principles of marketing- new product development

8/3/2019 Principles of Marketing- New Product Development

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PPRINCIPLESRINCIPLES OFOF MMARKETINGARKETING

Product Management / New ProductDevelopment

Prof. Rushen Chahal

Prof. Rushen Chahal 1


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Learning contentsLearning contents

1. Understand and describe the product life

cycle concept

2. Appreciate the market evolution conditions3. Describe about the approaches of product

positioning

4. Understand and describe the new productdevelopment process



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1. The product lifecycle (PLC)1. The product lifecycle (PLC)

Product lifecycle concept:- an analytical toolto assess the life span of a product class orproduct form or service.

y Product class another name for product

category, e.g. clothes, toilet accessories

y Product form a products name or structureor type, e.g. jeans, mouthwash



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1. The product lifecycle (PLC)1. The product lifecycle (PLC)



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a. Stage1a. Stage1 PrePre--launch phaselaunch phase

During product development, sales are zero

and the company's investment costs mount.

Profits are negative or low because of thelow sales and high distribution and promotion

expenses.

Much money is needed to attract distributors

and build their inventories.



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b. Stage 2b. Stage 2 -- The introduction phaseThe introduction phase

Priority is to generate awareness of the

product among the target segments and to

stimulate product trial Need to gain strong distribution networks to

build demand

Need a unique selling point to beat

competition



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c. Stage 3c. Stage 3 -- The growth phaseThe growth phase

There is for a rapid increase in trial and

purchases.

Need to build as much brand preference and

loyalty as possible.

Profits hopefully will rise rapidly during this

phase.



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d. Stage 4d. Stage 4 -- The mature phaseThe mature phase

The product achieves as much as it is going

to.

Heavy price competition and increased

marketing expenditure may be required to

retain brand loyalty.

Distribution channels may need careful

handling during this phase.



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e. Stage 5e. Stage 5-- The decline phaseThe decline phase

Once a product goes into decline for market

based reasons, it is almost impossible to stop it.

Decline can be as a result of a number ofreasons, e.g. environmental or technological

issues or poor management.



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2. Market evolution2. Market evolution

Three components are involved in

market evolution:

a. The diffusion of innovation (customersadopt new products)

b. The evolution and acceptance of

technology.

c. The impact of competition.



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a. The diffusion of innovation.

y Innovators first movers; buy and adopt specific

categories early

y Early adopters enters early and generates trial to

mass market

y Early majority mass market starts to build up; but

wait for best price before adoptingy Late majority less interested; wait and see

y Late adopters / laggards little interest and averse

to changes



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b. Acceptance of technology.

Technological innovation can be used

to extend the product lifecycle byhelping to refresh and update a

product.

T

echnological innovation can alsoshorten a lifecycle by rendering a

product obsolete.



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c. The impact of competition

Competitors can be classified

according to their timing in entering amarket, e.g.:

Pioneers.

Early imitators.

Early differentiators.

Early nichers.

Late entrants.Prof. Rushen Chahal 13


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3. Positioning products3. Positioning products

There are 3 main areas for repositioning andproduct improvement:

Quality - reliability, durability, dependability,speed, taste, colour, price, packaging, etc.

Design - appearance, texture, taste, smellfeel or sound, etc.

Performance convenience, ease ofhandling, efficient.



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33.. PositioningPositioning productsproducts

Perceptual

Map

QQ


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1. Idea generation

2. Idea screening

3. Concept development and testing

4. Business analysis

5. Product development

6. Test marketing7. Commercialization

4. New-Product Development Process


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1. Idea Generation

Internal sources refer to the companys own

formal research and development,management and staff

External sources refer to sources outside the

company such as customers, competitors,distributors, suppliers, and licensing

Prof. Rushen Chahal 179-9



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2. Idea Screening

Idea screening:- refers to reviewing new-

product ideas in order to drop poor ones as

soon as possible

Prof. Rushen Chahal

18

9-10



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3. Concept Development and Testing

Product idea:- an idea for a possible

product that the company can see itselfoffering to the market

Product concept:- a detailed version of the

idea stated in meaningful consumer termsProduct image:- the way consumersperceive an actual or potential product




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4. Business Analysis

Business analysis involves a review of the

sales, costs, and profit projections to findout whether they satisfy the companys

objectives




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5. Product development

Product development involves the creating

a prototype

- testing by the R&D or field/engineering

departments. Requires an increase in

investment




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6. Test marketing

Test marketing is the stage at which the

product and marketing program areintroduced into more realistic marketingsettings

Standard Test market audit (long time)

Controlled Test using a research firm totest several locations or shops




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7. Commercialization

Commercialization is the introduction of the

new product

When to launch

Where to launch

Planned market rollout



principles of marketing- new product development

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