group 7: Murage, et al
• Lecture Topics: New Product Development and Pricing Strategies
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© 2002 Pearson Education Canada Inc.
9-2
MGT330F - Upcoming
• November 5/03 – Part 2 of the Marketing Plan is due
• November 12/03 – Individual Case #4 (Chapter 10, “PeoplePC”) is due for those NOT presenting ‘Becel
• November 14/03 – Individual Case #4 is due for those presenting “Becel” (Groups 1 and 4)
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© 2002 Pearson Education Canada Inc.
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Marketing in the News
• General Motors decides to change the name of new Buick model, “La Cross”
• Classic ‘mis-namings’
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© 2002 Pearson Education Canada Inc.
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Group Presentations
Landmark Sports Group: Athlete Relationships and Olympic Promotions
Group 6 – Auguston, Caouette, Fairall, and Thompson
Group 7 – Murage, Nkini, and Rasch
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© 2002 Pearson Education Canada Inc.
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New Product Design
• Finding and developing new product ideas
• The new-product development process
• The stages of the product life cycle
• Changes in marketing strategies change over the product life cycle
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New Product Development:Overview
• New product development– New to replace aging
• Life-cycle strategies– Adapt to changing:
Two major challenges
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New Product Development Strategy
• Two sources of new products– Acquisition - company, patent, licence– New product development internally
• New product development meaning– Original products, product improvements, or
product modifications, and new brands through the firm’s own R & D efforts
• Risk and failure rates are high
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New Product Development Strategy:Why Do New Products Fail?
• Overestimated market• Poor design• Incorrect positioning• Error in pricing• Poor marketing
communication• Production-orientation• Cost overrun• Competition
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New Product Development Strategy:Success Factors
• Unique superior product
• Well defined product concept from startup
• Specific criteria• Specific strategic role• Systematic new-
product process
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© 2002 Pearson Education Canada Inc.
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New-Product Development Process:Major Stages
Idea generation
Idea screening
Conceptdevelopmentand testing
Marketingstrategy
Businessanalysis
Productdevelopment
Commercialization
Test marketing
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New-Product Development Process:Idea Generation
• Major Sources of New-Product Ideas– Internal sources
• Employees, sales people, R & D, managers
• Intrapreneurial programs
– Customers– Competitors– Distributors and suppliers– Entrepreneurs
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New-Product Development Process:Idea Generation
• Systematic process– Idea manager
– Multidisciplinary committee
– Toll-free number
– Staff encouragement
– Formal recognition
• Yields– innovation culture
– more ideas
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New-Product Development Process:Idea Screening
• Purpose– Identify good ideas
drop poor ones fast
• Challenge– Maintain creativity and
stream of ideas
• Proposal format
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© 2002 Pearson Education Canada Inc.
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New-Product Development Process:Concept Development and Testing
• Product concept– New-product idea in detail stated in meaningful
consumer terms
• Concept development– Expanding the new-product idea into various
alternative forms
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New-Product Development Process:Concept Development and Testing
• Concept testing– Target consumers
exposed to new-product concepts
– Word or picture description
– Physical presentation of the concept
– Question reactions
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New-Product Development Process:Marketing Strategy Development
• Marketing Strategy Statement - Part one– Target market– Planned product positioning– Sales, market share and profit goals
• Marketing Strategy Statement - Part two– Outline price, distribution and first year
marketing budget
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New-Product Development Process:Marketing Strategy Development
• Marketing Strategy Statement - Part three– Planned long-run sales– Profit goals– Marketing mix strategy
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New-Product Development Process:Business Analysis
• Review sales, costs and profit projections
• Compare projected results to objectives
• Estimate maximum and minimum sales– Company history and market opinion
• Assess risk
• Estimate product costs and profits
• Analyze attractiveness using sales and costs
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New-Product Development Process:Product Development
• Performed by engineering or R & D
• Transform product concept into a physical product
• Prototype - functional and psychological
• Major investment
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© 2002 Pearson Education Canada Inc.
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New-Product Development Process:Test Marketing
AdvantagesAdvantages• Reduce uncertainty
about product and marketing approach
• Saves risk and expense of full launch
• Gain experience
DisadvantagesDisadvantages• High cost• Longer time-to-market
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New-Product Development Process:Test Markets
Standard Test Markets– Use small number of representative test cities
– Conducts full marketing campaign and audit results
– Costly and time consuming
– Competitor reaction
Controlled Test Markets– Client specifies stores and locations
– Shelf space/location, displays, promotion and price controlled
– Less time and costs
Simulated Test Markets (or pre-test markets)
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New-Product Development Process:Commercialization
• Major investment in manufacturing facilities
• High initial advertising and promotion expense
• Introduction timing critical
• Launch location?
• Local, regional roll-out, national, or global?
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Product Life-Cycle Strategies
Profits
Sales
Development Introduction Growth Maturity Decline
SalesProfit($)
Loss($)
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Product Life-Cycle Strategies
• Can describe a:– Product class– Product form– Brand
• Applicable to:– Styles – distinctive – Fashion – currently popular– Fads – fashions that peak and fizzle
Sal
es
Time
Style
Sal
es
Time
Fashion
Sal
es
Time
Fad
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Product Life-Cycle Strategies
Characteristics Introduction Growth Maturity Decline
Sales Low Rapidly rising Peak Declining
Costs High per customer Average per customer
Low per customer Low per customer
Profits Negative Rising High Declining
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number beginning to decline
Declining number
Marketing Objectives
Create product awareness and trial
Maximize market share
Maximize profit while defending market share
Reduce expenditures and milk the brand
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Product Life-Cycle StrategiesStrategies Introduction Growth Maturity DeclineProduct Offer basic product Offer product
extensions, service,warranty
Diversify brand andmodels
Phase out weak items
Price Use cost-plus Price to penetratemarket
Price to match or bestcompetitors
Cut price
Distribution Build selective Build intensive Build more intensive Go selective, phase outunprofitable outlets
Advertising Build productawareness among earlyadopters and dealers
Build awareness andinterest in the massmarket
Stress branddifferences andbenefits
Reduce to level neededto retain hard-coreloyals
SalesPromotion
Use heavy salespromotion to enticetrial
Reduce to takeadvantage of heavyconsumer demand
Increase to encouragebrand switching
Reduce to minimallevel