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2011.2.11 marketing

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2011.2.11 marketing

  1. 1. Lamb, Hair, McDaniel CHAPTER 11 Developing and Managing Products 2010-2011
  2. 2. LO 1 Explain the importance of developing new products and describe the six categories of new products LO 2 Explain the steps in the new-product development process LO 3 Discuss global issues in new-product development LO 4 Explain the diffusion process through which new products are adopted LO 5 Explain the concept of product life cycles Learning Outcomes
  3. 3. The Importance of New Products Explain the importance of developing new products and describe the six categories of new products LO 1
  4. 4. Categories of New Products LO 1 New-to-the-World New Product Lines Product Line Additions Improvements or Revisions Repositioned Products Lower-Priced Products
  5. 5. The New-Product Development Process Explain the steps in the new-product development process LO 2
  6. 6. The New-Product Development Process Long-term commitment Company-specific approach Capitalize on experience Establish an environment New Product Success Factors LO 2
  7. 7. New-Product Development Process LO 2 New-Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product
  8. 8. Idea Generation http://www.ideo.com LO 2 Customers Employees Distributors Competitors Vendors R & D Consultants Sources of New-Product Ideas Online
  9. 9. Tips for New Product Development <ul><li>Disperse R & D around the globe </li></ul><ul><li>Keep teams small and empower employees </li></ul><ul><li>Flatten hierarchy </li></ul><ul><li>Encourage extensive brainstorming and generation of crazy new ideas </li></ul><ul><li>Welcome mistakes </li></ul>LO 2
  10. 10. Idea Screening The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. Concept test : A test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions. LO 2
  11. 11. Business Analysis LO 2 Considerations in Business Analysis Stage Demand Cost Sales Profitability
  12. 12. Development <ul><ul><li>Creation of prototype </li></ul></ul><ul><ul><li>Marketing strategy </li></ul></ul><ul><ul><li>Packaging, branding, labeling </li></ul></ul><ul><ul><li>Promotion, price, and distribution strategy </li></ul></ul><ul><ul><li>Manufacturing feasibility </li></ul></ul><ul><ul><li>Final government approvals if needed </li></ul></ul>LO 2
  13. 13. Simultaneous Product Development A new team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process. LO 2
  14. 14. Test Marketing foodcom.com/signup The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. LO 2 Test Marketing Online
  15. 15. Alternatives to Test Marketing <ul><li>Single-source research using supermarket scanner data </li></ul><ul><li>Simulated (laboratory) market testing </li></ul><ul><li>Online test marketing </li></ul>LO 2 Online http://www.newproductworks.com
  16. 16. Commercialization LO 2 Production Inventory Buildup Distribution Shipments Sales Training Trade Announcements Customer Advertising
  17. 17. New-Product Success Factors LO 2 Listening to customers Producing the best product Vision of future market Strong leadership Commitment to new-product development Project-based team approach Getting every aspect right
  18. 18. New-Product Development Process Idea generation Idea screening Business analysis Development Test marketing Commercialization LO 2 Number of new product ideas Time 0
  19. 19. <ul><li>No discernible benefits </li></ul><ul><li>Poor match between features and customer desires </li></ul><ul><li>Overestimation of market size </li></ul><ul><li>Incorrect positioning </li></ul><ul><li>Price too high or too low </li></ul><ul><li>Inadequate distribution </li></ul><ul><li>Poor promotion </li></ul><ul><li>Inferior product </li></ul>Beyond the Book Why New Products Fail NOTE: Supplemental content – not in book. LO 2
  20. 20. Beyond the Book Success Factors NOTE: Supplemental content – not in book. Factors in Successful New Products Match between product and market needs Different from substitute products Benefit to large number of people LO 2
  21. 21. Global Issues in New-Product Development Discuss global issues in new-product development LO 3
  22. 22. Global Marketing Questions <ul><li>Develop product for potential worldwide distribution </li></ul><ul><li>Modify for unique </li></ul><ul><li>market requirements </li></ul><ul><li>Design products to meet regulations and key market requirements </li></ul>LO 3
  23. 23. The Spread of New Products Explain the diffusion process through which new products are adopted LO 4
  24. 24. Diffusion Diffusion LO 4 The process by which the adoption of an innovation spreads.
  25. 25. LO 4 Categories of Adopters Laggards Late Majority Early Majority Early Adopters Innovators
  26. 26. http://www.electronicgadgetdepot.com LO 4 Product Characteristics and the Rate of Adoption Trialability Observability Relative Advantage Compatibility Complexity Online
  27. 27. LO 4 Marketing Implications of the Adoption Process Direct from Marketer Word of Mouth Communication Aids the Diffusion Process
  28. 28. Product Life Cycles Explain the concept of product life cycles LO 5
  29. 29. Product Life Cycle A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). LO 5 Product Life Cycle
  30. 30. Product Life Cycle LO 5 Time Dollars Profits Sales Introductory Stage Growth Stage Maturity Stage Decline Stage 0
  31. 31. Product Life Cycles for Styles, Fashions, and Fads LO 5
  32. 32. <ul><li>High failure rates </li></ul><ul><li>Little competition </li></ul><ul><li>Frequent product modification </li></ul><ul><li>Limited distribution </li></ul><ul><li>High marketing and production costs </li></ul><ul><li>Negative profits with slow sales increases </li></ul><ul><li>Promotion focuses on awareness and information </li></ul><ul><li>Communication challenge is to stimulate primary demand </li></ul>Introductory Stage LO 5
  33. 33. <ul><li>Increasing rate of sales </li></ul><ul><li>Entrance of competitors </li></ul><ul><li>Market consolidation </li></ul><ul><li>Initial healthy profits </li></ul><ul><li>Aggressive advertising of the differences between brands </li></ul><ul><li>Wider distribution </li></ul>Growth Stage LO 5
  34. 34. <ul><li>Sales increase at a decreasing rate </li></ul><ul><li>Saturated markets </li></ul><ul><li>Annual models appear </li></ul><ul><li>Lengthened product lines </li></ul><ul><li>Service and repair assume important roles </li></ul><ul><li>Heavy promotions to consumers and dealers </li></ul><ul><li>Marginal competitors drop out </li></ul><ul><li>Niche marketers emerge </li></ul>Maturity Stage LO 5
  35. 35. <ul><li>Long-run drop in sales </li></ul><ul><li>Large inventories of unsold items </li></ul><ul><li>Elimination of all nonessential marketing expenses </li></ul><ul><li>“ Organized abandonment” </li></ul>Decline Stage LO 5
  36. 36. Diffusion Process and PLC Curve LO 5 Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Introduction Growth Maturity Decline Sales Diffusion curve
  37. 37. Product Life Cycles INTRODUCTION GROWTH MATURITY DECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models. Frequent changes. More models. Frequent changes. Large number of models. Eliminate unprofitable models. Limited wholesale/ retail distributors. Expanded dealers. Long- term relations. Extensive. Margins drop. Shelf space. Phase out unprofitable outlets. Awareness. Stimulate demand. Sampling. Aggressive ads. Stimulate demand. Advertise. Promote heavily. Phase out promotion. High to recoup development costs. Fall as result of competition and efficient production. Prices fall (usually). Prices stabilize at low level. LO 5 Time Sales
  38. 38. E-readers <ul><li>E-readers such as Amazon’s Kindle, Barnes & Noble’s Nook, and Sony’s e-reader are increasingly available products that have sparked serious debate among book lovers, publishers, and techies about the future of printed text. </li></ul><ul><ul><li>In what stage of the product life-cycle are these different readers? </li></ul></ul><ul><ul><ul><li>Sony e-Readers </li></ul></ul></ul><ul><ul><ul><li>Barnes & Noble's Nook </li></ul></ul></ul><ul><ul><ul><li>Amazon's Kindle </li></ul></ul></ul><ul><ul><li>Who is adopting these products now? </li></ul></ul><ul><ul><li>Discuss the different company’s attempts at competitive advantage. </li></ul></ul>LO 5

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