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For use only with Perreault and McCarthy texts.© 2006 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin
CHAPTER NINE
Product Management and New Product Development
CHAPTER NINE
Product Management and New Product Development
1. Understand how product life cycles affect strategy planning.
2. Understand what is involved in designing new products and what “new products” really are.
3. Understand the new-product development process.
4. See why product liability must be considered in screening new products.
5. Understand the need for product or brand managers.
6. Understand how total quality management can improve goods and services.
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When we finish this lecture you should
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Managing Products over Their Life CyclesExhibit 9-1
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Market Introduction – Investing in the Future
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Monopolistic Competition Develops
Monopolistic Competition Develops
Monopolistic Competition Develops
Monopolistic Competition Develops
Innovation Attracts Competition
Innovation Attracts Competition
Innovation Attracts Competition
Innovation Attracts Competition
Market Growth – Profits Go Up and Down
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Profits Peak and Then Decline
Profits Peak and Then Decline
Don’t Ignore Long-Term Competitive Trends!Don’t Ignore Long-Term Competitive Trends!
Persuasive, More Costly Promotion
Persuasive, More Costly Promotion
Brands Are More SimilarBrands Are More Similar
Greater Price Competition/Price Sensitivity
Greater Price Competition/Price Sensitivity
Persuasive, More Costly Promotion
Persuasive, More Costly Promotion
Brands Are More SimilarBrands Are More Similar
Greater Price Competition/Price Sensitivity
Greater Price Competition/Price Sensitivity
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Market Maturity – Sales Level Off, Profits Continue Down
Maturity May Last a Long Time
Maturity May Last a Long Time
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Sales Decline – A Time of Replacement
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Which Stage of the PLC?
AND
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IndividualBrands
IndividualBrands
• May not follow the classic pattern
• May be introduced in market growth or maturity
• Not all brands are equally strong
MarketDefinitions
MarketDefinitions
• Should be carefully developed
• Different markets, different stages
• Contribute to the length of the cycle
Product Life Cycles Should Be Related to Specific Markets
Can Be TriedCan Be Tried
Easy to Communicate
Easy to Communicate
Competitive Advantage
Competitive Advantage
Can Be TriedCan Be Tried
Easy to Communicate
Easy to Communicate
Competitive Advantage
Competitive Advantage Easy to UseEasy to UseEasy to UseEasy to Use
CompatibleCompatible
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Product Life Cycles Vary in Length
Some ProductsMove Fast
Some ProductsMove Fast
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Interactive Exercise: Adoption
The Early Bird Usually ProfitsThe Early Bird Usually Profits
Product Life Cycles Are Getting Shorter
Product Life Cycles Are Getting Shorter
The Early Bird Usually ProfitsThe Early Bird Usually Profits
Product Life Cycles Are Getting Shorter
Product Life Cycles Are Getting Shorter
Fashions and FadsFashions and Fads
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Other Issues in Product Life Cycle Length
Competitors May Help Adoption
Competitors May Help Adoption
Anticipate Speed of
Movement
Anticipate Speed of
Movement
Consider the Four Ps
Consider the Four Ps
Consider the Four Ps
Consider the Four Ps
Allocate Sufficient
Money
Allocate Sufficient
Money
Be FlexibleBe Flexible
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Planning for Different Stages of the Product Life Cycle
MarketIntroduction
& Growth
MarketIntroduction
& Growth
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Managing Mature Products
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Improve the Product or Develop a New OneExhibit 9-3
’’ ’’’’
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Are Product Modifications Really New Products?
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Don’t Pull the Plug So Quickly
Don’t Pull the Plug So Quickly
Don’t Pull the Plug So Quickly
Don’t Pull the Plug So Quickly
Phase-out May Be Necessary
Phase-out May Be Necessary
Phase-out May Be Necessary
Phase-out May Be Necessary
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Phasing Out Dying Products
ProfitabilityProduct LineCustomer
SupportSales Decline Can
Be ProfitableSales Decline Can
Be Profitable
What Is a New Product?What Is a New Product?What Is a New Product?What Is a New Product?
FTC Rule: 6 MonthsFTC Rule: 6 MonthsFTC Rule: 6 MonthsFTC Rule: 6 Months
Ethical Dilemmas ExistEthical Dilemmas Exist
New Product Planning
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New Product
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An Organized New Product Development Process is CriticalExhibit 9-4
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Step 1: Idea Generation
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Step 2: Screening
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Step 3: Idea Evaluation
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Step 4: Development
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Step 5: Commercialization
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New Product Development: A Total Company EffortExhibit 9-6
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Common in Large Companies
Common in Large Companies
Common in Large Companies
Common in Large Companies
Product/Brand Managers
Product/Brand Managers
Product/Brand Managers
Product/Brand Managers
Some Are “Product Champions”
Some Are “Product Champions”
Need for Product Managers
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Building Quality into the Implementation Effort
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TQM Is Easier Said Than DoneExhibit 9-7
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Why Things Go WrongExhibit 9-8
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Server Is Linked To the Service
Server Is Linked To the Service
Server Is Linked To the Service
Server Is Linked To the Service
Training Is CrucialTraining Is CrucialTraining Is CrucialTraining Is Crucial
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Building Quality into Services
Empowerment WorksEmpowerment Works
Separate the Routine from the Special
Separate the Routine from the Special
Separate the Routine from the Special
Separate the Routine from the Special
Specify Jobs and Benchmark
Specify Jobs and Benchmark
Specify Jobs and Benchmark
Specify Jobs and Benchmark
Managers Lead the EffortManagers Lead the EffortManagers Lead the EffortManagers Lead the Effort
Manage Expectations with Good Communication
Manage Expectations with Good Communication
Manage Expectations with Good Communication
Manage Expectations with Good Communication
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Other Issues in Quality Implementation Efforts
Get a Return on QualityGet a Return on Quality
• Product life cycle
• Market introduction
• Market growth
• Market maturity
• Sales decline
• Fashion
• New product
• Federal Trade Commission (FTC)
• Consumer Product Safety Act
• Product liability© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Concept testing
• Product managers
• Brand managers
• Total quality management (TQM)
• Continuous improvement
• Pareto chart
• Fishbone diagram
• Empowerment
• Benchmarking