1 lamb, hair, mcdaniel chapter 11 developing and managing products
TRANSCRIPT
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Lamb, Hair, McDaniel
CHAPTER 11
Developing and Managing Products
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Categories of New 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
NEW-PRODUCT DEVELOPMENT PROCESS
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Ideageneration
Ideascreening
Businessanalysis
Development
Test marketing
CommercializationNu
mb
er
of n
ew
pro
duct
ide
as
Time0
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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
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Diffusion
The process by which the
adoption of an innovation
spreads.
DiffusionDiffusion
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Laggards-16%Laggards-16%
Late Majority-34%Late Majority-34%
Early Majority- 34%Early Majority- 34%
Early Adopters- 13.5%Early Adopters- 13.5%
Innovators- 2.5%Innovators- 2.5%
Categories of Adopters
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TrialabilityTrialability
ObservabilityObservability
Relative AdvantageRelative Advantage
CompatibilityCompatibility
ComplexityComplexity
Product Characteristics and the Rate of Adoption/Diffusion
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Direct fromMarketer
Direct fromMarketer
Word of MouthWord of Mouth
CommunicationAids the
Diffusion Process
CommunicationAids the
Diffusion Process
Marketing Implications of the Adoption Process
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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).
Product Life Cycle
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Product Life Cycle
Time
Do
llar
s
Profits
SalesSalesIntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
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Understanding Product Life Cycle
Introduction Growth Maturity Decline
Market Few Slow, increasing High, slowing down
Declining
Production Small scale, still customized
Increasing, being standardized
Standardized Standardized
Competition Zero to low Increasing High High
Sales/Profit Negative to low
Positive, increasing
Positive, getting tough
Declining
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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
MARKETING MIX STRATEGIES AT DIFFERENT STAGES OF THE PLC
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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
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
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Introductory Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising
of the differences between brands
Wider distribution15
Growth 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
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Maturity Stage
Long-run drop in sales Large inventories of
unsold items Elimination of all
nonessential marketing expenses
“Organized abandonment”
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Decline Stage
CH 11 DEVELOPING AND MANAGING PRODUCTS
1. Define a new product and explain the steps in the new-product development process.
2. Describe the five categories of adopters and their implications in marketing.
3. Explain how product characteristics affect the adoption/diffusion of a new product.
4. Define a product life cycle and explain the marketing mix strategies at different stages of the PLC.