Class 8.pptx

PRINCIPLES OF MARKETING Chapter 9 New Product Development and Product Life-Cycle Strategies Learning Outcomes Explain how companies find and develop new product ideas. List and define the steps in the new product development process and the major considerations in man...

PRINCIPLES OF MARKETING Chapter 9 New Product Development and Product Life-Cycle Strategies Learning Outcomes Explain how companies find and develop new product ideas. List and define the steps in the new product development process and the major considerations in managing this process. Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. Causes of New Product Failures Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions To create successful new products, the company must:  understand it’s customers, markets and competitors  develop products that deliver superior value to customers. New Product Development Process Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization New Product Development Process Step 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers New New Product Product Development Development Process Process Step Step 2. 2. Idea Idea Screening Screening Process to spot good ideas and drop poor ones Criteria  Market Size  Product Price  Development Time & Costs  Manufacturing Costs  Rate of Return 3. 3. Choose Choosethe theBest BestOne One 2. 2. Concept ConceptTesting Testing--Test Testthe the Product ProductConcepts Conceptswith withGroups Groups of ofTarget TargetCustomers Customers 1. 1. Develop DevelopProduct ProductIdeas Ideasinto into Alternative Alternative Product ProductConcepts Concepts Step 3. Step Concept Development 3. Concept Testing & Testing Development & Product Development New Product New Process Development Process New New Product Product Development Development Process Process Step Step 4. 4. Marketing Marketing Strategy Strategy Development Development Marketing Strategy Statement Formulation Part Part One One -- Overall: Overall: Target Target Market Market Planned Planned Product Product Positioning Positioning Sales Sales & & Profit Profit Goals Goals Market Market Share Share Part Part Two Two -- Short-Term: Short-Term: Product’s Product’s Planned Planned Price Price Distribution Distribution Marketing Marketing Budget Budget Part Part Three Three -- Long-Term: Long-Term: Sales Sales & & Profit Profit Goals Goals Marketing Marketing Mix Mix Strategy Strategy  IfIf Yes, Yes, Move Move to to Product Product Development Development IfIf No, No, Eliminate Eliminate Product Product Concept Concept Business Business Analysis Analysis Review Review of of Product Product Sales, Sales, Costs, Costs, and and Profits Profits Projections Projections to to See See ifif They They Meet Meet Company Company Objectives Objectives 6. Product Step 6. Step Development Product Development 5. Business Step 5. Step Analysis Business Analysis Product Development New Product New Process Development Process New New Product Product Development Development Process Process Step Step 7. 7. Test Test Marketing Marketing Standard Standard Controlled Controlled Test Test Market Market Test Test Market Market Full Fullmarketing marketingcampaign campaign AAfew fewstores storesthat thathave have in inaasmall smallnumber numberof of agreed agreedtotocarry carrynew new representative representativecities. cities. products productsfor foraafee. fee. Simulated Simulated Test Test Market Market Test Testin inaasimulated simulated shopping shoppingenvironment environment to toaasample sampleofof consumers. consumers.  Product Life Cycle Sales and Profits ($) Sales Profits Time Product Introduction Growth Maturity Decline Develop- ment Losses/ Investments ($) Introduction Stage of the PLC Sales Sales Low Low sales sales Costs Costs High High cost cost per per customer customer Profits Profits Negative Negative Create Create product product awareness awareness Marketing Marketing Objectives Objectives and and trial trial Product Product Offer Offer aa basic basic product product Price Price Use Use cost-plus cost-plus Distribution Distribution Build Build selective selective distribution distribution Advertising Build Build product product awareness awareness among among Advertising early early adopters adopters and and dealers dealers Growth Growth Stage Stage of of the the PLC PLC Sales Sales Rapidly Rapidly rising rising sales sales Costs Costs Average Average cost cost per per customer customer Profits Profits Rising Rising profits profits Marketing Marketing Objectives Objectives Maximize Maximize market market share share Offer Offer product product extensions, extensions, Product Product service, service, warranty warranty Price Price Price Price to to penetrate penetrate market market Distribution Distribution Build Build intensive intensive distribution distribution Advertising Build Build awareness awareness andand interest interest in in Advertising the the mass mass market market Maturity Maturity Stage Stage of of the the PLC PLC Sales Sales Peak Peak sales sales Costs Costs Low Low cost cost per per customer customer Profits Profits High High profits profits Marketing Maximize Maximize profit profit while while defending defending Marketing Objectives Objectives market market share share Product Product Diversify Diversify brand brand and and models models Price Price to to match match oror beat beat Price Price competitors competitors Distribution Distribution Build Build more more intensive intensive distribution distribution Advertising Stress Stress brand brand differences differences and and Advertising benefits benefits Decline Decline Stage Stage of of the the PLC PLC Sales Sales Declining Declining sales sales Costs Costs Low Low cost cost per per customer customer Profits Profits Declining Declining profits profits Marketing Reduce Reduce expenditure expenditure and and milk milk the the Marketing Objectives Objectives brand brand Product Product Phase Phase out out weak weak items items Price Price Cut Cut price price Go Go selective: selective: phase phase out out Distribution Distribution unprofitable unprofitable outlets outlets Advertising Advertising Reduce Reduce to to level level needed needed toto retain retain hard-core hard-core loyal loyal customers customers