Podcast
Questions and Answers
What is the next step after concept testing in the product development process?
What is the next step after concept testing in the product development process?
Which of the following is NOT a part of the marketing strategy statement for a new product?
Which of the following is NOT a part of the marketing strategy statement for a new product?
What is the purpose of business analysis in the product development process?
What is the purpose of business analysis in the product development process?
What happens if a product concept passes the business test in the product development process?
What happens if a product concept passes the business test in the product development process?
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Which department typically converts a product concept into a physical product during product development?
Which department typically converts a product concept into a physical product during product development?
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In the marketing strategy statement, what does 'planning of long-run sales' refer to?
In the marketing strategy statement, what does 'planning of long-run sales' refer to?
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What aspect of a new product's marketing strategy focuses on how the product will be priced and distributed in its first year?
What aspect of a new product's marketing strategy focuses on how the product will be priced and distributed in its first year?
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'Developing a successful prototype can take days, weeks, months or even years.' This statement falls under which stage of the product development process?
'Developing a successful prototype can take days, weeks, months or even years.' This statement falls under which stage of the product development process?
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'Reviewing sales, costs, and profit projection for a new product' is characteristic of which stage in the product development process?
'Reviewing sales, costs, and profit projection for a new product' is characteristic of which stage in the product development process?
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Study Notes
Product Development
- The product development stage begins when a company finds and develops a new product idea.
- During this stage, sales are zero, and investment costs mount.
Introduction Stage
- The introduction stage begins when the new product is first distributed and made available for consumer purchase in the market.
- Profits are negative or low due to low sales and high distribution and promotion costs.
- The company should realize that the initial strategy is just the first step in a grander marketing plan for the product's entire life cycle.
Growth Stage
- The growth stage is characterized by increasing profits as promotion costs are spread over a large volume and unit manufacturing costs fall.
- Early adopters continue to buy, and later buyers start following their lead, especially if they hear favorable word of mouth.
- New competitors enter the market, introducing new product features and expanding the market.
Maturity Stage
- The maturity stage typically lasts longer than the previous stages and poses strong challenges to marketing management.
- Sales continue to increase but at a reduced rate of growth, and the product starts entering a stage of maturing.
- Companies need to do market modification, product modification, and marketing mix modification to stay competitive.
Decline Stage
- The decline stage is characterized by declining sales.
- Companies may use stimulated shopping environments to test new products and gather data on consumer behavior.
Commercialization
- Commercialization involves introducing the new product into the market, which comes with high costs.
- Companies must decide on introduction timing and where to launch the new product (single location, region, national market, or international market).
Product Life Cycle Characteristics
- Sales: Low sales (Introduction), Rapidly rising sales (Growth), Peak sales (Maturity), Declining sales (Decline)
- Costs: High cost per customer (Introduction), Average cost per customer (Growth), Low cost per customer (Maturity), Low cost per customer (Decline)
- Profits: Negative (Introduction), Raising profits (Growth), High profits (Maturity), Declining profits (Decline)
- Customers: Innovators (Introduction), Early Adopters (Growth), Middle majority (Maturity), Laggards (Decline)
- Competitors: Few (Introduction), Growing number (Growth), Stable number beginning to decline (Maturity), Declining number (Decline)
- Marketing Objectives: Create product awareness and trial (Introduction), Maximize market share (Growth), Maximize profit while defending market share (Maturity), Reduce expenditure and milk the brand (Decline)
- Product Offer: Basic product (Introduction), Product extensions, service, warranty (Growth), Diversify brand and models (Maturity), Phase out weak items (Decline)
- Cost: Use cost plus (Introduction), Price to penetrate market (Growth), Price to match or beat competitors (Maturity), Cut price (Decline)
- Distribution: Build selective distribution (Introduction), Build intensive distribution (Growth), Build more intensive distribution (Maturity), Go selective, phase out unprofitable outlets (Decline)
- Advertising: Build product awareness among early adopters and dealers (Introduction), Build awareness and interest in the mass market (Growth), Stress brand differences and benefits (Maturity), Reduce to level needed to retain hard core loyalist (Decline)
- Sales Promotion: Use heavy sales promotion to entice trial (Introduction), Reduce to take advantage of heavy consumer demand (Growth), Increase to encourage brand switching (Maturity), Reduce to minimal level (Decline)
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Description
Test your knowledge on product development stages and the product life cycle. Learn about the introduction stage, growth stage, and other key elements in the life cycle of a product.
