Chapter 8 Summary: New Product Development

Learning Objectives

  • Explain product life cycle stages
  • Describe ways to extend product life cycles
  • Differentiate between types of new products
  • Describe the adoption curve of new products
  • Detail the new product development process

Product Life Cycle (PLC)

  • Stages of PLC: Introduction, Growth, Maturity, Decline
  • Purpose: Manage product launch to decline
  • Adjustments: Revamping and repositioning to meet consumer needs

Stages in Detail:

  • Introduction Phase:
    • Few competitors
    • Marketing: Awareness-focused
    • Profit: Minimal
  • Growth Phase:
    • Increased competition
    • Emphasizes product differentiation
    • Profit: Rising to maximum
  • Maturity Phase:
    • Many competitors
    • Focus on brand loyalty
    • Profit: Levels off
  • Decline Phase:
    • Reduced competition
    • Focus on product rationalization
    • Profit: Declining

Types of New Products

  • Minor Innovations: No new consumer learning
  • Continuous Innovations: Changes current habits
  • Radical Innovations: Requires new learning

The Adoption Curve

  • Segments:

    • Innovators: 2.5%
    • Early adopters: 13.5%
    • Early majority: 34%
    • Late majority: 34%
    • Laggards: 16%

  • Barriers to Adoption:

    • Usage habits, value changes, risk concerns, psychological impacts

New Product Development Process

  1. Idea Generation: Brainstorm new concepts
  2. Screening and Evaluation: Evaluate feasibility and market fit
  3. Business Analysis: Assess financial viability
  4. Development: Create prototypes, internal testing
  5. Test Marketing: Limited rollout to gather consumer feedback
  6. Commercialization: Full product launch and marketing

Reasons for New Product Failure

  • Insignificant Point of Difference
  • Poor Concept Definition
  • Insufficient Market Attractiveness
  • Poor Marketing Mix Execution
  • Bad Timing