Developing New Products & Managing the Product Life Cycle

New Product Idea Sources

Internal: formal R\&D, employee suggestions, intrapreneur programs (e.g., Google "20\% time", Area 120).
External: customers, distributors, suppliers, competitors, trade shows, labs, inventors.
Crowdsourcing / open innovation: invite broad communities for ideas (e.g., Ben & Jerry’s flavor contest).

Idea Generation → large pool of ideas.
Idea Screening → R-W-W test: Real? Win? Worth doing?
Concept Development & Testing → craft detailed concept; test with target consumers.
Marketing Strategy Development → 3-part statement: (1) target & value proposition; (2) price, distribution, first-year budget; (3) long-run sales & profit goals.
Business Analysis → forecast sales, costs, \text{ROI} .
Product Development → build prototypes; technical & consumer tests.
Test Marketing → real, controlled, or simulated market tests; may be shortened/skipped to save time.
Commercialization → decide timing & rollout scope; highest costs.

Stages & typical characteristics:
- Product Development: \text{Sales}=0; high costs.
- Introduction: slow sales; negative/low profits; heavy promotion.
- Growth: rapid sales climb; rising profits; new competitors; expand features & channels.
- Maturity: peak sales; profit plateau/decline; overcapacity → competition; use market, product, and mix modifications.
- Decline: falling sales & profits; decide to maintain, harvest, or drop.
Variations: styles (recur), fashions (grow–plateau–decline), fads (brief spike).

Introduction: basic product, cost-plus price, selective distribution, awareness ads, heavy trial promotion.
Growth: product improvements, competitive pricing, intensive distribution, persuasive ads.
Maturity: diversify models, price to match/beat rivals, remind advertising, larger promotions, enter new segments.
Decline: cut costs, prune lines & channels, minimal promotion, consider harvesting or liquidation.

Social Responsibility: obey patent laws; ensure quality & safety (Consumer Product Safety Act); manage product liability; appoint product stewards.
International Products & Services: balance standardization vs adaptation (e.g., McDonald’s localized menus & store design); global expansion by service firms (banks, retailers).