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Idea Generation: the systematic search for new product ideas
Firms typically generate thousands of ideas of which only a few make it to production
Internal Idea Sources: the company can find new ideas through formal research and development; by picking the brains of company executives, scientists, engineers, etc.; or through an intrapreneurial program
External Idea Sources: good new-product ideas also come from watching and listening to customers, competitors, distributors and suppliers
The search for new product ideas should be systematic and companies would benefit from an idea management system that directs the flow of new ideas to a central point where they can be collected, reviewed and evaluated
The company finds a small number of representative test cities, conducts a full marketing campaign in these cities, and uses stare audits, consumers and distributor surveys, and other measures to gauge product performance
Controlled Test Markets: several research firms keep controlled panels of stores that have agreed to carry new products for a fee
Simulated Test Markets: the company or research firm shows ads and promotions for a variety of products, including the new product being tested, to a sample of consumers. It gives consumers a small amount of money and invites them to a real or laboratory store where they may keep the money or use it to buy items
Online Test Marketing Is it in the Near Future?
Silicon Valley startup called There launched their site in 2003.
Users enter a virtual world where they can network, hang out, dress up and try new products.
There is catching marketers’ attention as a tool to test brands and products.
There will also help marketers identify leaders and heavy users of their products.
Click on screenshot for website Source Advertising Age
Sequential Product Development: under this approach, one company department works individually to complete its stage of the process before passing the new product along to the next department and stage
Simultaneous Product Development: under this approach, company departments work closely together through cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness
The product life cycle concept can be applied to a:
Product class (soft drinks)
Product form (diet colas)
Brand (Diet Dr. Pepper)
Using the PLC to forecast brand performance or to develop marketing strategies is problematic
Product Life-Cycle Strategies
The Category Product Life Cycle Total Retail Sales Introduction Growth Maturity Decline Time Introduction Growth Maturity Decline Strategy variable Target market High-income Middle-income Mass market Low-income Innovators adapters and laggards Variety One basic Some variety Greater variety Less variety offering Distribution Limited or More retailers More retailers Fewer Intensity extensive retailers Price Penetrating Wide range Lower prices Lower prices or skimming Promotion Informative Persuasive Competitive Limited
If the new product satisfies the market, it will enter a growth stage in which sales will start climbing quickly
New competitors may enter the market, new product features may be introduced, number of distribution outlets may increase, ultimately leading to an increase in sales
Profits increase as promotion costs are spread over a large volume and as unit manufacturing costs fall
By spending a lot of money on product improvement, promotion, and distribution, the company can capture a dominant position in the market—in doing so, however, it gives up maximum current profit, which it hopes to make up in the next stage
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