Principles of Marketing, Arab World Edition Chapter 9 PDF

New-Product Development and Product Life- Principles of Marketing, Cycle Strategies Arab World Edition Topic Outline Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed...

New-Product Development and Product Life- Principles of Marketing, Cycle Strategies Arab World Edition Topic Outline Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed Tolba Presentation prepared by Annelie Moukaddem Baalbaki 9.1 New-Product Development Strategy 9.2 New-Product Development Process 9.3 Managing New-Product Development CHAPTER NINE 9.4 Product Life-Cycle Strategies New-Product Development and 9.5 Additional Product and Service Considerations Product Life-Cycle Strategies L. Sarah Alrabeeah ١ Copyright © 2011 Pearson Education ٢ Copyright © 2011 Pearson Education New-Product Development Strategy New-Product Development Strategy Two ways to obtain new products Reasons for new product failure (eg. Keda tea & Arma food pg. 241) 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. ٣ Copyright © 2011 Pearson Education ٤ Copyright © 2011 Pearson Education  The New-Product Development Process 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 ٥ Copyright © 2011 Pearson Education ٦ Copyright © 2011 Pearson Education The New-Product Development Process The New-Product Development Process 1- Idea Generation 2- Idea Screening Internal sources refer to the company’s own formal research Identify good ideas and drop poor ideas and development, management and staff, and “intrapreneurial” R-W-W Screening Framework: programs. – Is it real? – Can we win? – Is it worth doing? External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms. ٧ Copyright © 2011 Pearson Education ٨ Copyright © 2011 Pearson Education  The New-Product Development Process The New-Product Development Process 3- Concept Development and Testing Concept Development Product idea is an idea for a possible product that the company can see itself offering to the market. The marketer’s task is to: Develop the new product into alternative product concepts Product concept is a detailed version of the idea stated in Find out how attractive each concept is to customers meaningful consumer terms. Choose the best one Product image is the way consumers perceive an actual or potential product. ٩ Copyright © 2011 Pearson Education ١٠ Copyright © 2011 Pearson Education The New-Product Development Process The New-Product Development Process Concept Testing 4- Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market. Concept testing refers to testing new product concepts with It consists of three parts: groups of target consumers. 1st: Describes the target market; planned value proposition; sales, market share, and profit goals for the first few years. 2nd: Outlines the product’s planned price, distribution, and marketing budget for the first year. 3rd: Describes the planned long-run sales, profit goals, and marketing-mix strategy. ١١ Copyright © 2011 Pearson Education ١٢ Copyright © 2011 Pearson Education  The New-Product Development Process The New-Product Development Process 5- Business Analysis 6- Product Development Business analysis involves a review of the sales, costs, and Product development involves the creation and testing of profit projections to find out whether they satisfy the company’s one or more physical versions by the R&D (Research and objectives. development) or engineering departments. Requires an increase in investment. ١٣ Copyright © 2011 Pearson Education ١٤ Copyright © 2011 Pearson Education The New-Product Development Process The New-Product Development Process 7- Test Marketing Test Marketing: Types of Test Markets 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. ١٥ Copyright © 2011 Pearson Education ١٦ Copyright © 2011 Pearson Education  The New-Product Development Process Standard test markets are small representative markets where Test Marketing 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. ١٨ Copyright © 2011 Pearson Education The New-Product Development Process Managing New-Product Development (real 8- Commercialization marketing pg. 252) Commercialization: Introducing the new product into the market. Successful new-product development should be: ❑The company must decide on: Customer centered Introduction timing Team based Where to launch the product Systematic ١٩ Copyright © 2011 Pearson Education ٢٠ Copyright © 2011 Pearson Education  Managing New-Product Development Managing New-Product Development Customer-centered new product development Sequential new-product development Sequential new-product development is a development approach Customer-centered new product development focuses on where company departments work closely together individually to finding new ways to solve customer problems and create more complete each stage of the process before passing it along to the next customer satisfying experiences. department or stage. Begins and ends with solving customer problems. Increased control in risky or complex projects Slow ٢١ Copyright © 2011 Pearson Education ٢٢ Copyright © 2011 Pearson Education Managing New-Product Development Managing New-Product Development Team-based new-product development Systematic new-product development Systematic new-product development is an innovative Team-based new-product development is a development development approach that collects, reviews, evaluates, and approach where company departments work closely together in manages new-product ideas. cross-functional teams, overlapping in the product-development process to save time and increase effectiveness. Creates an innovation-oriented culture Yields a large number of new-product ideas ٢٣ Copyright © 2011 Pearson Education ٢٤ Copyright © 2011 Pearson Education  Product Life-Cycle Strategies 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. ٢٥ Copyright © 2011 Pearson Education Copyright © 2011 Pearson Education ٢٦ Product Life-Cycle Strategies Product Life-Cycle Strategies Product Life Cycle Three category for 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. ٢٧ Copyright © 2011 Pearson Education ٢٨ Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Product Life-Cycle Strategies Introduction Stage Growth Stage Sales increase Slow sales growth New competitors enter the market Little or no profit Price stability or decline to increase volume High distribution and promotion expense Consumer education Profits increase Promotion and manufacturing costs gain economies of scale ٢٩ Copyright © 2011 Pearson Education ٣٠ Copyright © 2011 Pearson Education Product Life-Cycle Strategies Product Life-Cycle Strategies Maturity Stage Maturity Stage: Modifying Strategies Slowdown in sales Market modifying Many suppliers Product modifying Substitute products Marketing mix modifying Overcapacity leads to competition Increased promotion and R&D to support sales and profits ٣١ Copyright © 2011 Pearson Education ٣٢ Copyright © 2011 Pearson Education  Product Life-Cycle Strategies Additional Product and Service Considerations Decline Stage Product Decisions and Social Responsibility Maintain the product Public policy and regulations regarding developing and dropping Harvest the product products, patents, quality, and safety. Drop the product ٣٣ Copyright © 2011 Pearson Education ٣٤ Copyright © 2011 Pearson Education Additional Product and Service Considerations Summary of Product Life-Cycle Characteristics International Product and Service Marketing Determining what products and services to introduce in which countries. Standardization versus customization Packaging and labeling Customs, values, laws ٣٥ Copyright © 2011 Pearson Education ٣٦ 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). ٣٧ Copyright © 2011 Pearson Education