New Product Development and Product Life-Cycle Strategies

New-Product Development Strategies Strategies for Obtaining New Product Ideas Acquired Companies Original Products Acquired Patents Acquired Licenses Product Improvements Product Modifications New Brands .

markets and competitors – develop products that deliver superior value to customers. the company must: – understand it’s customers.Causes of New Product Failures • Overestimation of Market Size • Product Design Problems • Product Incorrectly Positioned. . Priced or Advertised • Costs of Product Development • Competitive Actions • To create successful new products.

New Product Development Process Marketing Strategy Business Analysis Product Development Concept Development and Testing Idea Screening Idea Generation Test Marketing Commercialization .

Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally and From: C U S T O M E R S C O M P E T I T O R S D I S T R I B U T O R S S U P P L I E R S .New Product Development Process Step 1.

Idea Screening • Process to spot good ideas and drop poor ones as soon as possible. . • Many companies have systems for rating and screening ideas which estimate: – – – – – Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return • Then.New Product Development Process Step 2. the idea is evaluated against a set of general company criteria.

Concept Development & Testing 1. Choose the Best One . Concept Testing .New Product Development Process Step 3. Develop Product Ideas into Alternative Product Concepts 2.Test the Product Concepts with Groups of Target Customers 3.

New Product Development Process Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two Describes Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy .

Move to Product Development .New Product Development Process Step 5. Eliminate Product Concept If Yes. Product Development Business Analysis Review of Product Sales. and Profits Projections to See if They Meet Company Objectives If No. Business Analysis Step 6. Costs.

Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Controlled Test Market A few stores that have agreed to carry new products for a fee. Test Marketing Standard Test Market Full marketing campaign in a small number of representative cities.New Product Development Process Step 7. .

New Product Development Process Step 8. When? Where? To Whom? How? . Commercialization Commercialization is the Introduction of the New Product into the Marketplace.

Speeding Up Development Sequential Simultaneous Step 1 Step 1 Step 3 Step 4 Step 2 Step 2 Step 3 Step 4 .

Product Life Cycle Sales and Profits Over the Product’s Life From Introduction to Decline Sales and Profits ($) Sales Profits Time Product Development Losses/ Investments ($) Introduction Growth Maturity Decline .

& Strategies Sales Costs Profits Marketing Objectives Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers Product Price Distribution Advertising . Objectives.Introduction Stage of the PLC Summary of Characteristics.

& Strategies Sales Costs Profits Marketing Objectives Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions. warranty Price to penetrate market Build intensive distribution Build awareness and interest in the mass market Product Price Distribution Advertising .Growth Stage of the PLC Summary of Characteristics. Objectives. service.

Maturity Stage of the PLC Summary of Characteristics. & Strategies Sales Costs Profits Marketing Objectives Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits Product Price Distribution Advertising . Objectives.

Decline Stage of the PLC Summary of Characteristics. & Strategies Sales Costs Profits Marketing Objectives Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers Product Price Distribution Advertising . Objectives.

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