Principles Of Marketing, Arab World Edition PDF

Principles of Marketing, Arab World Edition Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed Tolba Presentation prepared by Annelie Moukaddem Baalbaki CHAPTER NINE New-Product Devel...

Principles of Marketing, Arab World Edition Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed Tolba Presentation prepared by Annelie Moukaddem Baalbaki CHAPTER NINE New-Product Development and Product Life-Cycle Strategies L. Sarah Alrabeeah Ch 9 -# Copyright © 2011 Pearson Education New-Product Development and Product Life- Cycle Strategies Topic Outline 9.1 New-Product Development Strategy 9.2 New-Product Development Process 9.3 Managing New-Product Development 9.4 Product Life-Cycle Strategies 9.5 Additional Product and Service Considerations Ch 9 -1 Copyright © 2011 Pearson Education New-Product Development Strategy Two ways to obtain new products Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product. New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development. Ch 9 -2 Copyright © 2011 Pearson Education  New-Product Development Strategy Reasons for new product failure (eg. Keda tea & Arma food pg. 241) Ch 9 -3 Copyright © 2011 Pearson Education  The New-Product Development Process Ch 9 -4 Copyright © 2011 Pearson Education  The New-Product Development Process Idea Generation (pg 241- 249) 1- Idea generation is the systematic search for new-product ideas. Sources of new-product ideas - Internal - External Ch 9 -5 Copyright © 2011 Pearson Education  The New-Product Development Process 1- Idea Generation Internal sources refer to the company’s own formal research and development, management and staff, and “intrapreneurial” programs. External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms. Ch 9 -6 Copyright © 2011 Pearson Education  The New-Product Development Process 2- Idea Screening Identify good ideas and drop poor ideas R-W-W Screening Framework: – Is it real? – Can we win? – Is it worth doing? Ch 9 -7 Copyright © 2011 Pearson Education  The New-Product Development Process 3- Concept Development and Testing Product idea is an idea for a possible product that the company can see itself offering to the market. Product concept is a detailed version of the idea stated in meaningful consumer terms. Product image is the way consumers perceive an actual or potential product. Ch 9 -8 Copyright © 2011 Pearson Education  The New-Product Development Process Concept Development The marketer’s task is to: Develop the new product into alternative product concepts Find out how attractive each concept is to customers Choose the best one Ch 9 -9 Copyright © 2011 Pearson Education  The New-Product Development Process Concept Testing Concept testing refers to testing new product concepts with groups of target consumers. Ch 9 -10 Copyright © 2011 Pearson Education  The New-Product Development Process 4- Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market. It consists of three parts: 1 st: Describes the target market; planned value proposition; sales, market share, and profit goals for the first few years. 2 nd : Outlines the product’s planned price, distribution, and marketing budget for the first year. 3 rd: Describes the planned long-run sales, profit goals, and marketing-mix strategy. Ch 9 -11 Copyright © 2011 Pearson Education  The New-Product Development Process 5- Business Analysis Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives. Ch 9 -12 Copyright © 2011 Pearson Education  The New-Product Development Process 6- Product Development Product development involves the creation and testing of one or more physical versions by the R&D (Research and development) or engineering departments. Requires an increase in investment. Ch 9 -13 Copyright © 2011 Pearson Education  The New-Product Development Process 7- Test Marketing Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings. Provides the marketer with experience in testing the product and entire marketing program before full introduction. Ch 9 -14 Copyright © 2011 Pearson Education  The New-Product Development Process Test Marketing: Types of Test Markets Ch 9 -15 Copyright © 2011 Pearson Education Standard test markets are small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance. Results are used to forecast national sales and profits, discover product problems, and fine-tune the marketing program. Controlled test markets are panels of stores that have agreed to carry new products for a fee. In general they are less expensive than standard test market, faster than standard test markets, but competitors gain access to the new product. Simulated test markets are events where the firm will create a shopping environment and note how many consumers buy the new product and competing products. Provides measure of trial and the effectiveness of promotion. Researchers can interview consumers.  The New-Product Development Process Test Marketing Ch 9 -17 Copyright © 2011 Pearson Education  The New-Product Development Process 8- Commercialization Commercialization: Introducing the new product into the market. ❑ The company must decide on: Introduction timing Where to launch the product Ch 9 -18 Copyright © 2011 Pearson Education  Managing New-Product Development (real marketing pg. 252) Successful new-product development should be: Customer centered Team based Systematic Ch 9 -19 Copyright © 2011 Pearson Education  Managing New-Product Development Customer-centered new product development Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences. Begins and ends with solving customer problems. Ch 9 -20 Copyright © 2011 Pearson Education  Managing New-Product Development Sequential new-product development Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage. Increased control in risky or complex projects Slow Ch 9 -21 Copyright © 2011 Pearson Education  Managing New-Product Development Team-based new-product development Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product- development process to save time and increase effectiveness. Ch 9 -22 Copyright © 2011 Pearson Education  Managing New-Product Development Systematic new-product development Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas. Creates an innovation-oriented culture Yields a large number of new-product ideas Ch 9 -23 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Ch 9 -24 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Product development Sales are zero and investment costs mount. Introduction Slow sales growth and profits are nonexistent. Growth Rapid market acceptance and increasing profits. Maturity Slowdown in sales growth and profits level off or decline. Decline Sales fall off and profits drop. Ch 9 -25 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Three category for Product Life-Cycle: Ch 9 -26 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Product Life Cycle Style: A basic and distinctive mode of expression. Fashion: A currently accepted or popular style in a given field. Fad: A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. Ch 9 -27 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Introduction Stage Slow sales growth Little or no profit High distribution and promotion expense Ch 9 -28 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Growth Stage Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale Ch 9 -29 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Maturity Stage Slowdown in sales Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R&D to support sales and profits Ch 9 -30 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Maturity Stage: Modifying Strategies Market modifying Product modifying Marketing mix modifying Ch 9 -31 Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Decline Stage Maintain the product Harvest the product Drop the product Ch 9 -32 Copyright © 2011 Pearson Education  Additional Product and Service Considerations Product Decisions and Social Responsibility Public policy and regulations regarding developing and dropping products, patents, quality, and safety. Ch 9 -33 Copyright © 2011 Pearson Education  Additional Product and Service Considerations International Product and Service Marketing Determining what products and services to introduce in which countries. Standardization versus customization Packaging and labeling Customs, values, laws Ch 9 -34 Copyright © 2011 Pearson Education  Summary of Product Life-Cycle Characteristics Ch 9 -35 Copyright © 2011 Pearson Education  From book ▪ Read reviewing objectives and key terms (pg. 261 and 262) ▪ Focus on Ethics- (pg. 263). ▪ Focus on Technology (pg. 263). ▪ Video case- Electrolux (pg. 264). Ch 9 -36 Copyright © 2011 Pearson Education