Chapter Nine
New-Product Development and
Product Life-Cycle Strategies
New-Product Development
and Product Life-Cycle
Strategies
•
•
•
•
•

New-Product Development Strategy
New-Product Developm...
New-Product
Development Strategy
Two ways to obtain new products
Acquisition refers to the buying of a whole company, a

p...
Reasons for new product
failure
New-Product
Development Process
Major Stages in New-Product Development
New-Product
Development Process
Idea Generation

Idea generation

is the systematic search
for new-product ideas

Sources ...
New-Product
Development Process
Internal sources refer to the
company’s own formal
research and development,
management an...
Idea Screening
•
•

Identify good ideas and drop poor
ideas
R-W-W Screening Framework:
1. Is it real?
2. Can we win?
3. Is...
Concept Development and
Testing
Product idea

is an idea for a possible product that the
company can see itself offering t...
Marketing Strategy
Development
• Marketing strategy development refers to the
initial marketing strategy for introducing t...
Marketing Strategy
Development
Product development involves the
creation and testing of one or more
physical versions by t...
Types of Test Markets
Marketing Strategy
Development
• Advantages of
simulated test
markets

– Less expensive than
other test methods
– Faster
–...
Managing New-Product
Development
Successful new-product development
should be:
• Customer centered
• Team centered
• Syste...
New-Product Development
Strategies
Customer-centered new product development focuses on
finding new ways to solve customer...
Team-based new-product development is a development
approach where company departments work closely together
in cross-func...
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle
Strategies
• Product development
– Sales are zero and investment costs mount

• Introduction
– Slow sal...
Product Life-Cycle Strategies
Introduction Stage
• Slow sales growth
• Little or no profit
• High distribution and promoti...
Product Life-Cycle Strategies
•
•
•
•
•
•

Growth Stage

Sales increase
New competitors enter the market
Price stability o...
Product Life-Cycle Strategies
•
•
•
•
•

Maturity Stage

Slowdown in sales
Many suppliers
Substitute products
Overcapacity...
Product Life-Cycle Strategies
Decline Stage
• Maintain the product
• Harvest the product
• Drop the product
Product Life-Cycle Strategies
Style is a basic and distinctive mode of expression.
• Clothing
Fashion is a currently accep...
Product Life-Cycle Strategies
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  • Note to Instructor
    Discussion Question
    Name a product at each stage of the PLC.
    This concept is very new to students. See if they can identify products or product categories that are in each stage of the model. Introduction might include online movie viewing software, growth might include MP3 players, maturity might include bottled water, and decline could include soda (actually in a decline) or videotape players.
  • Note to Instructor
    Cars are very mature products so companies are always coming up with new models and features. This is a link to a very funny YouTube ad about a new car product.
  • Note to Instructor
    Style is a basic and distinctive mode of expression.
    Fashion is a currently accepted popular style in a given field.
  • New Product Development

    1. 1. Chapter Nine New-Product Development and Product Life-Cycle Strategies
    2. 2. New-Product Development and Product Life-Cycle Strategies • • • • • New-Product Development Strategy New-Product Development Process Managing New-Product Development Product Life-Cycle Strategies Additional Product and Service Considerations
    3. 3. 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.
    4. 4. Reasons for new product failure
    5. 5. New-Product Development Process Major Stages in New-Product Development
    6. 6. New-Product Development Process Idea Generation Idea generation is the systematic search for new-product ideas Sources of new-product ideas • Internal • External
    7. 7. New-Product Development Process Internal sources refer to the company’s own formal research and development, management and staff, and entrepreneurial programs. External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms.
    8. 8. Idea Screening • • Identify good ideas and drop poor ideas R-W-W Screening Framework: 1. Is it real? 2. Can we win? 3. Is it worth doing?
    9. 9. 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.
    10. 10. Marketing Strategy Development • Marketing strategy development refers to the initial marketing strategy for introducing the product to the market • Marketing strategy statement includes: – Description of the target market – Value proposition – Sales and profit goals Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
    11. 11. Marketing Strategy Development Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments • Requires an increase in investment 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.
    12. 12. Types of Test Markets
    13. 13. Marketing Strategy Development • Advantages of simulated test markets – Less expensive than other test methods – Faster – Restricts access by competitors • Disadvantages – Not considered as reliable and accurate due to the controlled setting
    14. 14. Managing New-Product Development Successful new-product development should be: • Customer centered • Team centered • Systematic
    15. 15. New-Product Development Strategies 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. 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.
    16. 16. Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the productdevelopment process to save time and increase effectiveness. 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
    17. 17. Product Life-Cycle Strategies Product Life Cycle
    18. 18. 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
    19. 19. Product Life-Cycle Strategies Introduction Stage • Slow sales growth • Little or no profit • High distribution and promotion expense
    20. 20. 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
    21. 21. 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
    22. 22. Product Life-Cycle Strategies Decline Stage • Maintain the product • Harvest the product • Drop the product
    23. 23. Product Life-Cycle Strategies Style is a basic and distinctive mode of expression. • Clothing Fashion is a currently accepted or popular style in a given field. • Marriages in banquet halls. Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. • Sales of country flags on national independence day.
    24. 24. Product Life-Cycle Strategies
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