Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
New Product Development
Product life cycle strategies
Developing New Products
1. Must develop new products
2. Consumer needs
3. Source of growth for the company
4. Response to ...
New Product Odds
 Up to 90 % of new products meet failure
 New Coke, Eagle Snacks, Zap Mail, Premier
“Smokeless” cigaret...
Process
 Idea generation
 Idea screening
 Concept development and testing
 Marketing strategy development
 Business a...
Idea generation
 New product development starts with idea generation
 Finding good ideas difficult. Out of 3000 only 10 ...
Idea screening
 Reducing the number of ideas
 Picking good ones, drop bad ones
 Workable and usable ideas are chosen fo...
Concept development & testing
 Detailed version of the idea stated in meaningful
consumer terms
 Daimler Chrysler
 Fuel...
Marketing strategy development
 Target market
 Product Positioning
 Sales, market share and profit goals
 Concept 3
 ...
Business Analysis
 Business attractiveness of the proposal
 Costs
 Sales
 Profits
Product Development
 After passing business test
 Moves to product development
 Physical shape give by R & D
 Examples...
Test Marketing
 Product introduced into more realistic market
setting
 To gain experience before fully introducing
the p...
Standard Test Markets
 By making use of smaller number of
representative test cities to gauge
performance
 Results used ...
Controlled Test Markets
 Panel stores
 Tracking consumer behavior from television
to check counter
 Observing consumer ...
Simulated Test Markets
 Testing new products in simulated shopping
environment
 Some money is given to consumers to shop...
Commercialization
 Test marketing gives information
 Decision to launch a product based on that
information
 Costs will...
Product Life Cycle
 Product launch – happy life
 Cover costs
 Earn profits
 Length not know in advance
 Coca-Cola, Gi...
PLC – S Curve
Introduction Stage
 Product launch
 Takes time
 Slow growth
 Negative profits
 High promotion and distribution cost
Growth Stage
 Product, if satisfies market, enters growth stage
 Sales climb quickly
 Early adopters continue, new join...
Maturity
 At some point sale slows down, product enters
maturity stage
 Lasts longer
 Marketing management most of the ...
Maturity
 Product manager should modify market,
product and marketing mix
 Market: increase consumption of product,
new ...
Decline Stage
 Eventually dip
 Oat meal, VHS tapes, VCR, Tape recorders
 Reasons: technology, consumer tastes, increase...
www.slideshare.net/mazhariftikhar
mazhariftikhar@gmail.com
Ali.naeem@msn.com
19   new product dev lec - 3
Upcoming SlideShare
Loading in …5
×

19 new product dev lec - 3

1,076 views

Published on

New Product Development

Published in: Business
  • Be the first to comment

  • Be the first to like this

19 new product dev lec - 3

  1. 1. New Product Development Product life cycle strategies
  2. 2. Developing New Products 1. Must develop new products 2. Consumer needs 3. Source of growth for the company 4. Response to environment and technology 5. Every product is born, has its stages and then dies 6. New Product Development strategies: 1. acquisition 2. new product development (original products, product improvements, product modifications, new brands)
  3. 3. New Product Odds  Up to 90 % of new products meet failure  New Coke, Eagle Snacks, Zap Mail, Premier “Smokeless” cigarettes, Arch Deluxe  Reasons:  Market overestimation  Actual product poorly designed  Incorrectly positioned  Wrong timing for launch  Price too high  Poor advertisement
  4. 4. Process  Idea generation  Idea screening  Concept development and testing  Marketing strategy development  Business analysis  Product development  Test marketing  Commercialization
  5. 5. Idea generation  New product development starts with idea generation  Finding good ideas difficult. Out of 3000 only 10 to 12 are accepted  Internal sources: R & D, brains of executives, engineers, scientists, engineers, manufacturing staff, and salespeople  3 M bootlegging rule  External: customers, LEGO train, competitors – good source of new product ideas, distributors and suppliers, trade magazines, shows, seminars, govt agencies, new product consultants, ad agencies, marketing research firms, inventors
  6. 6. Idea screening  Reducing the number of ideas  Picking good ones, drop bad ones  Workable and usable ideas are chosen for further development  Profitability factor  Questions like:  Usefulness  Good for company or not  In line with co’s strategy  Value chain support  Competing goods  Distribution channels
  7. 7. Concept development & testing  Detailed version of the idea stated in meaningful consumer terms  Daimler Chrysler  Fuel-cell-powered electric car  Concept 1: second friendly car  Concept 2: young people  Concept 3: environment friendly  Concept 4: high end SUV  Concept Testing: concept testing calls for testing new product concepts with groups of target customers. After being exposed to the concept, consumers than may be asked to react to it by answering questions.
  8. 8. Marketing strategy development  Target market  Product Positioning  Sales, market share and profit goals  Concept 3  Young  Colors, AC, price, advertisements  3 % of car market share
  9. 9. Business Analysis  Business attractiveness of the proposal  Costs  Sales  Profits
  10. 10. Product Development  After passing business test  Moves to product development  Physical shape give by R & D  Examples Gillette, Louis Vuitton
  11. 11. Test Marketing  Product introduced into more realistic market setting  To gain experience before fully introducing the product  Olay cosmetics  Redbox
  12. 12. Standard Test Markets  By making use of smaller number of representative test cities to gauge performance  Results used for national sales forecast  Competitors can monitor test results  Clorox bleach – P & G Tide with bleach
  13. 13. Controlled Test Markets  Panel stores  Tracking consumer behavior from television to check counter  Observing consumer reaction to price, shelf placement, in-store promotions  Reports generated
  14. 14. Simulated Test Markets  Testing new products in simulated shopping environment  Some money is given to consumers to shop  New products  Competing products  After purchase follow up
  15. 15. Commercialization  Test marketing gives information  Decision to launch a product based on that information  Costs will be incurred if a company decides to launch the new product  Timing  Place
  16. 16. Product Life Cycle  Product launch – happy life  Cover costs  Earn profits  Length not know in advance  Coca-Cola, Gillette, Budweiser, American Express, Wells-Fargo, and Tabasco
  17. 17. PLC – S Curve
  18. 18. Introduction Stage  Product launch  Takes time  Slow growth  Negative profits  High promotion and distribution cost
  19. 19. Growth Stage  Product, if satisfies market, enters growth stage  Sales climb quickly  Early adopters continue, new join through favorable word of mouth  New competitors enter market  Competition – increase in sale points  Spread of sales, unit cost reduces  Sustain rapid growth  New market segments  Prices may be lowered to attract more customers (iPod)
  20. 20. Maturity  At some point sale slows down, product enters maturity stage  Lasts longer  Marketing management most of the time deals with mature products  More producers selling the same product  Greater competition  Prices down, increase in sales promotion  Drop in profit  Well established competitors stay
  21. 21. Maturity  Product manager should modify market, product and marketing mix  Market: increase consumption of product, new users, present users  Product: quality, features, style (milk pak, Honda City)  Four Ps
  22. 22. Decline Stage  Eventually dip  Oat meal, VHS tapes, VCR, Tape recorders  Reasons: technology, consumer tastes, increased competition, profits decline, withdrawal from market  Furthermore:  Weak product costly to firm  Management time  Price adjustments  Advertising/sales efforts  Reputation of other co products affected  Old Spice/ co can sell brands
  23. 23. www.slideshare.net/mazhariftikhar mazhariftikhar@gmail.com Ali.naeem@msn.com

×