New-Product Development and
A product that opens an entirely new market
A product that adopts or
existing product
An old product introduced in a new market
An old product packaged in a different way
An old product marketed in a different way
replaces an
9-2
Increase/defend market share by offering
more choice or updating older products
Improve relationship with distributors
Maintain the firms reputation a leading
Make better use of the organization's
resources
9-3
Why develop New
Product
?
To maintain/increase market share
To
fill gap in the market
To take advantage of new technology
To replace declining product
To maintain competitive advantage
A firm can obtain new products through:
Acquisition
New-product development
9-4
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 development
9-5
Reasons for new product failure
Overestimation of market size
Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition
9-6
1.
Idea generation
2.
Idea screening
3.
Concept development and testing
4.
Marketing strategy development
5.
Business analysis
6.
Product development
7.
Test marketing
8.
Commercialization
9-7
Idea Generation
New idea generation is the systematic search for
new product ideas
Sources of new-product ideas
Internal
External
9-8
Internal sources refer to the companys own formal research and
development, management and staff, and entrepreneurial
programs
External sources refer to sources outside the company such as
customers, competitors, distributors, suppliers, and outside
design firms
9-9
Idea screening refers to reviewing new-product ideas in
order to drop poor ones as soon as possible
9-10
Product idea is an idea for a possible product that the company
can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
9-11
Concept testing refers to new-product concepts
with groups of target consumers
9-12
Marketing strategy development refers to the initial
marketing strategy for introducing the product to the
market
9-13
Marketing strategy statement
Part 1:
Description of the target market
Product positioning, sales, market share, and profit goals
Part 2:
Price, distribution, and budget
Part 3:
Long-term sales, profit goals, and marketing mix strategy
9-14
Business analysis involves a review of the sales, costs,
and profit projections to find out whether they satisfy
the companys objectives
9-15
Marketing Strategy Development
Product development involves the creation and testing
of one or more physical versions by the R&D or
engineering departments
Requires an increase in investment
9-16
Marketing Strategy Development
Test marketing is the stage at which the product and marketing
program are introduced into more realistic marketing
settings
Test marketing provides the marketer with experience in testing
the product and entire marketing program before full
introduction
9-17
Marketing Strategy Development
When firms test market
New product with large investment
Uncertainty about product or marketing program
When firms may not test market
Simple line extension
Copy of competitor product
Low costs
Management confidence
9-18
Marketing Strategy Development
Approaches to test marketing
Standard test markets
Controlled test markets
Simulated test markets
9-19
Marketing Strategy Development
Standard test markets are small representative
markets where the firm conducts a full
marketing campaign and uses store audits,
consumer and distributor surveys, and other
measures to gauge product performance.
Results are used to forecast national sales and
profits, discover product problems, and fine-tune
the marketing program.
9-20
Marketing Strategy Development
Challenges of standard test markets
Cost
Time
Competitors can monitor the test
Competitor interference
Competitors gain access to the new product
before introduction
9-21
Marketing Strategy Development
Controlled test markets are panels of
stores that have agreed to carry new
products for a fee
Less expensive than standard test markets
Faster than standard test markets
Competitors gain access to the new
product
9-22
Marketing Strategy Development
Simulated test markets are events where
the firm will create a shopping
environment and note how many
consumers buy the new product and
competing products. Provides measure of
trial and the effectiveness of promotion.
Researchers can interview consumers.
9-23
Marketing Strategy Development
Advantages of simulated test markets
Less expensive than other test methods
Faster
Restricts access by competitors
Disadvantages
Not considered as reliable and accurate due to
the controlled setting
9-24
Marketing Strategy Development
Commercialization is the introduction of
the new product
When to launch
Where to launch
Planned market rollout
9-25
Successful new product development should
be:
Customer-centered
Team-centered
Systematic
9-26
New-Product Development Strategies
Customer-centered new-product
development focuses on finding new
ways to solve customer problems and
create more customer-satisfying
experiences
Begins and ends with solving customer
problems
9-27
New-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 stage
Increased control in risky or complex projects
Slow
9-28
New-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
effectiveness
9-29
New-Product Development Strategies
Team-based versus sequential new-product
development
Team-based can increase tension and
confusion
Team-based is faster and more flexible
9-30
New-Product Development Strategies
Systematic new-product development is
an innovative development approach
that collects, reviews, evaluates, and
manages new-product ideas
Creates an innovation-oriented culture
Yields a large number of new-product
ideas
9-31
Product life cycle (PLC) is the
course that a products sales and
profits take over its lifetime
Product development
Introduction
Growth
Maturity
Decline
9-32
Product life cycle (PLC) describes:
Product class
Product form
Brand
9-33
Product classes have the longest life
cycles, with sales of many product
classes in the mature stage for a long
time
Product forms have the standard PLC
shape, introduction, rapid growth,
maturity, and decline
Brands have changing PLCs due to
competitive threats
9-34
Style is a basic and distinctive mode of
expression
Fashion is a currently accepted popular
style in a given field
9-35
Fads are temporary periods of
unusually high sales driven by
consumer enthusiasm and
immediate product or brand
popularity
9-36
Introduction stage is when the new
product is first launched
Takes time
Slow sales growth
Little or no profit
High distribution and promotion expense
9-37
Growth stage is when the new product satisfies the
market
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain economies of
scale
Product quality increases
New features
New market segments and distribution channels are
entered
9-38
Maturity stage is a long-lasting stage of a product
that has gained consumer acceptance
Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to competition
Increased promotion and R&D to support sales
and profits
9-39
Modifying Strategies
Market modifying
Product modifying
Marketing mix modifying
9-40
Modifying Strategies
Market modifying strategy is when a
company tries to increase consumption of
the current product
New users
Increase usage of existing users
New market segments
9-41
Modifying Strategies
Marketing mix modifying strategy is
when a company changes one or more of
the marketing mix elements
Price
Promotion
Distribution channels
9-42
Decline stage is when sales decline or level
off for an extended time, creating a weak
product
Maintain the product
Harvest the product
Drop the product
9-43
Product Decisions and Social Responsibility
Public policy and regulations regarding
developing and dropping products,
patents, quality, and safety
9-44
International Product and Service Marketing
Challenges
Determining what products and services
to introduce in which countries
Standardization versus customization
Packaging and labeling
Customs, values, laws
9-45
