4.2. new-product development gillete 2

8/6/2019 4.2. New-Product Development Gillete 2

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8-1

8-1

Nathan George, M.S., J.D.

Nathan George, M.S., J.D.

New-Product Developmentand Product

Life-Cycle Strategies


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8-2

8-2New-Product Development Strategies

New-Product Development Strategies

OriginalProducts

OriginalProducts

ProductImprovements

ProductImprovements

ProductModifications

ProductModifications

NewBrands

NewBrands

AcquiredCompanies

AcquiredCompanies

AcquiredPatents

AcquiredPatents

AcquiredLicenses

AcquiredLicenses

Strategies for Obtaining New Product Ideas


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8-3

8-3Causes of New Product Failures

Causes of New Product Failures

Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or

Advertised Costs of Product Development Competitive Actions

create successful new products, the companymust: understand its customers, markets and competitors, develop products that deliver superior value to

customers.


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8-4

8-4New-Product Development Process

New-Product Development Process

IdeaGeneration

IdeaScreening

ConceptDevelopmentand Testing

MarketingStrategy

BusinessAnalysis

Product

Development

TestMarketing

Commercialization


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8-5

8-5

Customers

Customers Competitors

Competitors Distributors

Distributors Suppliers

Suppliers

New Product Development ProcessStep 1. Idea Generation

New Product Development ProcessStep 1. Idea Generation

Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From

Employees and Also From:


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8-6

Process to spot good ideas and drop poor ones as soon as possible.

Many companies have systems for ratingand screening ideas which estimate:

Market Size Product Price Development Time & Costs

Manufacturing Costs Rate of Return

Then, the idea is evaluated against a set of general company criteria.

New Product Development ProcessStep 2. Idea Screening

New Product Development ProcessStep 2. Idea Screening


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1. Develop New Product Ideasinto Alternative Detailed

Product Concepts

1. Develop New Product Ideasinto Alternative Detailed

Product Concepts

2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers

2. Concept Testing - Test theNew Product Concepts withGroups of Target Customers

3. Choose the One That Has theStrongest Appeal to Target

Customers

3. Choose the One That Has theStrongest Appeal to Target

Customers

New Product Development ProcessStep 3. Concept Development & Testing New Product Development ProcessStep 3. Concept Development & Testing


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8-88-8

Part Two Describes Short-Term:Product s Planned Price

DistributionMarketing Budget

Part Two Describes Short-Term:Product s Planned Price

DistributionMarketing Budget

Part Three Describes Long-Term:Sales & Profit GoalsMarketing Mix Strategy

Part Three Describes Long-Term:Sales & Profit GoalsMarketing Mix Strategy

Marketing Strategy Statement Formulation

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

New Product Development ProcessStep 4. Marketing Strategy Development New Product Development ProcessStep 4. Marketing Strategy Development


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8-98-9New Product Development ProcessStep 5. Business AnalysisStep 6. Product Development

New Product Development ProcessStep 5. Business AnalysisStep 6. Product Development

Business Analysis

Review of Product Sales, Costs,and Profits Projections to See if They Meet Company Objectives

Business AnalysisReview of Product Sales, Costs,and Profits Projections to See if They Meet Company Objectives

If Yes, Move to

Product Development

If Yes, Move to

Product Development

If No, EliminateProduct ConceptIf No, Eliminate

Product Concept


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8-108-10New Product Development ProcessStep 7. Test Marketing New Product Development ProcessStep 7. Test Marketing

AdvertisingAdvertising

PackagingPackaging

ProductProductBudget LevelsBudget Levels

PositioningStrategy

PositioningStrategy

DistributionDistributionPricingPricing

BrandingBranding

Elements thatMay be Test

Marketed by aCompany

Test Marketing is the Stage Where the Product andMarketing Program are Introduced into More Realistic

Market Settings.


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8-118-11

When?When? Where?Where?

Commercialization is the Introduction of theNew Product into the Marketplace.

New Product Development ProcessStep 8. CommercializationNew Product Development ProcessStep 8. Commercialization


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8-128-12Speeding Up Development Speeding Up Development

Step 1Step 1

Step 2Step 2

Step 3Step 3

Step 4Step 4

Step1

Ste

p2

Step 3

Step 4

Sequential Simultaneous (Team-Based)


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8-138-13Speed Bump:Linking the

Concepts

Speed Bump:Linking the

Concepts Suppose that you re on a panel to nominate

the best new products of the year .> What products would you nominate and why?> See what you can learn about the new-product

development process for one of these products.

Applying the new-product development processyou ve just studied, develop an idea for aninnovative new snack food product and sketch

out a brief plan for bringing it to market.


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8-148-14Product Life CycleProduct Life Cycle

Time

ProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

Sales and Profits Over the Product s Life From

Introduction to Decline


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8-158-15Introduction Stage of the PLC Introduction Stage of the PLC

Summary of Characteristics, Objectives, & Strategies

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low salesLow sales

High cost per customer High cost per customer

Negative or lowNegative or low

Create product awareness and trialCreate product awareness and trial

Offer a basic productOffer a basic product

Usually is high; use cost-plus formulaUsually is high; use cost-plus formula

DistributionDistribution High distribution expensesHigh distribution expenses

AdvertisingAdvertising Build product awareness among early

adopters and dealers

Build product awareness among early

adopters and dealers


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8-168-16Growth Stage of the PLC Growth Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Rapidly rising salesRapidly rising sales

Average cost per customer Average cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer new product features, extensions,service, and warranty

Offer new product features, extensions,service, and warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Increase number of distribution outletsIncrease number of distribution outlets

AdvertisingAdvertising Build awareness and interest in the mass

market

Build awareness and interest in the mass

market


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8-178-17Maturity Stage of the PLC Maturity Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customer Low cost per customer

High profits, then lower profitsHigh profits, then lower profits

Maximize profits while defending marketshare

Maximize profits while defending marketshare

Diversify brand and modelsDiversify brand and models

Price to match or best competitorsPrice to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits


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8-188-18Maturity Stage of the PLC Maturity Stage of the PLC

MarketMarketModificationModificationMarketMarket

ModificationModification ProductProduct

ModificationModificationProductProduct

ModificationModification

MarketingMarketingMixMixModificationModification

MarketingMarketingMixMix

ModificationModification

Maturity Stage Product Defense

Strategies


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8-198-19Speed Bump:Linking the

Concepts

Speed Bump:Linking the

Concepts Ask a grandparent or someone else who

shaved back then to compare a 1940 s or

1950

s Gillette razor to the most currentmodel.> Is Gillette s latest razor really a new product or just a retread of the previous version?

> What do you conclude about product life cycles? Hello Kitty has been around for decades

> How has the company protected Hello Kitty fromold age and decline?


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8-208-20Decline Stage of the PLC Decline Stage of the PLC


SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customer Low cost per customer

Declining profitsDeclining profits

Reduce expenditure and maintain,reposition, harvest or drop the product

Reduce expenditure and maintain,reposition, harvest or drop the product

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets

AdvertisingAdvertising Reduce to level needed to retain

hard-core loyal customers

Reduce to level needed to retain

hard-core loyal customers


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8-218-21Rest Stop:Reviewing

theConcepts

Rest Stop:Reviewing

theConcepts

Explain how companies find and develop new-product ideas. List and define the steps in the new-product

development process.

Describe the stages of the product life cycle. Explain how marketing strategies change during

the product s life cycle.

4.2. new-product development gillete 2

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