Lamb, Hair, McDaniel

CHAPTER 11
Developing and Managing
Products

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The Importance of New Products

Explain the importance

of developing new
products and describe
the six categories of
new products
Categories of
New Products
New-to-the-World
New-to-the-World

New
New Product
Product Lines
Lines

Product
Product Line
Line Additions
Additions

Improvements
Improvements or
or Revisions
Revisions

Repositioned
Repositioned Products
Products

Lower-Priced
Lower-Priced Products
Products
 The New-Product
Development Process

Explain the steps in

the new-product
development
process
New-Product
Development
Process
 New-Product Strategy

New-Product Strategy is…

a plan that links the new-product
development process with the
objectives of the marketing
department, the business unit, and
the corporation.
 Idea Generation
Customers
Employees
Distributors
Vendors
Sources of Competitors
New-Product
Ideas R&D
Consultants
 Idea Screening
Screening is…
the first filter in the product development
process, which eliminates ideas that are
inconsistent with the organization’s new-
product strategy or are inappropriate for
some other reason.
A Concept Test is…
a test to evaluate a new-product idea,
usually before any prototype has been
created. Often successful for line
extensions.
Business Analysis
Demand

Considerations
Considerations Cost
in
in
Business
Business
Analysis
Analysis Stage
Stage Sales

Profitability
 Development
 Creation of prototype
 Sketch marketing strategy
 Packaging, branding, labeling
 Promotion, price, and distribution
strategy
 Manufacturing feasibility
 Test Marketing

The limited introduction

Test
Test of a product and a
Marketing
Marketing
marketing program to
determine the reactions
of potential customers
in a market situation.
Commercialization
Ordering
Ordering Materials
Materials

Production
Production

Inventory
Inventory Buildup
Buildup

Distribution
Distribution Shipments
Shipments

Sales
Sales Force
Force Training
Training

Trade
Trade Announcements
Announcements

Customer
Customer Advertising
Advertising
 New-Product
Success Factors
Listening to customers Strong leadership

Producing the best Commitment to new-

product product development

Project-based team
Vision of future market
approach

Getting every aspect right

 Global Issues in
New-Product Development

Discuss global
issues in new-
product
development
Global Marketing Questions

• Develop product for potential

worldwide distribution

• Modify for unique market

requirements

• Design products to meet

regulations and key market
requirements
The Spread of New Products

Explain the diffusion

process through
which new products
are adopted
 Diffusion

Diffusion
Diffusion
The process by which the
adoption of an innovation
spreads.
Categories of Adopters

Innovators
Innovators

Early
Early Adopters
Adopters

Early
Early Majority
Majority

Late
Late Majority
Majority

Laggards
Laggards
Product Characteristics and
the Rate of Adoption
Complexity
Complexity

Compatibility
Compatibility

Relative
Relative Advantage
Advantage

Observability
Observability

Trialability
Trialability
Marketing Implications of the
Adoption Process

Word
Wordof
ofMouth
Mouth

Communication
Communication
Aids
Aidsthe
the
Diffusion
DiffusionProcess
Process

Direct
Directfrom
from
Marketer
Marketer
Product Life Cycles

Explain the concept

of product life
cycles
 Product Life Cycle

Product
Product
Life
LifeCycle
Cycle(PLC)
(PLC)

A concept that provides a way

to trace the stages of a
product’s acceptance, from its
introduction (birth) to its
decline (death).
Exhibit 11.2
Four Stages of the
Product Life Cycle
Exhibit 11.3
Product Life Cycles for Styles,
Fashion, and Fads
 Introductory Stage
 High failure rates
 Little competition
 Frequent product modification
 Limited distribution
 High marketing and production costs
 Negative profits with slow sales increases
 Promotion focuses on awareness and information
 Communication challenge is to stimulate primary
demand
 Growth Stage

 Increasing rate of sales

 Entrance of competitors
 Market consolidation
 Initial healthy profits
 Aggressive advertising of the
differences between brands
 Wider distribution
 Maturity Stage

 Sales increase at a decreasing rate

 Saturated markets
 Annual models appear
 Lengthened product lines
 Service and repair assume important roles
 Heavy promotions to consumers and dealers
 Marginal competitors drop out
 Niche marketers emerge
 Decline Stage

 Long-run drop in sales

 Large inventories of
unsold items
 Elimination of all nonessential
marketing expenses
 “Organized abandonment”
Exhibit 11.4
Relationships between the Diffusion Process
and the Product Life Cycle

Product
life cycle
curve

Diffusion
curve