1 lamb, hair, mcdaniel chapter 11 developing and managing products 2010-2011
TRANSCRIPT
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Lamb, Hair, McDaniel
CHAPTER 11
Developing and Managing Products
2010-2011
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LO 1 Explain the importance of developing new products and describe the six categories of new products
LO 2 Explain the steps in the new-product development process
LO 3 Discuss global issues in new-product development
LO 4 Explain the diffusion process through which new products are adopted
LO 5 Explain the concept of product life cycles
Learning OutcomesLearning Outcomes
3
Explain the importance of developing new
products and describe the six categories of
new products
The Importance of New ProductsThe Importance of New Products
LO1
4
Categories ofNew Products
New-to-the-WorldNew-to-the-World
New Product LinesNew Product Lines
Product Line AdditionsProduct Line Additions
Improvements or RevisionsImprovements or Revisions
Repositioned ProductsRepositioned Products
Lower-Priced ProductsLower-Priced Products
LO1
5
Explain the steps in the new-product
development process
The New Product The New Product Development ProcessDevelopment Process
LO2
6
The New-Product Development Process
Long-term commitmentLong-term commitment
Company-specific approachCompany-specific approach
Capitalize on experienceCapitalize on experience
Establish an environmentEstablish an environment
New Product Success Factors
LO2
7
New-Product Development Process
New-Product StrategyNew-Product Strategy
Idea GenerationIdea Generation
Idea ScreeningIdea Screening
Business AnalysisBusiness Analysis
DevelopmentDevelopment
Test MarketingTest Marketing
CommercializationCommercialization
New ProductNew ProductLO2
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Idea Generation
Customers
Employees
Distributors
Competitors
Vendors
R & D
Consultants
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
Online
http://www.ideo.com
LO2
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Tips for New Product Development
Disperse R & D around the globe
Keep teams small and empower employees
Flatten hierarchy
Encourage extensive brainstorming and generation of crazy new ideas
Welcome mistakes
LO2
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Idea ScreeningThe first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason.
Concept test: A test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions.
LO2
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Business Analysis
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Demand
Cost
Sales
Profitability
LO2
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Development
Creation of prototype
Marketing strategy
Packaging, branding, labeling
Promotion, price, and distribution strategy
Manufacturing feasibility
Final government approvals if needed
LO2
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Simultaneous Product Development
A new team-oriented approach to new-
product development where all relevant
functional areas and outside suppliers
participate in the development process.
LO2
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Test Marketing
TestMarketing
TestMarketing
Online
foodcom.com/signup
The limited introduction
of a product and a
marketing program to
determine the reactions
of potential customers
in a market situation.
LO2
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Alternatives toTest Marketing
Single-source research using supermarket scanner data
Simulated (laboratory) market testing
Online test marketing
Online
http://www.newproductworks.com
LO2
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Commercialization
ProductionProduction
Inventory BuildupInventory Buildup
Distribution ShipmentsDistribution Shipments
Sales TrainingSales Training
Trade AnnouncementsTrade Announcements
Customer AdvertisingCustomer Advertising
LO2
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New-ProductSuccess Factors
Listening to customers
Producing the best product
Vision of future market
Strong leadership
Commitment to new-product development
Project-based team approach
Getting every aspect right
LO2
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Ideageneration
Ideascreening
Businessanalysis
Development
Test marketing
CommercializationNu
mb
er
of n
ew
pro
duct
ide
as
Time0
New-ProductDevelopment Process
LO2
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Beyond
the
Book
Why New Products Fail
NOTE: Supplemental content – not in book.
• 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
LO2
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Beyond
the
Book
Success Factors
NOTE: Supplemental content – not in book.
Factors in SuccessfulFactors in SuccessfulNew ProductsNew Products
Match between product and market needs
Different from substitute products
Benefit to large number of people
LO2
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Discuss global issues in new-
product development
Global Issues in Global Issues in New-Product DevelopmentNew-Product Development
LO3
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Global Marketing Questions
• Develop product for potential worldwide distribution
• Modify for unique • market requirements
• Design products to meet regulations and key market requirements
LO3
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Explain the diffusion process through
which new products are adopted
The Spread of New ProductsThe Spread of New Products
LO4
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Diffusion
The process by which the
adoption of an innovation
spreads.
DiffusionDiffusion
LO4
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LaggardsLaggards
Late MajorityLate Majority
Early MajorityEarly Majority
Early AdoptersEarly Adopters
InnovatorsInnovators
LO4
Categories of Adopters
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TrialabilityTrialability
ObservabilityObservability
Relative AdvantageRelative Advantage
CompatibilityCompatibility
ComplexityComplexity
Online
http://www.electronicgadgetdepot.com
LO4
Product Characteristics and the Rate of Adoption
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Direct fromMarketer
Direct fromMarketer
Word of MouthWord of Mouth
CommunicationAids the
Diffusion Process
CommunicationAids the
Diffusion Process
LO4
Marketing Implications of the Adoption Process
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Explain the concept of product life
cycles
Product Life CyclesProduct Life Cycles
LO5
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ProductLife Cycle
ProductLife Cycle
A concept that provides a way
to trace the stages of a
product’s acceptance, from its
introduction (birth) to its
decline (death).
LO5
Product Life Cycle
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Product Life Cycle
Time
Do
llar
s
Profits
SalesSalesIntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
0
LO5
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Product Life Cycles for Styles, Fashions, and Fads
LO5
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Introductory Stage
High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion focuses on awareness and
information Communication challenge is to stimulate
primary demand
LO5
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Growth Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the
differences between brands Wider distribution
LO5
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Maturity Stage
Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Niche marketers emerge
LO5
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Decline Stage
Long-run drop in sales Large inventories of
unsold items Elimination of all nonessential
marketing expenses “Organized abandonment”
LO5
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Diffusion Process and PLC Curve
Innovators
Early adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cyclecurvecurve
Introduction Growth Maturity Decline
Sal
es
DiffusionDiffusioncurvecurve
LO5
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INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited models.Frequent changes.
More models.Frequent changes.
Large number of models.
Eliminate unprofitable
models.
Limitedwholesale/
retail distributors.
Expanded dealers. Long-term relations.
Extensive.Margins drop.Shelf space.
Phase out unprofitable
outlets.
Awareness. Stimulate
demand. Sampling.
Aggressive ads.Stimulatedemand.
Advertise. Promote heavily.
Phase outpromotion.
High to recoupdevelopment
costs.
Fall as result ofcompetition and efficient production.
Prices fall (usually).
Prices stabilize at low level.
Sa
les
Product Life CyclesLO5
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E-readers
E-readers such as Amazon’s Kindle, Barnes & Noble’s Nook, and Sony’s e-reader are increasingly available products that have sparked serious debate among book lovers, publishers, and techies about the future of printed text.– In what stage of the product life-cycle are these
different readers?• Sony e-Readers• Barnes & Noble's Nook• Amazon's Kindle
– Who is adopting these products now? – Discuss the different company’s attempts at
competitive advantage.
LO5