Developing new product &

managing the product life cycle

Chapter - 9
RECAPE
What Is Marketing?
The Marketing Process

Copyright © 2016 Pearson Education, Inc. 1-3

Marketing strategy and marketing mix
Chapter-3
Managing the marketing efforts

• Managing the marketing process requires five marketing

management functions
Chapter-4
1. Marketing information and customer insight
2. Assessing information needs and developing data
3. Marketing research
4. Analyzing and using marketing information
5. Other marketing information considerations
Chapter-5
• Model of consumer behavior
• Characteristics affecting consumer buying behavior
• Buying decision behavior and buying decision process
• The buyer decision process for new product
Chapter-5: Consumer buying behavior
• Business deals with two consumers/markets
• Business market (chapter-6)
• Consumer market (chapter-5)
• Consumer buyer behavior refers to the buying behavior of final
consumers—individuals and households that buy goods and services
for personal consumption. All of these final consumers combine to
make up the consumer market
 Chapter-7
Customer value – Driven
marketing strategies
Chap-7: Customer value driven Marketing
strategy
 Chap-7
Customer value driven market strategy

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Copyright © 2016 Pearson Education, Inc. 1-11
 Developing new product &
managing the product life cycle
Chapter - 9
Case in consideration

•SamSung: Enriching Customers’ Lives

through new-Product Innovation
Contents (objectives) of the chapter
• New product development strategy
• New product development process
• Product life-cycle strategies
• Additional product and service considerations
1. New product development strategy
New product
development
strategy The development of
original products,
product
Acquisition of improvements,
New product
existing company, product
development
patent or license
modifications, and
new brands through
the firm’s own
product development
efforts
The new product development process
The new product development process – Idea
generation
• Internal idea sources
• Formal R&D
• Internal social networking
• Intrapreneurial programs
• External idea sources
• Distributors and suppliers
• Competitors
• Customers
• Crowdsourcing – Inviting broad communities of people— customers,
employees, independent scientists and researchers, and even the
public at large—into the new product innovation process.
The new product development process – Idea
screening & Concept development & testing
• Idea Screening - new product ideas to spot good ones and drop poor
ones as soon as possible.
• New product screening framework (real, win, worth doing; RWW)
• Product concept A detailed version of the new product idea stated in
meaningful consumer terms.
• Product idea - an idea for a possible product that the company can see itself
offering to the market
• Product concept - product concept is a detailed version of the idea stated in
meaningful consumer terms.
• Product image - product image is the way consumers perceive an actual or
potential product.
The new product development process – Idea
screening & Concept development & testing
• Concept development
• Development of the concept of the product, its features, characteristics and
how it would be useful for customers
• Concept testing
• Testing new product concepts with a group of target consumers to find out if
the concepts have strong consumer appeal.
The new product development process –
Marketing strategy development
• Designing an initial marketing strategy for a new product based on
the product concept.
• Marketing strategy statement covers three parts
• The first part describes the target market; the planned value proposition; and
the sales, market-share, and profit goals for the first few years
• Second part of the marketing strategy statement outlines the product’s
planned price, distribution, and marketing budget for the first year
• The third part of the marketing strategy statement describes the planned
long-run sales, profit goals, and marketing mix strategy
The new product development process –
Business analysis
• Business analysis is a review of the sales, costs, and profit projections
for a new product to find out whether they satisfy the company’s
objectives
• Forecast of sales
• Estimated costs and benefits
The new product development process –
Product development
• Product development - Developing the product concept into a
physical product to ensure that the product idea can be turned into a
workable market offering.
• Prototype development
• Testing of prototypes
• Customer feedback of trials
The new product development process – Test
marketing
• Test marketing - the stage at which the product and its proposed
marketing program are tested in realistic market settings.
• Controlled test markets – new products and tactics are tested among
controlled panels of shoppers and stores.
• Simulated test markets - researchers measure consumer responses
to new products and marketing tactics in laboratory stores or
simulated online shopping environments.
The new product development process –
Commercialization
• Commercialization - Introducing a new product into the market.
• Extensive market investment required
• Distribution network required
• Commercialization covers decisions like:
• Timing of launch
• Where to launch
• How much to be available
The new product development process –
Managing new product development
• Customer-centered new product development - New product
development that focuses on finding new ways to solve customer
problems and create more customer satisfying experiences
• Team-based new product development - New product development
in which various company departments work closely together,
overlapping the steps in the product development process to save
time and increase effectiveness
• Systematic new product development – use of approaches like
innovation management system in product development process
3. Product life cycle strategies
• Product life cycle stages cover the course of a product’s sales and
profits over its lifetime.
3. Product life cycle (PLC) stages
• Product development begins when the company finds and develops a new product
idea. During product development, sales are zero, and the company’s investment
costs mount.
• Introduction is a period of 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.
• Growth is a period of rapid market acceptance and increasing profits. Here product
sales start climbing quickly.
• Maturity is a period of 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. Here
growth of the product eithers slows down or levels off. Here company may modify
the market, modify the product or modify the marketing mix
• Decline is the period when sales fall off and profits drop. Here product sales fade
away. Here firms may maintain, harvest or drop the product
3. Product life cycle (PLC) application
• Styles - A basic and distinctive mode of expression. For example,
styles appear in homes (colonial, ranch, transitional), clothing (formal,
casual), and art (realist, surrealist, abstract)
• Fashion - A currently accepted or popular style in a given field.
• Fad - A temporary period of unusually high sales driven by consumer
enthusiasm and immediate product or brand popularity.
4. Additional product service considerations
• Product decisions and social responsibility
• International product service marketing