chapter 13: “conceiving, developing, and managing products”

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Copyright Atomic Dog Publishing, 200 Chapter 13: “Conceiving, Developing, and Managing Products” Joel R. Evans & Barry Berman Marketing, 10e: Marketing in the 21st Century

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Chapter 13: “Conceiving, Developing, and Managing Products”. Joel R. Evans & Barry Berman Marketing, 10e: Marketing in the 21st Century. Chapter Objectives. To study how products are created and managed, with an emphasis on the product life cycle - PowerPoint PPT Presentation

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Page 1: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Chapter 13:“Conceiving, Developing, and Managing Products”

Joel R. Evans & Barry Berman

Marketing, 10e: Marketing in the 21st Century

Page 2: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Chapter Objectives

• To study how products are created and managed, with an emphasis on the product life cycle

• To detail the importance of new products and describe why new products fail

• To present the stages in the new-product planning process

• To analyze the growth and maturity of products, including the adoption process, the diffusion process, and extension strategies

• To examine product deletion decisions and strategies

Page 3: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Types of New Products

• Modifications: alterations/extensions in a company’s existing products, such as new models

• Minor Innovations: items not previously sold by a firm that have been sold

• Major Innovations: items not previous sold by any firm

Page 4: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

The Product Life Cycle

• The product life cycle is a concept that seeks to describe a product’s sales, competitors, customers, and marketing emphasis from its beginning until it is removed from the market.

• Companies often desire a balanced product portfolio.

• The life-cycle concept can be applied to a product class, a product form, and a product brand.

Page 5: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Selected Product Life Cycles

Traditional Boom or ClassicFad

Extended Fad

Seasonal or Fashion

Revival Bust

Page 6: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

The Traditional Product Life Cycle

TIME

SALES

Typical product:

Black and White TVs

Page 7: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Stages in Traditional Product Life Cycle

TIME

SALES

Introduction Growth Maturity Decline

Profits

Sales

Profit is negative in Introduction, slowly rises in Growth, peaks and then declines in Maturity stage and in Decline

stage.

Page 8: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Traditional Product Life Cycle and Advertising

ADVERTISING GOALS

Inform Persuade Highly competitive Reassess/go back

Introduction Growth Maturity Decline

Page 9: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Self-Fulfilling Prophecy

• Many firms may engage in a self-fulfilling prophecy, whereby they predict falling sales and then ensure this by reducing or removing marketing support.

• With proper marketing, some products might not fail.

Page 10: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Importance of New Products

To assure a firm’s survival, new products may: Offer differential advantages. Lead to sales growth or stability. Increase profits and control. Reduce risk through diversity. Improve distribution. Exploit technology. Utilize waste materials. Respond to consumer needs. Be a result of a government mandate.

Page 11: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Why Do Products Fail?

• Poor long-term planning

• Lack of a differential advantage

• Incorrect pricing and product placement

• Inattention to the environment of marketing and audit sequences

• Marketing myopia Who me? But, we have always done it that way! As I say, if it

worked for one, it will work for all.

Page 12: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

The Importance of New Product Failure

• Failure rate is 35% or more.

• Despite careful planning, products may still fail.

• There is absolute failure and relative failure.

Page 13: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Types of Failures

• In absolute product failure, costs are not regained.

• In relative product failure, even though a profit may be earned, goals are not met.

Page 14: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

New-Product Planning Process

1. Idea

Generation

2. Product

Screening

3. Concept Testing

4. Business Analysis

5. Product

Development6.

Test Marketing

7. Commercialization

Page 15: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

1. Idea Generation

IdeaGeneration

Continuous, systematic

search for new product

opportunities

Page 16: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

2. Product Screening

ProductScreening

Poor, unsuitable products weeded

out and patentability determined

Page 17: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

3. Concept Testing

Present consumer with

proposed product to measure

attitudes and intentions

ConceptTesting

Page 18: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

4. Business Analysis

BusinessAnalysis

Detailed review of demand, costs, break-

even points, investments, and

potential profits for each new product

Page 19: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

5. Product Development

ProductDevelopment

Converts product ideainto tangible form and

identifies basic marketingstrategy

Page 20: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

6. Test Marketing

Involves placing a fully developed product into one or more selected

areas to observe it under a proposed marketing

plan

Test Marketin

g

Page 21: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

7. Commercialization

Commercialization

The product’s introduction to its full target market,

corresponding to the introduction stage of the product life cycle

Page 22: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Growth Stage in Life Cycle

• With major innovations, growth may be very slow at first and then rise quickly, as with the microwave oven.

• Minor innovations or product modifications have quicker growth from the start.

Page 23: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Adoption Process

• The adoption process is the procedure an individual consumer goes through when learning about and purchasing a new product.

• The process depends on consumer traits, the product, and marketing efforts. The stages are: Knowledge Persuasion Decision Implementation Confirmation

Page 24: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Diffusion Process

• The diffusion process describes the manner in which different members of the target market often accept and purchase a product.

• It spans the time from product introduction through market saturation and affects the total sales level of a product through the life cycle.

• Consumer segments include: Innovators—2.5% Early Adopters—13.5% Early Majority—34% Late Majority—34% Laggards—16%

Page 25: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

The Diffusion Process Curve

Innovators

Early Adopters

Laggards

This curve shows the manner in which different members of the target market often

accept and purchase a product.

Early Majority

Late Majority

(68%)

Page 26: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Maturity Stage in Life Cycle

Useful Strategies in Maturity:

1. Develop new uses for products2. Develop new product features3. Increase the market4. Find new classes of consumers for

present products5. Find new classes of consumers for

modified products6. Increase product usage among current

users7. Change marketing strategy

Page 27: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Decline Stage in Life Cycle

Questions to Consider When Deciding to Delete a Product:1. Replacement Parts—Who will make them?

How long will they be made?2. Notification Time—How soon before the

actual deletion will an announcement be made? Will distributors be alerted early enough so they can line up other suppliers?

3. Warranties—How will warranties be honored? After they expire, how will repairs be done?

Page 28: Chapter 13: “Conceiving, Developing,  and Managing Products”

Copyright Atomic Dog Publishing, 2007

Chapter Summary

• This chapter examines how products are created and managed, with a focus on the product life cycle.

• It notes the importance of new products and describes why new products fail.

• It presents the stages in the new-product planning process.

• It analyzes the growth and maturity of products, including the adoption process, the diffusion process, and extension strategies.

• It looks at product deletion decisions and strategies.