mkt_ch 9.ppt
TRANSCRIPT
-
7/29/2019 Mkt_Ch 9.ppt
1/23
1
Chapter 9
New-Product Development andProduct Life-Cycle Strategies
-
7/29/2019 Mkt_Ch 9.ppt
2/23
2
OriginalProducts
Product
ImprovementsProduct
Modifications
New
Brands
AcquiredCompanies
Acquired
PatentsAcquiredLicenses
New-Product Development
Strategy
Strategies for Obtaining New-Product
-
7/29/2019 Mkt_Ch 9.ppt
3/23
3
Causes of New-Product FailuresOne study estimated that as many as 80% of newconsumer packaged products fail.
Only about 40% of new consumer products are
around 5 years after introduction.Why?
Overestimation of market size,
Product design problems,
Product incorrectly positioned, priced, or advertised,
Product may have been pushed despite poor marketingresearch findings,
Costs of product development, or
Competitive actions.
-
7/29/2019 Mkt_Ch 9.ppt
4/23
4
Improving New-Product SuccessNew-product successdepends on having a:
Unique superior product(one with higherquality, features, andvalue in use), and a
Well-defined productconcept(a definedtarget market, productrequirements, andbenefits).
To create successfulnew products, the
company must:understand itsconsumers, markets,and competitors, and
develop productsthat deliver superiorvalue to customers.
-
7/29/2019 Mkt_Ch 9.ppt
5/23
5
Major Stages in New-Product
Development (Fig. 9-1)
-
7/29/2019 Mkt_Ch 9.ppt
6/23
6
Customers Competitors Distributors Suppliers
Systematic Search for New Product Ideas
Obtained From Employees and Also From:
New Product Development Process
Step 1. Idea Generation
-
7/29/2019 Mkt_Ch 9.ppt
7/237
New Product Development Process
Step 2. Idea ScreeningHelps spot good ideas and drop poor ones assoon as possible.
Many companies have systems for rating andscreening ideas which estimate:Market Size
Product Price
Development Time & CostsManufacturing Costs
Rate of Return
Then, the idea is evaluated against a set of
general company criteria.
-
7/29/2019 Mkt_Ch 9.ppt
8/238
1. Develop NewProduct Ideasinto Alternative Detailed
Product Concepts
2. Concept Testing - Test theNew-Product Concepts withGroups of Target Customers
3. Choose the One That Has theStrongest Appeal to Target
Customers
New Product Development Process
Step 3. Concept DevelopmentProduct Imageis theWay Consumers
Perceive an Actual orPotential Product
-
7/29/2019 Mkt_Ch 9.ppt
9/239
DaimlerChryslers Electric CarThe companys task isto develop its fuel-cell
powered electric carinto alternativeproduct concepts, findout how attractiveeach is to customers,and choose the bestone.
-
7/29/2019 Mkt_Ch 9.ppt
10/2310
New Product Development Process
Step 4. Marketing StrategyPart One Describes Overall:
Target Market
Planned Product PositioningSales, Market Share, & Profit Goals
Part Two Describes First-Year:Products Planned Price
DistributionMarketing Budget
Part Three Describes Long-Run:Sales & Profit Goals
Marketing Mix Strategy
-
7/29/2019 Mkt_Ch 9.ppt
11/2311
If No, EliminateProduct Concept
Business AnalysisReview of Product Sales, Costs, and Profits
Projections to See if They Satisfy Company Objectives
Step 5. Business Analysis
If Yes, Move toProduct Development
-
7/29/2019 Mkt_Ch 9.ppt
12/2312
Developing the product concept into physical
Product so that it turns into aworkable market offering
Step 5. Product Development
-
7/29/2019 Mkt_Ch 9.ppt
13/23
13
New Product Development Process
Step 7. Test MarketingProduct andmarketing program
are introduced intomore realisticmarket settings.
Can be veryexpensive and timeconsuming.
Test the following:
Positioning strategy,
Advertising,
Distribution,
Pricing,
Branding,
Packaging,
Budget levels.
-
7/29/2019 Mkt_Ch 9.ppt
14/23
14
When is theRight Time to
Introduce
Product?
Where toLaunch a
NewProduct?
Introducing the New Product into theMarket
New Product Development Process
Step 8. Commercialization
-
7/29/2019 Mkt_Ch 9.ppt
15/23
15
Step 1
Step 2
Step 3
Step 4
Sequential
Speeding Up New-Product
Development
Step
1
Step
2
Step 3
Step 4
Simultaneous (Team-Based)
-
7/29/2019 Mkt_Ch 9.ppt
16/23
16
Time
Product
Develop-ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Sales and Profits Over the Products Life From Inception to
Demise
Product Life Cycle (Fig. 9-2)
-
7/29/2019 Mkt_Ch 9.ppt
17/23
17
Applications of the Product Life
CycleProduct class which has the longest life cycles (i.e.gas-powered cars),
Product form which tends to have the standard PLCshape (i.e. minivans),
Brand which can change quickly because of changingcompetitive attacks and responses (i.e. Ford Taurus),
Style which is a basic and distinctive mode of
expression (formal clothing),Fashion which is a popular style in a given field(business casual),
Fad which is a fashion that enters quickly, is adopted
quickly, and declines fast (pet rocks).
-
7/29/2019 Mkt_Ch 9.ppt
18/23
18
Problems Using the PLCTrouble identifyingWhich Stage of thePLC the Product Is
In
Difficult to Forecastthe Sales Level, theLength of Each Stage,
and Shape of the PLCStrategy is Both a
Cause and a Resultof the Products Life
Cycle
The PLC Concept can beapplied by marketers fordescribing how products
and markets work, butmay also present someproblems:
-
7/29/2019 Mkt_Ch 9.ppt
19/23
19
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Create product awareness and trial
Offer a basic product
Usually is high
Distribution High distribution expenses
Advertising Spending is high to inform consumers
Negative or low
Create product awareness and trial
Offer a basic product
Usually is high
High distribution expenses
Summary of Characteristics, Objectives, & StrategiesIntroduction Stage of the PLC
-
7/29/2019 Mkt_Ch 9.ppt
20/23
20
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer new product features and models
Remain where they are or fall slightly
Distribution Increase number of distribution outlets
Advertising Educating consumers and meeting
competition
Summary of Characteristics, Objectives, & StrategiesGrowth Stage of the PLC
-
7/29/2019 Mkt_Ch 9.ppt
21/23
21
Sales
Costs
Profits
Marketing Objectives
Product
Price
Begin to slow
Low cost per customer
High profits, then lower profits
Maximize profits while defendingmarket share
May modify product
May decline
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
Summary of Characteristics, Objectives, & StrategiesMaturity Stage of the PLC
-
7/29/2019 Mkt_Ch 9.ppt
22/23
22
Maturity Stage of the PLC
Company tries to increase consumption ofthe current product
Changing characteristics such as quality,features, or styles to attract new users
Company tries to improve sales by changingone or more marketing mix elements
-
7/29/2019 Mkt_Ch 9.ppt
23/23
23
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and maintain,harvest, or drop the product
Phase out weak items
Cut price
Distribution Selective: phase out unprofitable outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
Summary of Characteristics, Objectives, & StrategiesDecline Stage of the PLC