New Product Development Strategies

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Questions and Answers

What is the primary focus of advertisements during the promotion phase of a product?

Highlighting product uniqueness and differentiation (correct)

Establishing a strong sales price

Targeting laggards and declining customers

Encouraging widespread distribution

Which strategy is most effective during the decline phase of a product's life cycle?

Lower prices to sell remaining output (correct)

Introduce multiple new products to the line

Increase advertising to capture new customers

Expand distribution channels aggressively

In the maturity stage, which of the following products is commonly associated?

Personal Computer (correct)

Online/mobile banking

VR technology

Jute carpets

What is a common characteristic of the decline phase in terms of competition?

Declining competition within the market Signup and view all the answers

What is the primary goal of the idea generation stage in new product development?

To gather as many good product ideas as possible Signup and view all the answers

During the promotion phase, which customer group is primarily targeted as promotions are reduced?

Loyal customers Signup and view all the answers

Which of the following is NOT a vital part of the marketing strategy development?

Sales and profit projection for the first year Signup and view all the answers

What is the purpose of business analysis in the product development process?

To estimate sales, costs, and profit Signup and view all the answers

Which stage follows the idea screening in the product development process?

Concept development and testing Signup and view all the answers

Why do companies need to develop new products over time?

To maintain a competitive edge against inferior products Signup and view all the answers

During which stage of product development is the product concept turned into a workable market offering?

Product development Signup and view all the answers

What is a primary risk associated with aging products in the market?

Decreased desirability and profit decline Signup and view all the answers

What does the third part of the marketing strategy include?

Long-run sales and profit goals Signup and view all the answers

What is the primary focus during the introduction stage of the product life cycle?

Creating awareness among innovators and early adopters Signup and view all the answers

What characterizes the growth stage of the product life cycle?

Rising profits along with growing competition Signup and view all the answers

Which of the following actions is least likely to be taken during the maturity stage of the product life cycle?

Developing entirely new products Signup and view all the answers

In test marketing, what is the main purpose?

To assess consumer response in realistic settings Signup and view all the answers

During which stage of the product life cycle is selective distribution most advisable?

Introduction stage Signup and view all the answers

Why might a company delay the introduction of a new product?

To prevent cannibalization of existing products Signup and view all the answers

What is a primary objective of promotions during the growth stage?

To build awareness in the mass market Signup and view all the answers

What financial characteristic is typically observed in the introduction stage of the product life cycle?

Negative or very low profits Signup and view all the answers

Study Notes

New Product Development and Product Life-Cycle Strategies

New product development encompasses developing original products, improving existing products, modifying products, or creating new brands through a company's own R&D efforts.
Companies develop new products due to current products becoming obsolete due to changing consumer needs or superior competing products. Existing products may become less desirable and profitable. New products can be lifesaving. A company may introduce new products even as market leader to attract and retain more customers.
Product development follows a series of stages.
- Idea generation: Finding new product ideas internally (e.g., through in-house teams) and externally (e.g., focus groups, surveys).
- Idea screening: Evaluating ideas, eliminating poor ones.
- Concept development and testing: Creating detailed descriptions of ideas. Testing the concepts with potential customers to assess consumer appeal.
- Marketing strategy development: Formulating the target market, value proposition, and short- and long-term goals. Including price, distribution, and marketing budget details.
- Business analysis: Estimating sales, costs, and profits to determine whether product objectives are met. Using historical sales data and surveys of potential customers.
- Product development: Converting ideas into tangible products. Thorough testing is important to verify safety and effective performance.
- Test marketing: Testing the product and marketing plans in realistic market settings. Assessing advertising, distribution, pricing, and budget levels.
- Commercialization: Launching the product into the market. Includes choosing timing of the launch, selection of a launch region (local, regional, national, or international), and possible use of TV advertising.

Product Life Cycle

A product's life cycle tracks its sales and profits over time.
Not all products follow the stages consistently. Some have short lifecycles.
Stages include introduction, growth, maturity, and decline.
- Introduction: Low sales, high customer acquisition costs, and negative/low profits initially, but promotional activities may build awareness and start initial demand. One or a few product variants are offered at first, keeping initial costs low.
- Growth: Rapidly rising sales, increasing profits, and growing competition. More product variants are added. Customers are acquired more easily. More aggressive promotional activities.
- Maturity: Peak sales, low customer acquisition costs, and high profits, followed by a decline in growth. Brand differentiation and advertising are crucial for maintaining demand.
- Decline: Falling sales, declining profits, and reduced competition. In this stage, companies may cut unprofitable outlets or reduce distribution channels to increase profit margins and reduce costs. A strategy for innovative new products should also be in place.

Product Development Stages

This stage occurs where large investments in R&D are made, preparing necessary marketing strategies, product idea development occurs, and there are initially zero sales, while high costs and negative profits occur.

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Description

This quiz explores the various stages of new product development and product life-cycle strategies. Discover how companies innovate and adapt to shifting consumer needs while navigating through the processes of idea generation, screening, and concept testing. Test your knowledge and understand the critical steps that drive successful product launches.