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New product development NPD is a process which is designed to develop, test and consider the
viability of product which are new to the market in order to ensure the growth or survival of the
organisation.
What is a new product? A product that opens up an entirely new market. A product that adapts
up or replace an existing product. A product that significantly broadens the market for an
existing product. An old product introduced in a new market. An old product packaged in
different way. An old product marketed in a different way.
Why develop new products? To add to product portfolio To create stars and cash cows for future
To replace the declining product To take advantage of new technology To maintain/increase
market share To defeat rivals To keep up with rivals To make competitive advantages
Product life cycle management (or PLCM) is the succession of strategies used by business
management as a product goes through its life cycle. The conditions in which a product is sold
(advertising, saturation) changes over time and must be managed as it moves through its
succession of stages.
The four main stages of a product's life cycle and the accompanying characteristics are:
Stage Characteristics
1. costs are high
2. slow sales volumes to start
3. little or no competition
1. Market
4. demand has to be created
introduction stage
5. customers have to be prompted to try the product
6. makes no money at this stage
In the process of building a product following defined procedure, an RFD is a request for
authorization, granted prior to the manufacture of an item, to depart from a particular
performance or design requirement of a specification, drawing or other document, for a specific
number of units or a specific period of time.
Market identification
Termination is not always the end of the cycle; it can be the end of a micro-entrant within the
grander scope of a macro-environment. The auto industry, fast-food industry, petro-chemical
industry, are just a few that demonstrate a macro-environment that overall has not terminated
even while micro-entrants over time have come and gone.
Lessons of the product life cycle (PLC)
It is claimed that every product has a life period, it is launched, it grows, and at some point, may
die. A fair comment is that - at least in the short term - not all products or services die. Jeans may
die, but clothes probably will not. Legal services or medical services may die, but depending on
the social and political climate, probably will not.
Even though its validity is questionable, it can offer a useful 'model' for managers to keep at the
back of their mind. Indeed, if their products are in the introductory or growth phases, or in that of
decline, it perhaps should be at the front of their mind; for the predominant features of these
phases may be those revolving around such life and death. Between these two extremes, it is
salutary for them to have that vision of mortality in front of them.
However, the most important aspect of product life-cycles is that, even under normal conditions,
to all practical intents and purposes they often do not exist (hence, there needs to be more
emphasis on model/reality mappings). In most markets the majority of the major brands have
held their position for at least two decades. The dominant product life-cycle, that of the brand
leaders which almost monopolize many markets, is therefore one of continuity.
In the criticism of the product life cycle, Dhalla & Yuspeh state:
...clearly, the PLC is a dependent variable which is determined by market actions; it is not an
independent variable to which companies should adapt their marketing programs. Marketing
management itself can alter the shape and duration of a brand's life cycle.[1]
Thus, the life cycle may be useful as a description, but not as a predictor; and usually should be
firmly under the control of the marketer. The important point is that in many markets the product
or brand life cycle is significantly longer than the planning cycle of the organizations involved.
Thus, it offers little practical value for most marketers. Even if the PLC (and the related PLM
support) exists for them, their plans will be based just upon that piece of the curve where they
currently reside (most probably in the 'mature' stage); and their view of that part of it will almost
certainly be 'linear' (and limited), and will not encompass the whole range from growth to
decline. Product life cycle means how a product run through out all of his life. It have four stages
which are 1. introduction stage 2. growth stage 3. maturity 4. decline
Limitations
The PLC model is of some degree of usefulness to marketing managers, in that it is based on
factual assumptions. Nevertheless, it is difficult for marketing management to gauge accurately
where a product is on its PLC graph. A rise in sales per se is not necessarily evidence of growth.
A fall in sales per se does not typify decline. Furthermore, some products do not (or to date, at
the least, have not) experienced a decline. Coca Cola and Pepsi are examples of two products
that have existed for many decades, but are still popular products all over the world. Both modes
of cola have been in maturity for some years.
Another factor is that differing products would possess different PLC "shapes". A fad product
would hold a steep sloped growth stage, a short maturity stage, and a steep sloped decline stage.
A product such as Coca Cola and Pepsi would experience growth, but also a constant level of
sales over a number of decades. It can probably be said that a given product (or products
collectively within an industry) may hold a unique PLC shape, and the typical PLC model can
only be used as a rough guide for marketing management. This is why its called the product life
cycle. The duration of PLC stages is unpredictable. It is not possible to predict when maturity or
decline will begin. Strict adherence to PLC can lead a company to misleading objectives and
strategy prescriptions.