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Questions and Answers
What are the marketing objectives during the Introduction stage of the Product Life Cycle?
Create product awareness and trial
What is the main marketing objective during the Maturity stage of the Product Life Cycle?
During the Decline stage, sales are ____________, costs are low cost per customer, and profits are declining.
declining
List the steps involved in the new product development process.
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What are some causes of new product failures?
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The _______ Development stage involves a review of product sales, costs, and profits projections.
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Match the following steps with the descriptions:
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During the Idea Generation stage, companies can obtain new product ideas from customers and competitors.
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Study Notes
New Product Development
- Companies find and develop new product ideas through a systematic search, considering internal sources, customers, competitors, distributors, and suppliers.
- The new product development process involves:
- Idea Generation and Screening
- Concept Development and Testing
- Marketing Strategy
- Business Analysis
- Product Development
- Test Marketing
- Commercialization
Causes of New Product Failures
- Overestimation of Market Size
- Product Design Problems
- Product Incorrectly Positioned, Priced, or Advertised
- Costs of Product Development
- Competitive Actions
Idea Generation
- Involves a systematic search for new product ideas
- Internal sources include employees, research and development, and company records
- External sources include customers, competitors, distributors, and suppliers
Idea Screening
- Process to spot good ideas and drop poor ones
- Criteria include:
- Market Size
- Product Price
- Development Time and Costs
- Manufacturing Costs
- Rate of Return
Concept Development and Testing
- Develop product ideas into alternative product concepts
- Test product concepts with groups of target customers
Marketing Strategy
- Develop a marketing strategy statement
- Part One: Overall Marketing Strategy
- Target Market
- Planned Product Positioning
- Sales and Profit Goals
- Market Share
- Part Two: Short-Term Marketing Strategy
- Product's Planned Price
- Distribution
- Marketing Budget
- Part Three: Long-Term Marketing Strategy
- Sales and Profit Goals
- Marketing Mix Strategy
Business Analysis
- Review of product sales, costs, and profits projections
- Evaluate if the product meets company objectives
Product Development
- Develop the product based on the marketing strategy
Test Marketing
- Conduct test marketing to test the product and marketing strategy
- Types of test marketing include:
- Standard Test Market
- Simulated Test Market
Product Life Cycle
- Stages of the product life cycle include:
- Introduction
- Growth
- Maturity
- Decline
Introduction Stage
- Low sales
- High cost per customer
- Negative profits
- Marketing objectives:
- Create product awareness
- Achieve trial and repeat sales
- Build selective distribution
- Marketing strategy:
- Offer a basic product
- Use cost-plus pricing
- Build product awareness among early adopters and dealers
Growth Stage
- Rapidly rising sales
- Average cost per customer
- Rising profits
- Marketing objectives:
- Maximize market share
- Offer product extensions and service
- Marketing strategy:
- Price to penetrate the market
- Build intensive distribution
- Build awareness and interest in the mass market
Maturity Stage
- Peak sales
- Low cost per customer
- High profits
- Marketing objectives:
- Maximize profit while defending market share
- Diversify brand and models
- Marketing strategy:
- Price to match or beat competitors
- Build more intensive distribution
- Stress brand differences and benefits
Decline Stage
- Declining sales
- Low cost per customer
- Declining profits
- Marketing objectives:
- Reduce expenditure and milk the brand
- Phase out weak items
- Marketing strategy:
- Cut price
- Go selective: phase out unprofitable outlets
- Reduce advertising to retain hard-core loyal customers
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Description
This quiz covers the principles of new product development, including finding and developing new product ideas, steps in the development process, and product life-cycle strategies. It also addresses common causes of new product failures.
