New-Product Development and Product Life-Cycle Strategies

Chapter Outline

New-Product Development StrategyNew-Product Development ProcessManaging New-Product DevelopmentProduct Life-Cycle StrategiesAdditional Product and Service Considerations9-3

New-Product Development Strategy

Acquisition refers to the buying of a whole company, a patent, or a license to produce someone elses product

New product development refers to original products, product improvements, product modifications, and new brands developed from the firms own research and development9-5

New-Product Development Strategy

Reasons for new product failureOverestimation of market sizePoor designIncorrect positioningWrong timingPriced too highIneffective promotionManagement influenceHigh development costsCompetition9-6

Managing New-Product Development

Successful new product development should be:Customer-centeredTeam-centeredSystematic9-26

Managing New-Product DevelopmentNew-Product Development Strategies

Customer-centered new-product development focuses on finding new ways to solve customer problems and create more customer-satisfying experiencesBegins and ends with solving customer problems9-27

Managing New-Product DevelopmentNew-Product Development Strategies

Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing along to the next department or stageIncreased control in risky or complex projectsSlow9-28

Managing New-Product DevelopmentNew-Product Development Strategies

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 effectiveness9-29

Managing New-Product DevelopmentNew-Product Development Strategies

Team-based versus sequential new-product development Team-based can increase tension and confusionTeam-based is faster and more flexible9-30

Managing New-Product DevelopmentNew-Product Development Strategies

Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideasCreates an innovation-oriented cultureYields a large number of new-product ideas9-31

Product Life-Cycle StrategiesProduct life cycle (PLC) is the course that a products sales and profits take over its lifetimeProduct development IntroductionGrowthMaturityDecline9-32

Product Life-Cycle Strategies

Product life cycle (PLC) describes:Product classProduct formBrand9-33

Product Life-Cycle Strategies

Product classes have the longest life cycles, with sales of many product classes in the mature stage for a long timeProduct forms have the standard PLC shape, introduction, rapid growth, maturity, and declineBrands have changing PLCs due to competitive threats9-34

Product Life-Cycle Strategies

Style is a basic and distinctive mode of expression

Fashion is a currently accepted popular style in a given field9-35

Product Life-Cycle Strategies

Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity9-36

Product Life-Cycle Strategies

Introduction stage is when the new product is first launchedTakes timeSlow sales growthLittle or no profitHigh distribution and promotion expense9-37

Product Life-Cycle Strategies

Growth stage is when the new product satisfies the marketSales increaseNew competitors enter the marketPrice stability or decline to increase volumeConsumer education Profits increasePromotion and manufacturing costs gain economies of scaleProduct quality increasesNew featuresNew market segments and distribution channels are entered

9-38

Product Life-Cycle Strategies

Maturity stage is a long-lasting stage of a product that has gained consumer acceptance

Slowdown in salesMany suppliersSubstitute productsOvercapacity leads to competitionIncreased promotion and R&D to support sales and profits9-39

Product Life-Cycle StrategiesModifying Strategies

Market modifyingProduct modifyingMarketing mix modifying9-40

Product Life-Cycle StrategiesModifying Strategies

Market modifying strategy is when a company tries to increase consumption of the current productNew usersIncrease usage of existing usersNew market segments

9-41

Product Life-Cycle StrategiesModifying Strategies

Marketing mix modifying strategy is when a company changes one or more of the marketing mix elementsPricePromotionDistribution channels9-42

Product Life-Cycle Strategies

Decline stage is when sales decline or level off for an extended time, creating a weak productMaintain the productHarvest the productDrop the product

9-43

Additional Product and Service ConsiderationsProduct Decisions and Social Responsibility

Public policy and regulations regarding developing and dropping products, patents, quality, and safety9-44

Additional Product and Service ConsiderationsInternational Product and Service Marketing

ChallengesDetermining what products and services to introduce in which countriesStandardization versus customizationPackaging and labeling Customs, values, laws

9-45

The End

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