Marketing 2205 Chapter 8: Developing New Products and Managing the PLC

New Product Development Strategy

• Developing new products through the firm’s own research & development efforts

 

• Creating successful new products requires

  • Understanding consumers, markets, & competitors

  • Developing products that deliver superior value to customers

Major Stages in New Product Development

Figure 8.1

1. Idea Generation

• Systematic search for new product ideas

  • Internal idea sources:

    • Internal social networks

    • Intrapreneurial programs

  • External idea sources:

    • Distributors & suppliers

    • Competitors

    • Customers

2. Idea Screening

• Screening new product ideas to spot good ones & 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

    • Real – real need & desire for it, clear product concept

    • Win – is there a sustainable competitive advantage

    • Worth – does it fit with the company’s growth strategy

3. Concept Development

• Developing a new product into alternative product concepts

  • Find out how attractive each concept is to customers

  • Choose the best one

Product Concept

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

 

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

 

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

Concept Testing

• Testing new product concepts with groups of target consumers

 

• Methods:

  • Presenting the concepts to consumers symbolically or physically

  • Asking customers to respond by answering questions about their reactions to the concepts

4. Marketing Strategy Development

• Initial marketing strategy for a new product

 

• Three parts of the marketing strategy statement:

  • Describes the target market, planned value proposition, sales, market-share, & profit goals

  • Determines product’s planned  price, distribution, & marketing budget

  • Develops long-run sales, profit goals, & overall marketing mix strategy

5. Business Analysis

• A review of the sales, costs, & profit projections for a new product to find out whether theses factors satisfy the company’s objective.

Product Development

• Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering

7. Test Marketing

• Introduces the product & its proposed marketing program into realistic market settings

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

  • Tests the product & its marketing program

  • Test marketing takes time, & costs can be high & gives competition insight into your actions.

Test Marketing Alternatives

• Alternatives to standard test markets

  • Controlled (panel) test markets

  • Simulated test markets

• Reasons for using alternative test markets

  • Reducing the costs

  • Speeding up the process

  • Not signaling moves to competitors

8. Commercialization

• Introducing a new product into the market

 

• Considerations for launching a new product

  • When to launch

  • Where to launch

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

Managing New Product Development

• Requires a holistic approach

  • Customer-centred

    • finding new ways to solve customer problems & create more customer-satisfying experiences.

  • Team-based

    • various company departments work together, overlapping the steps in the product development process.

  • Systematic

    • innovation management systems collect, review, evaluate, & manage new product ideas.

Sales & Profits over the Product’s Life from Inception to Decline

Figure 8.2

Styles, Fashions, & Fads

Figure 8.3

Summary of Product Life-Cycle Characteristics

Table 8.2

Summary of Product Life-Cycle Strategies

Table 8.2

Summary of Product Life-Cycle Strategies

Table 8.2

International Product & Services Marketing

• Challenges facing international marketers:

  • Finding what products & services to introduce & in which countries

  • Deciding on how much to standardize or adapt the products & services for world markets

• Service firms are taking the lead in international expansion.