adbms new product.ppt

7/29/2019 adbms new product.ppt

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New-Product

Development andProduct Life-Cycle

Strategies


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Definition

New Product Development

Development of original

products, product

improvements, product

modifications, and new brandsthrough the firms own R & D

efforts.


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New products can be obtained

via acquisition or development.New products suffer from high

failure rates.

Several reasons account for

failure.


Strategy


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Causes of failure of new product

Overestimation of Market Size

Product Design ProblemsProduct Incorrectly Positioned,

Priced or Advertised

Costs of Product DevelopmentCompetitive Actions


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To create successful new

products, the company must:

understand its customers,markets and competitors

develop products thatdeliversuperior value to

customers.


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Process:

Stage 1: Idea Generation Internal idea sources:

R & D External idea sources:

Customers, competitors,

distributors su liers


Strategy


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Process to spot good ideasand drop poor ones

Criteria Market Size

Product Price

Development Time & Costs

Manufacturing Costs

Rate of Return

New Product Development ProcessStep 2. Idea Screening


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New Product Development ProcessStep 3. Concept Development & Testing

1. Develop Product Ideas intoAlternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

3. Choose the Best One


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New Product Development ProcessStep 4. Marketing StrategyDevelopment

Short term PriceDistribution

Marketing BudgetLong-Term:

Sales & Profit Goals

Marketing Mix Strategy

Short term Target MarketPlanned Product Positioning

Sales & Profit Goals

Market Share


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New Product Development ProcessStep 5. Business AnalysisStep 6. Product Development

Business Analysis

Review of Product Sales, Costs,and Profits Projections to See if

They Meet Company Objectives

If Yes, Move toProduct Development

If No, Eliminate

Product Concept


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New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaignin a small number ofrepresentative cities.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

ControlledTest Market

A few stores that haveagreed to carry newproducts for a fee.


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New Product Development Process:

Stage 7: Test Marketing

Standard test markets Controlled test markets

Simulated test markets

Stage 8:Commercialization


Strategy


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The Typical Product Life Cycle(PLC) Has Five Stages

Product Development,

Introduction, Growth, Maturity,Decline

Not all products follow this cycle:

Fads

Styles

Fashions

Product Life-Cycle Strategies


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Product Life

Cycle

Time

Product

Develop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)


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Product

development

Introduction

Growth

Maturity

Decline

Begins when the

company

develops a new-

product idea

Sales are zero

Investment costsare high

Profits are

ne ative

PLC Stages


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Product

development Introduction

Growth

Maturity

Decline

High cost percustomer

acquiredNegative profits

Innovators are

targeted

Low sales

Little com etition

PLC Stages


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Product Offer a basic product

Price Use cost-plus basis to set

Distribution Build selectivedistribution

Advertising Build awareness

among early adopters anddealers/resellers

Sales Promotion Heavy

expenditures to create trial

Marketing Strategies:

Introduction Stage


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Product development

Introduction

Growth Maturity

Decline

Rapidly rising sales

Average cost per

customerRising profits

Early adopters are

targeted

Growing

competition

PLC Stages


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Product Offer product extensions,service, warranty

Price

Penetration pricingDistribution Build intensive

distribution

Advertising Build awareness andinterest in the mass market

Sales Promotion Reduce

expenditures


Growth Stage


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Product development

Introduction

Growth

Maturity Decline

Sales peakLow cost per

customer

High profitsMiddle majority

are targeted

Competitionbegins to decline

PLC Stages


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Product

Diversify brand and models

Price Set to match or beat competition

Distribution Build more intensivedistribution

Advertising Stress brand differences

and benefits

Sales Promotion Increase toencourage brand switching


Maturity Stage


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Product development

Introduction

Growth

Maturity

Decline

Declining sales

Low cost per

customerDeclining profits

Laggards are

targetedDeclining

competition

PLC Stages


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Product

Phase out weak items

Price Cut price

Distribution Use selective distribution:phase out unprofitable outlets

Advertising Reduce to level needed to

retain hard-core loyalists

Sales Promotion Reduce to minimallevel

Marketing Strategies: Decline

Stage

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