CHAPTER 8: Developing New Products and Managing the Product Life Cycle

2 ways a firm can obtain new products:

1. Acquisition: Buying an existing products

• ex: meta acquired insta

2. New product development efforts: creating new products

• ex: apple developed iphones

companies fail because…

• overestimate market size. 

• poorly designed

• Incorrectly positioned

• launched at the wrong time

• Priced too high

• Poorly advertised. 

8 Stages in Product Development

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

what is Idea generation and the 3 ways u can do it

systematic search for new product ideas.

• Internal idea sources: companies can find new ideas through formal R&D.

• External idea sources: distributors, suppliers, competitors, customers

• Crowdsourcing: A company invites broad communities of people into the innovation process.

Idea screening

Filtering ideas to eliminate bad ones early on and focus on viable concepts.

Concept Development and Testing and 3 ways to do it

Idea must then be developed into a product concept.

• Product idea: idea for a possible product that the company can see itself offering to the market. 

• Product concept: detailed version of the idea stated in meaningful consumer terms.

• Product image: is the way consumers perceive an actual or potential product.

Marketing Strategy Development:

Define target market, positioning, pricing. It consists of 3 parts:

1. The first describes the target market; the planned value proposition; and the sales, market-share, and profit goals for the first few years.

2. The second part of the marketing strategy statement outlines the product’s planned price, distribution, and marketing budget for the first year

3. The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and marketing mix strategy:

business analysis

Evaluating the costs, sales projections, and profitability of the new product.

Product development

R&D or engineering develops the product concept into a physical product. 

Test marketing

The product and its proposed marketing program are tested in realistic market settings.

• Controlled test markets: product is placed in a real retail environment but company controls where and how its sold (more realistic)

• Simulated test markets: controlled experiment where consumers are exposed to the product in a lab/online

Commercialization

introducing the new product into the market

3 diff ways to Managing New Product Development:

1. Customer-Centered New Product Development:

2. Team-Based New Product Development:

3. Systematic New Product Development:

Customer-Centered New Product Development:

focuses on customer needs, experiences, and feedback throughout the product development process.

Team-Based New Product Development:

Cross-functional teams working together to speed up the process

• Instead of each department working separately, teams collaborate from start to finish.

Systematic New Product Development

Innovation management system (precise and ensures no issues)

5 stages of product life cycle

1. Product development: The company finds and develops a new product idea. sales are zero, and the company’s investment costs mount.

2. Introduction: slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction.

3. Growth: rapid market acceptance and increasing profits.

4. Maturity: slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.

5. Decline: sales fall off and profits drop.

Style, Fashion and Fads

Style: Basic and distinctive mode of expression.

• Homes (colonial, ranch, transitional), clothing (formal, casual), and art (realist, surrealist, abstract)

• May last for generations, passing in and out of vogue

Fashion: Currently accepted or popular style in a given field.

• Fashions tend to grow slowly, remain popular for a while, and then decline slowly.

Fads: Temporary periods of intense sales driven by short-term consumer enthusiasm.

• Fidget spinner, Selfie sticks, pokemon go 

Product decisions and social responsibility

Marketers should carefully consider public policy issues and regulations regarding acquiring or dropping products, patent protection, product quality and safety, and product warranties.

International product and services marketing

must figure out what products and services to introduce and in which countries and decide how much to standardize or adapt their products and services for world markets.