Marketing: An Introduction - Chapter 8 - PDF

Marketing: An Introduction Fourteenth Edition Chapter 8 Developing New Products and Managing the Product Life Cycle Copyright © 2020, 2017, 2015 Pearson...

Marketing: An Introduction Fourteenth Edition Chapter 8 Developing New Products and Managing the Product Life Cycle Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (1 of 4) 8.1 Explain how companies find and develop new product ideas. 8.2 List and define the steps in the new product development process and the major considerations in managing this process. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (2 of 4) 8.3 Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. 8.4 Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved First Stop Samsung: Enriching Customers’ Lives through New- Product Innovation Samsung’s new products “bring genuine change to people’s lives.” Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-1 Explain how companies find and develop new product ideas. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved New Product Development Strategy Developing new products through the firm’s own research and development efforts Creating successful new products requires – Understanding consumers, markets, and competitors – Developing products that deliver superior value to customers Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-1 Summary New product ideas from the firm’s own research and development efforts External sources include competitor's offerings, ideas from distributors and suppliers, as well as customers themselves Crowdsourcing or open-innovation new product idea programs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-2 List and define the steps in the new product development process and the major considerations in managing this process. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 8.1 Major Stages in New Product Development Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Idea Generation (1 of 2) Systematic search for new product ideas Internal idea sources: – Internal social networks – Intrapreneurial programs External idea sources: – Distributors and suppliers – Competitors – Customers Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Idea Generation (2 of 2) Under Armour sponsors an annual crowdsourcing competition called the Future Show Innovation Challenge. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Idea Screening Screening new product ideas to spot good ones and drop poor ones as soon as possible Ways of screening new ideas: – New idea write-up reviewed by a committee – R-W-W framework—Real, win, worth doing Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Product Concept A product idea is an idea for a possible product that the company can see itself offering to the market. A product concept is a detailed version of the new product idea stated in meaningful consumer terms. Product image is the way consumers perceive an actual or potential product. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Concept Development (1 of 2) This is Tesla’s initial all- electric roadster. Later, more affordable mass-market models will be developed. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Concept Development (2 of 2) Developing a new product into alternative product concepts – Find out how attractive each concept is to customers – Choose the best one Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Concept Testing Testing new product concepts with groups of target consumers Methods: – Presenting the concepts to consumers symbolically or physically – Asking customers to respond by answering questions about their reactions to the concepts Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Strategy Development Initial marketing strategy for a new product Three parts of the marketing strategy statement: – Describes the target market, planned value proposition, sales, market-share, and profit goals – Determines product’s planned price, distribution, and marketing budget – Develops long-run sales, profit goals, and marketing mix strategy Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Business Analysis and Product Development Business analysis: A review of the sales, costs, and profit projections for a new product – To find out whether these factors satisfy the company’s objectives Product development: Developing the product concept into a physical product – To ensure that the product idea can be turned into a workable market offering Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Test Marketing (1 of 3) Introduces the product and its proposed marketing program into realistic market settings Gives the marketer an experience with marketing a product before full introduction Tests the product and its marketing program Testing takes time, and costs can be high. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Test Marketing (2 of 3) Starbucks quickly introduced a less-than-perfect mobile payments app, then worked out the flaws. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Test Marketing (3 of 3) Alternatives to standard test markets – Controlled test markets – Simulated test markets Reasons for using alternative test markets – Reducing the costs – Speeding up the process Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Commercialization Introducing a new product into the market Considerations for launching a new product – When to launch – Where to launch  Single location, region, national market, or international market Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Managing New Product Development Requires a holistic approach – Customer-centered new product development – Team-based new product development – Systematic new product development Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Customer-Centered New Product Development (1 of 2) Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer-satisfying experiences. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Customer-Centered New Product Development (2 of 2) The LEG O Group is a strong proponent of customer- centered new product development. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Team-Based and Systematic New Product Development Team-based new product development Various company departments work together, overlapping the steps in the product development process. Systematic new product development Innovation management systems collect, review, evaluate, and manage new product ideas. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-2 Summary New product development process includes – Idea generation, idea screening, product concept development and testing, and marketing strategy development – Business analysis, product development, test marketing, and commercialization New product development requires a customer-centered, team-based, systematic effort. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-3 Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 8.2 Sales and Profits over the Product’s Life from Inception to Decline Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 8.3 Styles, Fashions, and Fads Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 8.2 (1 of 3) Summary of Product Life-Cycle Characteristics, Objectives, and Strategies Blank Introduction Growth Maturity Decline Blank Blank Blank Blank Characteristics Sales Low sales Rapidly rising sales Peak sales Declining sales Costs High cost per Average cost per Low cost per Low cost per customer customer customer customer Profits Negative Rising profits High profits Declining profits Customers Innovators Early adopters Middle majority Laggards Competitors Few Growing number Stable number Declining number beginning to decline Marketing Blank Blank Blank Blank objectives Create product Maximize market Maximize profit Reduce Blank awareness share while defending expenditure and and trial market share milk the brand Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 8.2 (2 of 3) Summary of Product Life-Cycle Characteristics, Objectives, and Strategies Blank Introduction Growth Maturity Decline Strategies Blank Blank Blank Blank Product Offer a basic Offer product Diversify brand Phase out weak product extensions, and models items service, and warranty Price Use cost- Price to Price to match Cut price plus penetrate market or beat competitors Distribution Built Build intensive Build more Go selective: selective distribution intensive phase out distribution distribution unprofitable outlets Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Product Life-Cycle Strategies Thanks to the “Quaker Up” campaign, 140-year-old Quaker has a contemporary appeal as a lifestyle brand. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 8.2 (3 of 3) Summary of Product Life-Cycle Characteristics, Objectives, and Strategies Blank Introduction Growth Maturity Decline Strategies Blank Blank Blank Blank Advertising Build product Build Stress brand Reduce to level awareness engagement and differences needed to retain among early interest in the and benefits hard-core loyals adopters mass market and dealers Sales Use heavy Reduce to take Increase to Reduce to Promotion sales advantage of encourage minimal level promotion to heavy brand switching entice trial consumer demand Source: Based on Philip Kotler and Kevin Lane Keller, Marketing Management, 15th ed. (Upper Saddle River, N J: Pearson Education, 2016), p. 358. © 2016. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-3 Summary Stages of the product life cycle: – Product development – Introduction stage – Growth stage – Maturity stage – Decline stage Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-4 Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Product Decisions and Social Responsibility Considerations for companies – Public policy issues – Regulations regarding acquiring or dropping products – Patent protection – Product quality and safety – Product warranties Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved International Product and Services Marketing (1 of 2) In many major global markets, McDonald’s adapts more than just its menu. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved International Product and Services Marketing (2 of 2) Challenges facing international marketers: – Finding what products and services to introduce and in which countries – Deciding on how much to standardize or adapt the products and services for world markets Service firms are taking the lead in international expansion. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 8-4 Summary Socially responsible product decisions – Public policy issues and regulations International product and services marketing – Standardize or adapt offerings for world markets Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (3 of 4) 8.1 Explain how companies find and develop new product ideas. 8.2 List and define the steps in the new product development process and the major considerations in managing this process. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (4 of 4) 8.3 Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. 8.4 Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved