Chapter 13: “Conceiving, Developing,  and Managing Products” Joel R. Evans  &  Barry Berman Marketing, 10e: Marketing in t...
Chapter Objectives <ul><li>To study how products are created and managed, with an emphasis on the product life cycle </li>...
Types of New Products <ul><li>Modifications : alterations/extensions in a company’s existing products, such as new models ...
The Product Life Cycle <ul><li>The  product life cycle  is a concept that seeks to describe a product’s sales, competitors...
Selected Product Life Cycles Traditional Boom or Classic Fad Extended Fad Seasonal or Fashion Revival Bust
The  Traditional  Product Life Cycle Typical product: Black and White TVs TIME SALES
Stages in Traditional Product Life Cycle Introduction Growth Maturity Decline Profits Sales Profit is negative in Introduc...
Traditional Product Life Cycle and Advertising ADVERTISING GOALS Inform   Persuade   Highly competitive   Reassess/go back...
Self-Fulfilling Prophecy <ul><li>Many firms may engage in a  self-fulfilling prophecy , whereby they predict falling sales...
Importance of New Products <ul><li>To assure a firm’s survival,  new products may: </li></ul><ul><ul><li>Offer differentia...
Why Do Products Fail? <ul><li>Poor long-term planning </li></ul><ul><li>Lack of a differential advantage </li></ul><ul><li...
The Importance of New Product Failure <ul><li>Failure rate is 35% or more. </li></ul><ul><li>Despite careful planning, pro...
Types of Failures <ul><li>In  absolute product failure , costs are not regained. </li></ul><ul><li>In  relative product fa...
New-Product Planning Process 1.  Idea Generation  2.  Product Screening  3 .  Concept Testing 4.  Business Analysis 5.  Pr...
1. Idea Generation Idea Generation Continuous, systematic search for new product opportunities
2. Product Screening Product Screening Poor, unsuitable products weeded out and patentability determined
3. Concept Testing Present consumer with proposed product to measure attitudes and  intentions   Concept Testing
4. Business Analysis Business Analysis Detailed review of demand, costs, break-even points, investments, and potential pro...
5. Product Development Product Development Converts product idea into tangible form and identifies basic marketing strategy
6. Test Marketing Involves placing a fully developed product into one or more selected areas to observe it under a propose...
7. Commercialization Commercialization The product’s introduction to its full target market, corresponding to the introduc...
Growth Stage in Life Cycle <ul><li>With  major innovations , growth may be very slow at first and then rise quickly, as wi...
Adoption Process <ul><li>The  adoption process  is the procedure an individual consumer goes through when learning about a...
Diffusion Process <ul><li>The  diffusion process  describes the manner in which different members of the target market oft...
The Diffusion Process Curve Innovators Early Adopters   Laggards This curve shows the manner in which different members of...
Maturity Stage in Life Cycle <ul><li>Useful Strategies in Maturity: </li></ul><ul><li>Develop new uses for products </li><...
Decline Stage in Life Cycle <ul><li>Questions to Consider When Deciding to Delete a Product: </li></ul><ul><ul><li>Replace...
Chapter Summary <ul><li>This chapter examines how products are created and managed, with a focus on the product life cycle...
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Marketing Chapter 13

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Marketing Chapter 13

  1. 1. Chapter 13: “Conceiving, Developing, and Managing Products” Joel R. Evans & Barry Berman Marketing, 10e: Marketing in the 21st Century
  2. 2. Chapter Objectives <ul><li>To study how products are created and managed, with an emphasis on the product life cycle </li></ul><ul><li>To detail the importance of new products and describe why new products fail </li></ul><ul><li>To present the stages in the new-product planning process </li></ul><ul><li>To analyze the growth and maturity of products, including the adoption process, the diffusion process, and extension strategies </li></ul><ul><li>To examine product deletion decisions and strategies </li></ul>
  3. 3. Types of New Products <ul><li>Modifications : alterations/extensions in a company’s existing products, such as new models </li></ul><ul><li>Minor Innovations : items not previously sold by a firm that have been sold </li></ul><ul><li>Major Innovations : items not previous sold by any firm </li></ul>
  4. 4. The Product Life Cycle <ul><li>The product life cycle is a concept that seeks to describe a product’s sales, competitors, customers, and marketing emphasis from its beginning until it is removed from the market. </li></ul><ul><li>Companies often desire a balanced product portfolio . </li></ul><ul><li>The life-cycle concept can be applied to a product class, a product form, and a product brand. </li></ul>
  5. 5. Selected Product Life Cycles Traditional Boom or Classic Fad Extended Fad Seasonal or Fashion Revival Bust
  6. 6. The Traditional Product Life Cycle Typical product: Black and White TVs TIME SALES
  7. 7. Stages in Traditional Product Life Cycle Introduction Growth Maturity Decline Profits Sales Profit is negative in Introduction, slowly rises in Growth, peaks and then declines in Maturity stage and in Decline stage . TIME SALES
  8. 8. Traditional Product Life Cycle and Advertising ADVERTISING GOALS Inform Persuade Highly competitive Reassess/go back Introduction Growth Maturity Decline
  9. 9. Self-Fulfilling Prophecy <ul><li>Many firms may engage in a self-fulfilling prophecy , whereby they predict falling sales and then ensure this by reducing or removing marketing support. </li></ul><ul><li>With proper marketing, some products might not fail. </li></ul>
  10. 10. Importance of New Products <ul><li>To assure a firm’s survival, new products may: </li></ul><ul><ul><li>Offer differential advantages. </li></ul></ul><ul><ul><li>Lead to sales growth or stability. </li></ul></ul><ul><ul><li>Increase profits and control. </li></ul></ul><ul><ul><li>Reduce risk through diversity. </li></ul></ul><ul><ul><li>Improve distribution. </li></ul></ul><ul><ul><li>Exploit technology. </li></ul></ul><ul><ul><li>Utilize waste materials. </li></ul></ul><ul><ul><li>Respond to consumer needs. </li></ul></ul><ul><ul><li>Be a result of a government mandate. </li></ul></ul>
  11. 11. Why Do Products Fail? <ul><li>Poor long-term planning </li></ul><ul><li>Lack of a differential advantage </li></ul><ul><li>Incorrect pricing and product placement </li></ul><ul><li>Inattention to the environment of marketing and audit sequences </li></ul><ul><li>Marketing myopia </li></ul>Who me? But, we have always done it that way! As I say, if it worked for one, it will work for all.
  12. 12. The Importance of New Product Failure <ul><li>Failure rate is 35% or more. </li></ul><ul><li>Despite careful planning, products may still fail. </li></ul><ul><li>There is absolute failure and relative failure. </li></ul>
  13. 13. Types of Failures <ul><li>In absolute product failure , costs are not regained. </li></ul><ul><li>In relative product failure , even though a profit may be earned, goals are not met . </li></ul>
  14. 14. New-Product Planning Process 1. Idea Generation 2. Product Screening 3 . Concept Testing 4. Business Analysis 5. Product Development 6. Test Marketing 7. Commercialization
  15. 15. 1. Idea Generation Idea Generation Continuous, systematic search for new product opportunities
  16. 16. 2. Product Screening Product Screening Poor, unsuitable products weeded out and patentability determined
  17. 17. 3. Concept Testing Present consumer with proposed product to measure attitudes and intentions Concept Testing
  18. 18. 4. Business Analysis Business Analysis Detailed review of demand, costs, break-even points, investments, and potential profits for each new product
  19. 19. 5. Product Development Product Development Converts product idea into tangible form and identifies basic marketing strategy
  20. 20. 6. Test Marketing Involves placing a fully developed product into one or more selected areas to observe it under a proposed marketing plan Test Marketing
  21. 21. 7. Commercialization Commercialization The product’s introduction to its full target market, corresponding to the introduction stage of the product life cycle
  22. 22. Growth Stage in Life Cycle <ul><li>With major innovations , growth may be very slow at first and then rise quickly, as with the microwave oven. </li></ul><ul><li>Minor innovations or product modifications have quicker growth from the start. </li></ul>
  23. 23. Adoption Process <ul><li>The adoption process is the procedure an individual consumer goes through when learning about and purchasing a new product. </li></ul><ul><li>The process depends on consumer traits, the product, and marketing efforts. The stages are: </li></ul><ul><ul><li>Knowledge </li></ul></ul><ul><ul><li>Persuasion </li></ul></ul><ul><ul><li>Decision </li></ul></ul><ul><ul><li>Implementation </li></ul></ul><ul><ul><li>Confirmation </li></ul></ul>
  24. 24. Diffusion Process <ul><li>The diffusion process describes the manner in which different members of the target market often accept and purchase a product. </li></ul><ul><li>It spans the time from product introduction through market saturation and affects the total sales level of a product through the life cycle. </li></ul><ul><li>Consumer segments include: </li></ul><ul><ul><li>Innovators—2.5% </li></ul></ul><ul><ul><li>Early Adopters—13.5% </li></ul></ul><ul><ul><li>Early Majority—34% </li></ul></ul><ul><ul><li>Late Majority—34% </li></ul></ul><ul><ul><li>Laggards—16% </li></ul></ul>
  25. 25. The Diffusion Process Curve Innovators Early Adopters Laggards This curve shows the manner in which different members of the target market often accept and purchase a product. Early Majority Late Majority (68%)
  26. 26. Maturity Stage in Life Cycle <ul><li>Useful Strategies in Maturity: </li></ul><ul><li>Develop new uses for products </li></ul><ul><li>Develop new product features </li></ul><ul><li>Increase the market </li></ul><ul><li>Find new classes of consumers for present products </li></ul><ul><li>Find new classes of consumers for modified products </li></ul><ul><li>Increase product usage among current users </li></ul><ul><li>Change marketing strategy </li></ul>
  27. 27. Decline Stage in Life Cycle <ul><li>Questions to Consider When Deciding to Delete a Product: </li></ul><ul><ul><li>Replacement Parts — Who will make them? How long will they be made? </li></ul></ul><ul><ul><li>Notification Time — How soon before the actual deletion will an announcement be made? Will distributors be alerted early enough so they can line up other suppliers? </li></ul></ul><ul><ul><li>Warranties — How will warranties be honored? After they expire, how will repairs be done? </li></ul></ul>
  28. 28. Chapter Summary <ul><li>This chapter examines how products are created and managed, with a focus on the product life cycle. </li></ul><ul><li>It notes the importance of new products and describes why new products fail. </li></ul><ul><li>It presents the stages in the new-product planning process. </li></ul><ul><li>It analyzes the growth and maturity of products, including the adoption process, the diffusion process, and extension strategies. </li></ul><ul><li>It looks at product deletion decisions and strategies. </li></ul>

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