Marketing Chapter 9: New Products & Life Cycle

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

• Companies introduce over 30,000 new products annually, but 95% fail.
• Google's "Moonshot Factory" exemplifies a rapid, diverse new product development process, embedded within its company DNA.
• Innovation is pervasive at Google, encompassing all departments.
• New products can be obtained through acquisition (buying a company, patent, or license) or new product development (original products, improvements, modifications, or new brands).

Learning Objectives 9.1 - 9.4

• 9.1: Explore how companies find and develop new product ideas.
• 9.2: Define the steps in the new product development process and the major considerations in managing this process.
• 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.
• 9.4: Discuss socially responsible product decisions and international product/service marketing.

New Product Development Process

• Idea Generation: Internal (company research, staff, intrapreneurial programs) and external (customers, competitors, suppliers, design firms, crowdsourcing - involving public input).
• Idea Screening: Identifying good ideas and discarding poor ones (Real? Winnable? Worth doing?).
• Concept Development and Testing: Defining the product idea, concept, and image. Concept testing involves input from target consumers. (e.g. HondaJet elite, 1,653 miles, 486 mph, accommodating 7 including crew).
• Marketing Strategy Development: Defining the target market, value proposition, sales, market share, and marketing mix strategies.
• Business Analysis: Examining sales, costs and profit projections, ensuring they meet company objectives (e.g. product projections, figures).
• Product Development: Transforming the product concept into a tangible, functional product. (e.g. Carhartt Crew community).
• Test Marketing: Evaluating the product and its marketing program in realistic market settings. (e.g. McDonalds McPlant, 3-year test marketing period).
• Commercialization: Launching the product into the market (e.g. launch date, target market zones).

New Product Development Process Considerations

• Successful new product development should be customer-centered, team-based, and systematic.

Customer Centered New Product Development

• Focuses on solving customers' problems and creating satisfying experiences. Examples: Asics uses consumer input heavily

Team-Based New Product Development

• Involves multiple company departments working collaboratively.

Systematic New Product Development

• Employs an innovation management system to foster a company culture that generates many new product ideas.

Product Life Cycle

• The stages include introduction, growth, maturity, and decline. Sales and profit patterns are characteristic of each stage. Different marketing strategies are appropriate during each stage.

Introduction Stage

• Slow sales growth, little or no profit, and high distribution/promotion costs.
• Initial marketing focuses on attracting innovators

Growth Stage

• Rapid sales increase, new competitors entering the market, profits increase, economies of scale, consumer education, and price lowering to attract more buyers.

Maturity Stage

• Slow sales growth, possible profits leveling off and decline, more competition among suppliers, possible substitute products, and increased efforts in promotion and research and development. Modifications are common. (e.g. Campbell Soup website).

Decline Stage

• Sales fall off, profits drop, and companies may maintain the product, harvest it, or drop it. Brand revitalization strategies can be adopted. (e.g. Hallmark reimagining its business through digital offerings).

Additional Product Considerations

• Socially Responsible Product Decisions: Important to consider public policy/regulations regarding development and disposal, patents, product quality, safety, and warranties.
• International Product/Service Marketing: Determining products to introduce in other countries, considering standardization vs customization in packaging and labeling, customs, values, and laws. (Examples: Global product adaptation, McDonald's in France).