Marketing The New Product Development PDF

CHAPTER 08 NEW PRODUCT DEVELOPM ENT Prepared by: Maria Vincenten, Red © 2021 McGraw-Hill Education Limit ed...

CHAPTER 08 NEW PRODUCT DEVELOPM ENT Prepared by: Maria Vincenten, Red © 2021 McGraw-Hill Education Limit ed River College  Learning Objectives 1. Explain the concept of the product life cycle and elements involved in each stage 2. Describe the ways that product life cycles can be extended 3. Differentiate between different types of new products © 2021 McGraw-Hill Education Lim 2  Learning Objectives (continued) 4. Describe the adoption curve of new products 5. Detail each step in the new product development process © 2021 McGraw-Hill Education Lim 3  True Büch Kombucha Launched a whole new product category and continues to be innovators © 2021 McGraw-Hill Education Lim 4  The Product Life Cycle Product Life Cycle – describes the stages that a new product goes through © 2021 McGraw-Hill Education Lim 5  The Product Life Cycle (continued) © 2021 McGraw-Hill Education Lim 6  The Product Life Cycle (continued) Figure 8-3 Managing the stages of the product life cycle Stage in Introductio Growth Maturity Decline PLC n Competiti Few More Many Reduced on competitors competitors competitors in competition, exist enter the the market with some market competitors leaving the market General Awareness Product Brand loyalty Product Marketing differentiation rationalization Objective Product Focus on a Introduce Ensure full Retain only new product more features product line is best sellers or or brand available and discontinue innovative with new ideas © 2021 McGraw-Hill Education Lim 7  The Product Life Cycle (continued) Figure 8-3 Managing the stages of the product life cycle (continued) Stage in Introductio Growth Maturity Decline PLC n Price Use a Prices are Price Very low skimming or slowly discounts are prices penetration reduced used strategy frequently Place Limited Distribution is Full Distribution is distribution increased distribution is reduced achieved Promotion Focus on Emphasize Focus on Only minimal building points of pricing and promotion, if awareness difference sales any with versus the promotion advertising competition Profit Minimal Increased Maximized Decreasing profits, if any profits that profits that and minimal © 2021 McGraw-Hill Education Lim reach their level off profits 8  Length of the Product Life Cycle Varies according to the industry, competition, technological innovation, and approaches to marketing the product In general: – Consumer products have short life cycles – Availability of mass communication vehicles shortens life cycles – Technological change shortens life cycles – Marketing approaches to keep product relevant lengthens life cycles © 2021 McGraw-Hill Education Lim 9  Shape of the Product Life Cycle © 2021 McGraw-Hill Education Lim 10  Product Life Cycle Strategies Product life cycles can be extended: 1)Modifying the product 2)Modifying the market 3)Repositioning a product 4)Introducing a new product © 2021 McGraw-Hill Education Lim 11  Product Life Cycle Strategies (continued) 1)Modifying the product – Product improvements – Line extensions © 2021 McGraw-Hill Education Lim 12  Product Life Cycle Strategies (continued) 2) Modifying the market – Finding new customers – Increasing a product’s use – Creating a new situation © 2021 McGraw-Hill Education Lim 13  Product Life Cycle Strategies (continued) 3)Repositionin g a product © 2021 McGraw-Hill Education Lim 14  Product Life Cycle Strategies (continued) 4)Introducing a new product Best New Product Award Winners Product Category Neutrogena Hydro Boost Body Gel Cream Fragrance Health and beauty Free (body lotion) products Batiste Bare Dry Shampoo (dry shampoo) Sensodyne Rapid Relief (toothpaste) Robitussen Honey (cough syrup) Beyond Meat Burger (plant-based burger) Food and beverage products Siggi’s Yogurt (yogurt) Triscuit Woven with Chia Seeds Rosemary & Jalapeno (crackers) Sabra Avocado Toast (grab-and-go meal) Milk-Bone Wonder Bones (dog food/treat) Household products Finish In-Wash Dishwasher Cleaner (dishwasher cleaner) Downy Wrinkleguard Fabric Conditioner (fabric enhancer) © Airpods 2021 McGraw-Hill Education Lim earbuds) Pro (noise-cancelling 15  New Products “New products are the lifeblood of a company, helping to make products relevant and to bring future revenues into the company.” © 2021 McGraw-Hill Education Lim 16  New Products (continued) Figure 8-5 Degree of product innovation Minor Innovation Continuous Innovation Radical Innovation Definitio Requires no new Changes Requires new n learning by consumer’s learning and consumers normal routine but consumption does not require patterns by totally new consumers learning Exampl New and Swiffer WetJet; Amazon Alexa or es improved wearable Google Home; toothpaste or technology self-driving cars; detergent 3D printers Marketi Gain consumer Advertise points of Educate ng awareness and difference and consumers emphasi wide distribution benefits to through ©s 2021 McGraw-Hill Education Lim consumers advertising, 17  The Adoption Curve © 2021 McGraw-Hill Education Lim 18  The Adoption Curve (continued) Barriers that deter adoption: Usage Value Risk Psycholog ical © 2021 McGraw-Hill Education Lim 19  New Product Development Expensive undertaking High risk of failure High research costs Time and effort on developing prototypes and marketing materials Expensive product launches Lack of future credibility in the market © 2021 McGraw-Hill Education Lim 20  New Product Development (continued) Figure 8-7 Avoiding new product failure Issue Potential Solution Insignificant Determine a distinctive and point of meaningful point of difference for difference the target audience. Conduct research with consumers and monitor competitors’ products/activities. Incomplete Identify consumer insights and new clearly define the product’s features concept and benefits. definition Develop a clear positioning. Insufficient Identify a target market (with a © 2021 McGraw-Hill Education Lim 21  New Product Development (continued) Figure 8-7 Avoiding new product failure Issue (continued) Potential Solution Poor Ensure the 4 Ps—product (including execution of brand name and package), price, the promotion, distribution—are aligned marketing and attractive to consumers. mix Focus on gaining sufficient distribution to access consumers. Bad timing Launch products when consumers are eager to purchase. Monitor market conditions and competitor actions. © 2021 McGraw-Hill Education Lim 22  Approaches to New Product Development Strategic direction Figure 8-8 Strategic approaches to growth Market Current Products New Products s Curre Market Product nt Penetration Development Finding ways to Reaching current make current customers with a products appeal to new product current customers New Market Diversification Development Reaching new © 2021 McGraw-Hill Education Lim 23  Approaches to New Product Development (continued) Company structure “New product development success ultimately requires the expertise of people with different specializations.” © 2021 McGraw-Hill Education Lim 24  The New Product Development Process © 2021 McGraw-Hill Education Lim 25  The New Product Development Process (continued) Figure 8-10 Elements in each stage of the new product development process Stage of Purpose of Stage Marketing Process Information and Methods Used New product Identify new- Company objectives; development product SWOT analysis of strategy development focus company/product/bran that meets d company objectives Idea Brainstorm new Ideas from employees, generation ideas co-workers, and consumers Screening and Evaluate product Internal evaluation of © evaluation 2021 McGraw-Hill Education ideas Lim and develop technical 26  The New Product Development Process (continued) Figure 8-10 Elements in each stage of the new product development process Stage of (continued) Purpose of Stage Marketing Process Information and Methods Used Business Identify the Product’s key features analysis product’s features and anticipated and its marketing marketing mix; strategy, and make assessment of financial projections production, legal, and profitability issues Test marketing Test the product and Test marketing in marketing strategy defined areas in the marketplace © 2021 McGraw-Hill Education on Lim a limited scale (if 27  The New Product Development Process (continued) Figure 8-10 Elements in each stage of the new product development process Stage of (continued) Purpose of Stage Marketing Process Information and Methods Used Development Create the Internal company prototype and test it assessments and internally at the external tests on company and product prototypes externally with consumers Commercializat Launch and fully Implement all areas of ion market the product the marketing mix; in the marketplace possible regional © 2021 McGraw-Hill Education Lim rollout 28