new product development and product life-cycle strategies

Copyright © 2015 Pearson Education, Inc.

Learning Objectives

• Explain how companies find and develop new product ideas.

• List and define the steps in the new product development process and the major considerations in managing this process.

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Learning Objectives

• Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle.

• Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

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First Stop: Samsung–Enriching Customers’ Lives through New Product Innovation

• Transition from a low-cost knock-off to a cutting-edge technology brand

• Aimed to dethrone Sony• Set out to become a premier brand • Focused on customer-centered new product

• Wants to be the first company that finds and develops the next product in consumer electronics

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New Product Development

• Development of new products through the firm’s own research and development efforts• New product - Original products, product

improvement and modifications, and new brands

• Creating successful new products requires:• Understanding consumers, markets, and

competitors • Developing products that deliver superior value

to customers

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Figure 8.1 - Major Stages in New Product Development

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Idea Generation

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• Systematic search for new product ideas• Internal idea sources:

• Intrapreneurial programs • Internal social networks

• External idea sources:• Competitors• Customers• Distributors and suppliers


Idea Generation

• Crowdsourcing: Inviting broad communities of people into the new product innovation process

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Idea Screening

• Screening new product ideas to spot good ones and drop poor ones as soon as possible

• Ways of screening new ideas:• New idea write-up reviewed by a committee• R-W-W framework–Real, win, worth doing

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Product Concept

• A product concept is a detailed version of the new product idea stated in meaningful consumer terms.

• A product idea is an idea for a possible product that the company can see itself offering to the market.

• A product image is the way a product is perceived by consumers.

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Concept Development

• Developing a new product into alternative product concepts• Find out how attractive each concept is to

customers• Choose the best one

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Concept Testing

• Testing a group of target consumers to find out the degree of consumer appeal toward the concepts

• Methods:• Presenting the concepts to consumers

symbolically or physically or with a word or picture description

• Asking customers about their reactions to the concepts

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Marketing Strategy Development

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• Initial marketing strategy for a new product• The marketing strategy statement

• Describes the target market, the planned value proposition, and the sales, market-share, and profit goals for the first few years

• Outlines the planned product price, distribution, and marketing budget for the first year

• Describes the planned long-run sales, profit goals, and marketing mix strategy


Business Analysis and Product Development

• Business analysis: Review of the sales, costs, and profit projections for a new product• To find out whether the projections satisfy the

company’s objectives

• Product development: Develop the product concept into a physical product• To ensure that the product idea can be turned

into a workable market offering

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Test Marketing

• The product and its proposed marketing program are introduced into realistic market settings.

• Gives the marketer an experience with marketing a product before the introduction

• Tests the product and its marketing program• Costs can be high• Time consuming

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Test Marketing

• Alternatives to standard test markets• Controlled test markets • Simulated test markets

• Reasons for using alternative test markets• Reduce the costs of test marketing • Speed up the process

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Commercialization

• Introducing a new product into the market• Considerations for launching a new product

• Time• Place

• Single location, region, national market, or international market

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Managing New Product Development

• Requires a holistic approach• Customer-centered new product development• Team-based new product development• Systematic new product development

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Customer-Centered New Product Development

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• Focuses on finding new ways to solve customer problems and create more customer-satisfying experiences


Team-Based and Systematic New Product Development

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Figure 8.2 - Sales and Profits over the Product’s Life from Inception to Decline

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Figure 8.3 - Styles, Fashions, and Fads

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Table 8.2 - Summary of Product Life-Cycle Characteristics and Objectives

Source: Philip Kotler and Kevin Lane Keller, Marketing Management, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012), p. 317. © 2012. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

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Table 8.2 - Summary of Product Life-Cycle Strategies

Source: Philip Kotler and Kevin Lane Keller, Marketing Management, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012), p. 317. © 2012. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

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Product Decisions and Social Responsibility

• Considerations for companies• Public policy issues• Regulations regarding acquiring or dropping

products• Patent protection• Product quality and safety• Product warranties

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International Product and Services Marketing

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• Challenges • To find what products and services to introduce

and in which countries • To decide on how much to standardize or adapt

the products and services for world markets


Learning Objectives

• Explain how companies find and develop new product ideas.

• List and define the steps in the new product development process and the major considerations in managing this process.

8 - 27


Learning Objectives

• Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle.

• Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2015 Pearson Education, Inc.Copyright © 2015 Pearson Education, Inc.

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