Marketing Chapter 9: New Product Development

Chapter 9: Developing New Products and Managing the Product Life Cycle

• The chapter covers developing new products and managing the product life cycle.
• One estimate suggests that 95% of new products introduced each year fail.
• Companies use various methods to acquire new products, including buying a company, a patent, or a license.
• Developing new products involves original products, product improvements, modifications, and new brands developed from the firm's research and development.
• The new product development process has stages for idea generation, screening, concept development & testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.

Learning Objective 1: Exploring New Product Ideas

• Companies use various methods to identify new product ideas, including crowdsourcing.
• Google, for instance, has an in-house innovation incubator (Area 120) to encourage new product ideas.
• Internal sources of new product ideas include research and development, management insights, staff suggestions, and intrapreneurial programs.
• External sources include customers, competitors, distributors, suppliers, and outside design firms.
• Crowdsourcing is another method, involving broad communities of people in the new product innovation process.

Learning Objective 2: Defining the New Product Development Process

• Define the steps of a new product development process: idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.
• Each step in the process helps companies to reduce the number of product ideas and develop only the best ones.

Learning Objective 3: Describing the Product Life Cycle

• The product life cycle has stages, including product development, introduction, growth, maturity, and decline.
• Stages in the life cycle see changing sales, profits, and marketing strategies.
• At the introduction stage of the product life cycle, slow sales and nonexistent profits are common, along with high marketing expenses.
• In the growth stage, sales rise rapidly, and profits increase, and economies of scale and consumer education initiatives are important.
• The maturity stage of the product life cycle shows slowed sales growth and profits often level off or decline. Marketing activities such as modifications to the market, the product mix, or the marketing mix help keep profits during this stage of the cycle.
• During the decline stage of the product life cycle, sales fall off, and profits drop. Maintenance, harvesting, and dropping products are options to take during this stage.

Learning Objective 4: Discussing Socially Responsible and International Product Issues

• Socially responsible decisions are crucial during the development and marketing of products and services.
• Public policy and regulations regarding product development, patents, quality, safety, and warranties are key considerations.
• Key elements of international product marketing include identifying suitable products and services for specific countries, standardizing versus customizing products, packaging, labeling, and adhering to customs, laws, and local values.
• Successful global marketing seeks to adapt products/services to local needs and preferences.

Additional Discussion Points

• Successful new product development emphasizes customer-centricity, a team approach, and systematic procedures.
• Google's Area 120 is an example of an effective approach to fostering employee-driven innovation.
• The Product Life Cycle can be influenced by styles, fashions, and fads, with temporary popularity affecting sales trajectories.
• Companies should be aware of the potential difficulties of international marketing due to diverse customer needs, customs, values, and regulations.