Product Differentiation Copyright © 2008 Pearson Prentice Hall. All rights reserved. 5-1 Chapter 5.
Chapter 9- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter...
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Chapter 9- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter Nine New-Product Development and Product Life-Cycle Strategies
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Transcript of Chapter 9- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter...
Chapter 9- slide 1Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Chapter Nine
New-Product Development and Product Life-Cycle Strategies
Chapter 9- slide 2Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development and Product Life-Cycle Strategies
• New-Product Development Strategy
• New-Product Development Process• Managing New-Product
Development• Product Life-Cycle Strategies• Additional Product and Service
Considerations
Topic Outline
Chapter 9- slide 3Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Strategy
Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product
New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development efforts
Two ways to obtain new products
Chapter 9- slide 4Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product DevelopmentReasons for new product failure
Chapter 9- slide 5Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Major Stages in New-Product Development
Chapter 9- slide 6Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Idea generation is the systematic search for new-product ideas
Sources of new-product ideas• Internal • ExternalEx. IBM recently held an “Innovation Jam” Generated46,000 ideas,Of which IBM
planned to develop only 10
Idea Generation
Chapter 9- slide 7Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs
External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
Idea Generation
Chapter 9- slide 8Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Identify good ideas and drop poor ideas • R-W-W ( real, win, worth it )Screening
Framework:– Is it real?– Can we win?– Is it worth doing?The company should be able to answer yes to all
the questions before developing the new product idea further
Idea Screening
Chapter 9- slide 9Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Product idea is an idea for a possible product that the company can see itself offering to the market
Product concept is a detailed version of the idea stated in meaningful consumer terms
Product image is the way consumers perceive an actual or potential product
Concept Development and Testing
Chapter 9- slide 10Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Concept testing refers to testing new-product concepts with groups of target consumers
Concept Development and Testing
Chapter 9- slide 11Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Marketing strategy development refers to the initial marketing strategy for introducing the product to the market
• Marketing strategy statement includes:– Description of the target market– Value proposition( the product planned price,
distribution and marketing budget for the year– Sales and profit goals
Marketing Strategy Development
Chapter 9- slide 12Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
_ if they do , the product can move to the product development stage
Marketing Strategy Development
Chapter 9- slide 13Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments
• Requires an increase in investment
• Ex. Gillette uses employee-volunteers to test new shaving products.
Marketing Strategy Development
Chapter 9- slide 14Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings
• Provides the marketer with experience in testing the product and entire marketing program before full introduction
Marketing Strategy Development
Chapter 9- slide 15Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
For example :KFC test marketed its new
kentucky grilled chicken product for three years before rolling it out widely. Says the chain’s president, “ we had to get it right “
Marketing Strategy Development
Chapter 9- slide 16Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development ProcessTypes of Test Markets
Chapter 9- slide 17Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Standard test markets are small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance. Results are used to forecast national sales and profits, discover product problems, and fine-tune the marketing program.
• Controlled test markets are panels of stores that have agreed to carry new products for a fee. In general they are less expensive than standard test market, faster than standard test markets, but competitors gain access to the new product.
Types of Test Markets
Chapter 9- slide 18Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Simulated test markets are events where the firm will create a shopping environment and note how many consumers buy the new product and competing products. Provides measure of trial and the effectiveness of promotion. Researchers can interview consumers
Types of Test Markets
Chapter 9- slide 19Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• Advantages of simulated test markets– Less expensive than other test methods– Faster– Restricts access by competitors
• Disadvantages– Not considered as reliable and accurate due to
the controlled setting
Marketing Strategy Development
Chapter 9- slide 20Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Marketing Strategy Development
Chapter 9- slide 21Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
Commercialization is the introduction of the new product into the market• When to launch “ Timing”• Where to launch” Location”• Planned market rollout over time.
Marketing Strategy Development
Chapter 9- slide 22Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
New-Product Development Process
• An example of the commercialization when Microsoft recently did this with windows Vista operating system. Microsoft used the advertising to lunch Vista in more than 30 markets worldwide.
Marketing Strategy Development
Chapter 9- slide 23Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Managing New-Product Development
Successful new-product development should be:
• Customer centered• Team centered• Systematic
Chapter 9- slide 24Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Managing New-Product Development
Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences
• Begins and ends with solving customer problems
New-Product Development Strategies
Chapter 9- slide 25Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• An example of this when engineers and marketers from Black & Decker’s division, the division that makes power tools used by professional contractors, spend a great deal of time at job sites , generating ideas by talking to the end users. Then once prototypes of new products have been completed, those same people take them to the same job sites, leave the tools , and come back a week or so later to collect information on how they perform.
Customer-centered new product development
Chapter 9- slide 26Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Managing New-Product Development
Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage
• Increased control in risky or complex projects• Slow
New-Product Development Strategies
Chapter 9- slide 27Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Managing New-Product Development
Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness
_ creates more organizational tension and confusion than the more orderly sequential approach.
New-Product Development Strategies
Chapter 9- slide 28Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Managing New-Product Development
Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas
• Creates an innovation-oriented culture
• Yields a large number of new-product ideas
New-Product Development Strategies
Ex. Google is both successful & wildly innovative. At Google, innovation is more than just a process. Its in the air , in the spirit of the place
Chapter 9- slide 29Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
Product Life Cycle
Chapter 9- slide 30Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• Product development – Sales are zero and investment costs mount
• Introduction – Slow sales growth and profits are nonexistent
• Growth– Rapid market acceptance and increasing profits.
• Maturity – Slowdown in sales growth and profits level off or decline
• Decline– Sales fall off and profits drop
Product Life-Cycle Strategies
Chapter 9- slide 31Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity
Chapter 9- slide 32Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
Chapter 9- slide 33Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
• Slow sales growth• Little or no profit• High distribution and promotion expense
Introduction Stage
Chapter 9- slide 34Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
• Sales increase• New competitors enter the market• Price stability or decline to increase volume• Consumer education • Profits increase• Promotion and manufacturing costs gain
economies of scale
Growth Stage
Chapter 9- slide 35Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
• Slowdown in sales• Many suppliers• Substitute products• Overcapacity leads to competition• Increased promotion and R&D to support
sales and profits
Maturity Stage
Chapter 9- slide 36Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
• Market modifying• Product
modifying• Marketing mix
modifying
Maturity Stage Modifying Strategies
Chapter 9- slide 37Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
• Maintain the product• Harvest the product• Drop the product
Decline Stage
Chapter 9- slide 38Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Product Life-Cycle Strategies
Summary of Product Life Cycle
Chapter 9- slide 39Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Additional Product and Service Considerations
Public policy and regulations regarding developing and dropping products, patents, quality, and safety
Product Decisions and Social Responsibility
Chapter 9- slide 40Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Additional Product and Service Considerations
• Determining what products and services to introduce in which countries
• Standardization versus customization
• Packaging and labeling • Customs, values, laws
International Product and Service Marketing—Challenges
