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NEW PRODUCT

DEVELOPMENT & PRODUCT

LIFE CYCLE

Newport institute communication & economics Karachi

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CATEGORIES OF NEW PRODUCTS

Six categories of new products in terms of their newness tothe company and to the market place:

New-to-the-world products new products that create an entirely mew market

New product-lines new products that allow a company to enter an established market for

the first time

Additions to existing product-lines new products that supplement a companys established product lines

(package sizes, flavors, so on)

Improvements or revisions to existing products new products that provide improved performance or greater perceived

value and replace existing products

Repositioning existing products that are targeted to new markets or new market

segments

Cost reductions

Ch # 9 New Product Dev. & PLC

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NEW PRODUCT DEVELOPMENTthe development of original products, product improvements, product

modifications & new brands

New-product failure nearly 80% of new packaged consumer goods & line extensions fail

nearly 33% of new industrial products fail at launch

New successful products

are unique superior products higher quality, new features & offer higher value

have well-defined concept

by carefully defining and assessing the target markets, productrequirements & benefits

to remain successful companies must continuously develop newproducts - but the odds weigh heavily against success. Thesolution lies in strong new-product planning


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THE NEW PRODUCT

DEVELOPMENT PROCESS

consists of eight major steps

idea generation

idea screening

concept development & testing marketing strategy

business analysis

product development

test marketing

commercialization


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IDEA GENERATIONsystematic search for new-product ideas

internal sources

customers

competitors distributors

suppliers

others


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NEW PRODUCT DEVELOPMENT

PROCESS cont...

Concept development & testing product concept is a detailed version of the new-product idea

stated in meaningful consumer terms

concept development - a new product idea is developed into

alternative product concepts concept testing - calls for testing new-product concepts with

groups of target customers

Marketing strategy development describe target market

planned product positioning planned sales & market share

& profit goals for first few years


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NEW PRODUCT DEVELOPMENT

PROCESS cont...

Business analysis

a review of the sales, costs & profit projections for a

new product to find out whether these factors satisfy

the companys objectives sales forecast

estimation of costs & profits

Product development

Test marketing - in realistic market setting

Commercialization (launch)


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PRODUCT LIFE-CYCLE (PLC)has five distinct stages in sales history

Product development

A period of slow sales growth as the product is introduced in the market

Introduction

Profits are non-existent in this stage because of heavy expenses ofproduct introduction

Growth

A period of rapid market acceptance and substantial profit improvement

Maturity

A period of slowdown in sales growth because the product has achievedacceptance by most potential buyers. Profits stabilize or even decline

because of increased marketing outlays to defend the product againstcompetition

Decline

The period when sales show a downward drift and profits erode


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IMPLICATIONS OF A PRODUCTS

LIFE CYCLE STAGE

Product life cycle asserts four things: Products have limited life

Product sales pass through distinct stages, each posing different

challenges to the seller

Profits rise and fall at different stages of the product life cycle

Products require different marketing, financial, manufacturing,

purchasing and personnel strategies in each stage of their life

cycle

any products current PLC position thereforesuggests the best marketing strategies


lecture # 9 - npd & plc

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