4.2. new-product development gillete 2
TRANSCRIPT
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Nathan George, M.S., J.D.
Nathan George, M.S., J.D.
New-Product Developmentand Product
Life-Cycle Strategies
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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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8-3Causes 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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8-4New-Product Development Process
New-Product Development Process
IdeaGeneration
IdeaScreening
ConceptDevelopmentand Testing
MarketingStrategy
BusinessAnalysis
Product
Development
TestMarketing
Commercialization
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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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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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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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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
Summary of Characteristics, Objectives, & Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
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
Summary of Characteristics, Objectives, & Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
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
Summary of Characteristics, Objectives, & Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
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.