developing and managing products
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Developing and Managing Products. Chapter 10. Prepared by Deborah Baker Texas Christian University. Learning Objectives. 1.Explain the importance of developing new products and describe the six categories of new products. 2. Explain the steps in the new-product development process. - PowerPoint PPT PresentationTRANSCRIPT
1 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Developing and Managing ProductsDeveloping and Managing Products
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 10
2 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning ObjectivesLearning Objectives
1. Explain the importance of developing new products and describe the six categories of new products.
2. Explain the steps in the new-product development process.
3. Explain why some products succeed and others fail.
3 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objectives Learning Objectives (continued)(continued)
4. Discuss global issues in new-product development.
5. Explain the diffusion process through which new products are adopted.
6. Explain the concept of product life cycles.
4 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the importance of developing new products and describe the six categories of new products.
1On Linehttp://www.chrysler.com
5 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
New ProductNew Product
A product new to the world, the market, the producer,
the seller, or some combination of these.
1
6 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
New Product Introductions, New Product Introductions, 1964-20001964-20001
On Linehttp://www.newproductworks.com
7 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Categories of New ProductsCategories of New Products
New-To-The-World
New Product Lines
Product Line Additions
Improvements/Revisions
Repositioned Products
Lower-Priced Products
SixCategories
ofNew
Products
1
8 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the steps in the new-product development process.
2
9 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
The New-Product The New-Product Development ProcessDevelopment Process
New ProductNew ProductSuccessSuccessFactorsFactors
Long-Term Commitment
New Product Strategy
Capitalize on Experience
Establish an Environment
2
10 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
New-Product StrategyNew-Product Strategy
Idea GenerationIdea Generation
Idea ScreeningIdea Screening
Business AnalysisBusiness Analysis
DevelopmentDevelopment
Test MarketingTest Marketing
CommercializationCommercialization
New ProductNew Product
New-Product New-Product Development ProcessDevelopment Process2
11 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Idea GenerationIdea Generation
Customers
Employees
Distributors
Competitors
R & D
Consultants
Creative Thinking
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
2On Linehttp://www.ideo.com
12 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
BrainstormingBrainstorming
The process of getting a group to think of unlimited ways to vary a product or
solve a problem.
2
13 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Idea ScreeningIdea Screening
The 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.
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14 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Concept TestConcept Test
A test to evaluate a new-product idea, usually before any prototype has
been created.
2
15 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Business AnalysisBusiness Analysis
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Demand
Cost
Sales
Profitability
2
16 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
DevelopmentDevelopment
Creation of prototype Marketing strategy Packaging, branding, labeling Manufacturing feasibility Final government approvals if needed
2
17 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Simultaneous Simultaneous Product DevelopmentProduct Development
A new team-oriented approach to new-product
development.
2
18 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Test MarketingTest Marketing
The limited introduction of a product and a marketing program to determine the
reactions of potential customers in a market situation.
2On Linehttp://www.google.com
19 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Checklist for Selecting Checklist for Selecting Test MarketsTest Markets2
20 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Alternatives to Test MarketingAlternatives to Test Marketing
Single-source research using supermarket scanner data
Simulated (laboratory) market testing
2
21 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
CommercializationCommercialization
Production
Inventory Buildup
Distribution Shipments
Sales Training
Trade Announcements
Customer Advertising
Steps in Steps in Marketing a Marketing a New Product New Product
2
22 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain why some products succeed and others fail.
3
23 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Why New Products FailWhy 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
3
24 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Success FactorsSuccess Factors
Match between product and
market needsUnique but
superior product
Benefit to large number of people
Factors in SuccessfulFactors in SuccessfulNew ProductsNew Products
3On Linehttp://www.jnj.com
25 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Success FactorsSuccess Factors3
26 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Discuss global issues in new-product development.
4
27 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Global IssuesGlobal Issues
Develop product for potential worldwide distribution
Build in unique market requirements
Design products to meet regulations and key market requirements
4On Linehttp://www.levi.com
28 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the diffusion process throughwhich new products are adopted.
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29 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
DiffusionDiffusion
The process by which the adoption of an innovation
spreads.
5
30 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Categories of AdoptersCategories of Adopters
Laggards
Late Majority
Early Majority
Early Adopters
Innovators
Categories of Categories of AdoptersAdopters
in thein theDiffusion ProcessDiffusion Process
5
31 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Diffusion of Three Familiar Diffusion of Three Familiar Products among U.S. Products among U.S.
HouseholdsHouseholds5
32 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Categories of AdoptersCategories of AdoptersPe
rcen
tage
of A
dopt
ers
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%Laggards
16%
5
33 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Product Characteristics and Product Characteristics and the Rate of Adoptionthe Rate of Adoption
Trialability
Observability
Relative Advantage
Compatibility
Complexity
ProductProductCharacteristics Characteristics Predict Rate of Predict Rate of
AdoptionAdoption
5On Linehttp://www.electronicgadgetdepot.com
34 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Marketing Implications Marketing Implications of the Adoption Processof the Adoption Process
Direct fromMarketer
Word of Mouth
CommunicationAids the
Diffusion Process
5
35 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Learning Objective Learning Objective
Explain the concept of product life cycles.
6
36 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Product Life CycleProduct Life Cycle
A concept that provides a way to trace the stages of a
product’s acceptance, from its introduction (birth)
to its decline (death).
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37 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Product Life CycleProduct Life Cycle
Time
Dol
lars
ProductCategory Profits
ProductCategory Sales
IntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
0
6
38 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Product Life Cycles for Product Life Cycles for Styles, Fashions, and FadsStyles, Fashions, and Fads6
39 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Extending the PLCExtending the PLC
Change product
Change product use
Change product image
Change product positioning
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40 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Introductory StageIntroductory Stage
High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and
information Intensive personal selling to channels
Full-Scale Launch of New Products
6
41 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Growth StageGrowth Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered
Offered in more sizes,
flavors, options
6
42 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Maturity StageMaturity Stage
Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and
consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge
Many consumer products are in Maturity Stage
6On Linehttp://www.mcdonalds.com
43 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Decline StageDecline Stage
Long-run drop in sales Large inventories of
unsold items Elimination of all nonessential
marketing expenses
Rate of decline depends on change in tastes or
adoption of substitute products
6
44 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Marketing Strategies for PLCMarketing Strategies for PLCINTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited modelsFrequent changes
More modelsFrequent 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
Higher/recoupdevelopment
costs
Fall as result ofcompetition &
efficient produc-tion.
Prices fall (usually).
Prices stabilize at low level.
6
45 Chap. 10 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning
Diffusion Process and PLC Diffusion Process and PLC CurveCurve
Innovators
Early adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cyclecurvecurve
DiffusionDiffusioncurvecurve
Introduction Growth Maturity Decline
Sale
s6