chapter 6
TRANSCRIPT
Fundamental Of MarketingMKT243
Chapter 6
Developing and Managing Product
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Slide Outline
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Categories of New Product New Product Development Process Product Life Cycles (PLC)
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New to world products (discontinuous innovations) These products create entirely new market.
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New product lines
A product that a firm has not previously offered, allow it to enter an established market.
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Additions to existing product lines
It includes new products that supplement a firm’s established line.
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Improvements/ Revisions of existing products
A product that has significant or slightly changed.
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Repositioned products
These are existing products targeted at new markets or market segments.
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Lower priced products
Products that provide performance similar to competing brands at a lower price.
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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
Two ways to obtain new products
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Reasons for new product failure
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New-Product Development Process
Major Stages in New-Product Development
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New-Product Development Process
Idea generation is the systematic search for new-product ideas
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
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New-Product Development Process
Process to spot good ideas and drop poor ones.
Need to avoid ‘GO error’ and also ‘DROP error’
Idea Screening
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New-Product Development Process
Concept testing refers to testing new-product concepts with groups of target consumers
Concept Development and Testing
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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 Sales and profit goals
Marketing Strategy Development
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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
Marketing Strategy Development
New-Product Development Process Product Development
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Develop concept into physical product
Prototypes are made Prototype must have correct
physical features and convey psychological characteristics
Test the include in Product Development stage:-
Alpha test Beta test Test market
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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
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New-Product Development Process
Commercialization is the introduction of the new product When to launch Where to launch Planned market rollout
Commercialization
Product Life Cycle
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ProductLife Cycle
ProductLife Cycle
A biological metaphor that
traces the stages of a
product’s acceptance, from
its introduction (birth) to its
decline (death).
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Product Life-Cycle Strategies
Product Life Cycle
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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
PLC stages
Introductory stage Growth stage
High failure rates Little competition Frequent product modification Limited distribution High marketing and production
costs Negative profits with slow
sales increases Promotion focuses on
awareness and information Communication challenge is to
stimulate primary demand
Increasing rate of sales Entrance of
competitors Market consolidation Initial healthy profits Aggressive advertising
of the differences between brands
Wider distribution
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PLC stages cont…
Maturity stage Decline stage
Sales increase at a decreasing rate
Saturated markets Lengthened product
lines Heavy promotions to
consumers and dealers
Niche marketers emerge
Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessential marketing expenses
Maintain product vs. harvesting product
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Product Life-Cycle Strategies
Market modifying Product modifying Marketing mix
modifying
Maturity Stage Modifying Strategies
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Time
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited models;Frequent changes
More models;Frequent changes
Large number of models
Eliminate unprofitable
models
LimitedWholesale/
retail distributors
Expanded dealers; Long-term relations
Extensive;Margins drop;Shelf space
Phase out unprofitable
outlets
Awareness; Stimulate demand;
Sampling
Aggressive ads.Stimulatedemand
Advertise; Promote heavily
Phase outpromotion
High to recoupdevelopment
costs
Fall as result ofcompetition &
efficient production
Prices fall (usually)
Prices stabilize at
low level
Sal
es
Product Life Cycle Strategies
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Product Life-Cycle Strategies
Product Life-Cycle Strategies
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Style A basic and distinctive model of expression
Example: Clothing (formal, casual and homes (colonial, ranch, transitional)
Once style invented, it may last for generations, passing in and out of vogue
Product Life-Cycle Strategies
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Fashion is a currently accepted or popular style in given field
Fashion tend to grow slowly, remain popular for a while, and then decline slowly.
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Product Life-Cycle Strategies
Fads are temporary periods of unusually high sales driven by consumer
enthusiasm and immediate product or
brand popularity