new-product development & product life-cycle strategies
TRANSCRIPT
New-Product Development & Product Life-Cycle Strategies
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
The systematic search for new product ideas.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
Development an attractive idea into a product concept which provides more detailed stated in meaningful consumer terms. Then test new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
Designing an initial marketing strategy for a new product based on the product concept.
Marketing Strategy Statement
• Consists of 3 parts:Target marketThe planned value proposition The sales, market share, and profit goals for the
first few years.
Marketing Strategy Statement
Example: electric car
• Product concept: A “green” car appealing to an environmentally conscious people who
want practical, low polluting transportation.
• Marketing strategy statement: The target market is younger, well-educated, moderate-to high-income
individuals, couples, or small families seeking practical, environmentally responsible transportation. The car will be positioned as more fun to drive and less polluting than today’s internal combustion engine or hybrid cars. The company will aim to sell 100,000 cars in the first year, at loss of not more than $15 million. In second year, the company will aim for sales of 120,000 cars and a profit of $25 million.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
A review of the sales, costs, and profit projections for new product to find out whether these factors satisfy the company’s objectives.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
Developing the product concept into a physical
product in order to ensure that the product idea can be turn into a workable market
offering.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
The stage of new-product development in which the
product and marketing program are tested in realistic
market settings.
New Product Development Process
Idea generation
Idea screening
Concept Development
& testing
Marketing strategy
development
Business analysis
Product development
Test marketing Commercialization
Introducing a new product into the market
Product Life-Cycle Strategies
• The course of a product’s sales and profits over its lifetime.
• It involves five distinct stages:1. Product development2. Introduction3. Growth4. Maturity5. Decline
Sales & Profits over the Product’s Life from Inception to Decline
-2
-1
0
1
2
3
4
5
6
SalesProfits
Sales and profits ($)
Losses/ Investment ($)
Time
This shows typical product life cycle (PLC), not all products follow this PLC.
Stage 1
Product development: • Begins when company finds and develops a
new-product idea.
• During this stage, sales are zero and the company’s investment costs add up.
Stage 2
Introduction:• Starts when the new product is first launched.
• Is a period of slow sales growth as the product is introduced in the market.
• Profits are nonexistent or low in this stage because of the heavy expenses of product introduction.
Stage 3
Growth:• Is a period of rapid market acceptance and
increasing profits.
• Product’s sales start climbing quickly.
Stage 4
Maturity:• Is a period of slowdown in sales growth
because the product has achieved acceptance by most potential buyers.
• Profits level off or decline because of increased marketing outlays to defend the product against competition.
Stage 5
Decline:• Is the period when sales fall off and profits drop.
• Sales decline for many reasons: technological advances, shifts in consumer tastes, and increased competition.
– A firm must regularly review product sales, market shares, costs, and profit trends. Then, management can decide whether to maintain, harvest, or drop the declining products.
Summary of PLC CharacteristicsCharacteristics Introduction Growth Maturity DeclineSales Low sales Rapidly rising
salesPeak sales Declining sales
Costs High cost per customer
Average cost per customer
Low cost per customer
Low cost per customers
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority
Laggards
Competitors Few Growing number
Stable number begin to decline
Declining number
Summary of PLC ObjectivesIntroduction Growth Maturity Decline
Marketing Objectives
Create product awareness and trial
Maximize market share
Maximize profit while defending market share
Reduce expenditure and milk the brand
Summary of PLC StrategiesStrategies Introduction Growth Maturity Decline
Product Offer a basic product
Offer product extensions, service, warranty
Diversify brand and models
Phase out weak items
Price Use cost-plus Price to penetrate market
Price to match or beat competitors
Cut price
Distribution Build selective distribution
Build intensive distribution
Build more intensive distribution
Go selective: phase out unprofitable outlets
Advertising Build product awareness among early adopters and dealers
Build awareness and interest in the mass market
Stress brand differences and benefits
Reduce to level needed to retain hard-core loyals
Sales promotion Use heavy sales promotion to entice trial
Reduce to take advantage of heavy consumer demand
Increase to encourage brand switching
Reduce to minimal level