PRODUCT PLANNING: PRODUCT POLICY, NEW PRODUCT DEVELOPMENT PROCESS, AND PRODUCT LIFE CYCLE STRATEGIES WITH EXAMPLES

1. Product planning:
New-Product Development and
Product Life-Cycle Strategies

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Product policy
 Product policies are the general rules set by
the management.
 Product policy guides the marketing
activities of the firm and helps it to make the
right products to the consumers.
 Product policy is concerned with defining
type, volume and timing of products
acompany offers for sale.

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• A product policy generally covers the
follows:
• Product planning and development
• Product line
• Product mix
• Product branding
• Product positioning
• Product packaging

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New-Product Development
Strategy
• Strategies for Obtaining New-Product
Ideas:
 Acquisition of companies, patents,
licenses
 Original products, improvements,
modifications

5. Reasons for introducing new
products
 To suit the changes in customers needs
 To adopt new technological advances and
avoid obsolence
 To match competition
 Product Life Cycle Concept
 To bring down the cost

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Major Stages in New-Product
Development
• Idea generation
• Idea screening
• Concept development and testing
• Marketing strategy development
• Business analysis
• Product development
• Test marketing
• Commercialization

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Idea Generation
• Company employees
• Customers
• Competitors
• Distributors
• Suppliers

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Idea Screening
 Process to spot good ideas.
 Develop system to estimate: market size,
product price, development time and costs,
manufacturing costs, and rate of return.
 Evaluate these findings against set of
company criteria for new products.

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Concept Development and
Testing
 Product Idea: idea for a possible product
that the company can see itself offering.
 Product Concept: detailed version of the
idea stated in meaningful consumer terms.
 Product Image: the way consumers perceive
an actual or potential product.

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Marketing Strategy
Development
• Part One Describes:
 The target market, planned product positions,
sales, market share, and profit goals
• Part Two Outlines the First Year’s:
 Product’s planned price, distribution, and
marketing budget
• Part Three Describes Long-Run:
 Sales and profit goals, marketing mix strategy

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Business Analysis
 Involves a review of the sales, costs,
and profit projections to assess fit with
company objectives.
 If yes, move to the product
development phase.

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Product Development
 Develop concept into physical product
 Calls for large jump in investment
 Prototypes are made
 Prototype must have correct physical
features and convey psychological
characteristics

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Test Marketing
 Product and program introduced in
more realistic market setting.
 Not needed for all products.
 Can be expensive and time consuming,
but better than making major marketing
mistake.

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Commercialization
 Must decide on timing (i.e., when to
introduce the product).
 Must decide on where to introduce the
product (e.g., single location, state,
region, nationally, internationally).
 Must develop a market rollout plan.

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Organizing New-Product
Development
 Sequential Approach: each stage
completed before moving to next phase
of the project.
 Simultaneous Approach: Cross-
functional teams work through
overlapping steps to save time and
increase effectiveness.

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The Product Life Cycle
• Introduction
• Growth
• Maturity
• Saturation
• Decline

17. Introduction Stage of PLC
 The Introduction stage is probably the most
important stage in the PLC. In fact, most
products that fail do so in the Introduction
stage.
 This is the stage in which the product is
initially promoted.
 Public awareness is very important to
the success of a product.
 If people don't know about the product they
won't go out and buy it. 17

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Features
• Sales: low
• Costs: high cost per customer
• Profits: negative
• Marketing Objective: create product awareness and
trial
• Product: offer a basic product
• Price: use cost-plus formula
• Distribution: build selective distribution
• Promotion: heavy to entice product trial

19. Products presently in introduction
stage
•3D TVs
•HOLOGRAPHIC
PROJECTIONS
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20. Growth Stage of PLC
 If the company is lucky enough to get their
product out of the Introduction stage, then
enter this stage.
 The Growth stage is where the product starts
to grow.
 In this stage a very large amount of money is
spent on advertising.
 (because the company want to concentrate of
telling the consumer how much better the
product is than the competitors' products.)
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features
• Sales: rapidly rising
• Costs: average cost per customer
• Profits: rising
• Marketing Objective: maximize market share
• Product: offer extension, service, warranty
• Price: penetration strategy
• Distribution: build intensive distribution
• Promotion: reduce to take advantage of demand

22. Products presently in growth stage
 BLU-RAY CDs AND TABLET PCs
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23. Maturity Stage of PLC
 During this stage sales grow at a very fast
rate
and then gradually begin to stabilize.
 The key to surviving this stage is
differentiating the product from the similar
products offered by the competitors.
 the company must make the product stand out
among the rest Due to the fact that sales are
beginning to stabilize
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features
• Sales: peak
• Costs: low cost per customer
• Profits: high
• Marketing Objective: maximize profits while
defending market share
• Product: diversify brand and models
• Price: match or best (competitors)
• Distribution: build more intensive distribution
• Promotion: Increase to encourage brand switching

25. Three ways to be stand there in
maturity:
1.Modifying the Market: Increase the
consumption of the current product.
 How?
 Look for new users and market segments
 Reposition the brand to appeal to larger or
faster-growing segment
 Look for ways to increase usage among present
customers
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3.Modifying the Product: Changing
characteristics such as quality, features, or
style to attract new users and to inspire more
usage.
 How?
 Improve durability, reliability, speed, taste
 Improve styling and attractiveness
 Add new features
 Expand usefulness, safety, convenience

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2.Modifying the Marketing Mix: Improving
sales by changing one or more marketing
mix elements( price, place, promotion and
product)
 How?
 Cut prices
 Launch a better ad campaign
 Move into larger market channels
 Offer new or improved services to buyers

28. Products presently in maturity stage
 DVD players, laptops, staplers, etc,..,
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29. Saturation
 This is a period of stability. The sales of the
product reach the peak and there is no further
possibility to increase it.
 This stage is characterized by:
 Saturation of sales (at the early part of this stage
sales remain stable then it starts falling).
 It continues till substitutes enter into the market.
 Marketer must try to develop new and alternative
uses of product.
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30. Decline Stage of PLC
 This is the stage in which sales of the product
begin to fall.
 Either everyone that wants to has bought the
product or new, more innovative products
have been created that replace that product.
 Many companies decide to withdrawal their
products from the market due to the downturn.
 The only way to increase sales during this
period is to cut your costs reduce your
spending. 30

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features
• Sales: declining
• Costs: high cost per customer
• Profits: declining
• Marketing Objective: reduce expenditures
• Product: phase out weak items
• Price: cut price
• Distribution: selective--phase out unprofitable
outlets
• Promotion: reduce to minimal level

32. Products presently in decline stage
 Video recorders, typewriters ,,.etc
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33. PLC

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Problems of PLC
• Hard to identify which stage of the PLC the
product is in.
• Hard to pinpoint when the product moves to the
next stage.
• Hard to identify factors that affect product’s
movement through stages.
• Hard to forecast sales level, length of each stage,
and shape of PLC.
• Strategy is both a cause and result of the PLC.

37.  Many products may not have a life cycle as depicted
by PLC
 Traditional shape may not occur. Eg. Fad items
 Strategic decisions can change the PLC eg.
repositioning
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38. Product Life Cycle Applications
Product class has the longest life cycle (e.g., gas-powered
cars)
 Honda civic
•Super efficient gas
powered car
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39.  Product form tends to have the standard PLC
shape (e.g., dial telephone)
 Style is a basic and distinctive mode of
expression (e.g., formal clothing, Danish
modern furniture)
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40.  Brand can change quickly because of
changing competitive attacks and responses
(e.g., Tide, Cheer,)
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41.  Fad is a fashion that enters quickly, is adopted
quickly, and declines fast (e.g., pet rocks)
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42.  Fashion is a popular style in a given field
(e.g., business casual)
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