Kotler10 exd


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  • Clicking the Video Clip icon will launch a short video (typically between 20 seconds and 1 minute in length) extracted from one of the BusinessNow Video shorts that accompany the text. You must have RealPlayer, QuickTime, or Windows Media Player installed for the video clip to function correctly. From the VIEW menu, select COMMENTS to hide this box.
  • Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J. ; Shulman , Robert S. ; Volume: 20 Issue: 4 Start Page: 10 “ The Future of Simulated Test Markets” http://www.acnielsenbases.com/news/news%20092002.html http://www.synovate.com/solutions/branded_solutions/marketest/ http://www.merwyn.com/
  • Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J.; Shulman, Robert S.; Volume: 20 Issue: 4 Start Page: 10
  • Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J.; Shulman, Robert S.; Volume: 20 Issue: 4 Start Page: 10
  • Kotler10 exd

    1. 1. New-ProductDevelopment and Product Life-Cycle Strategies Chapter 10
    2. 2. ObjectivesUnderstand how companies find anddevelop new-product ideas.Learn the steps in the new-productdevelopment process.Know the stages of the product lifecycle.Understand how marketingstrategies change during theproduct’s life cycle.
    3. 3. Microsoft c$50 billion in Innovation isprofits over 27 critical toyears Microsoft’s future successEarly new product Much of R & Ddevelopment relied efforts are Internetheavily on copying relatedthe competition Many new products$4.2 billion and services are in
    4. 4. DefinitionNew Product Development Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.
    5. 5. New ProductDevelopment StrategyNew products can be obtained viaacquisition ordevelopment.New products sufferfrom high failure rates.Several reasonsaccount for failure.
    6. 6. Discussion QuestionWhy do products fail?See if you can identify thefatal flaw in the brandsbelow and at right. Ben-Gay Asprin Buttermilk Shampoo Fruit of the Loom Laundry Detergent
    7. 7. Figure 10-1: Major Stages inNew-Product Development
    8. 8. New ProductDevelopment StrategyNew Product Development Process: Stage 1: Idea Generation  Internal idea sources: • R&D  External idea sources: • Customers, competitors, distributors, suppliers
    9. 9. 3M’s corporatecultureencourages,supports, andrewards newproduct ideasand innovation
    10. 10. Using the Web to Solicit Product Ideas Procter and GambleTo see how P&G solicits ideas fromcustomers, visit the Procter andGamble home page, click on theResources and Offers button, then Procter & Gambleselect the Share Your Thoughts listing.
    11. 11. New ProductDevelopment StrategyNew Product Development Process: Stage 2: Idea Screening  Product development costs increase dramatically in later stages.  Ideas are evaluated against criteria; most are eliminated.
    12. 12. New ProductDevelopment StrategyNew Product Development Process: Stage 3: Concept Development and Testing  Product concepts provide detailed versions of new product ideas.  Consumers evaluate ideas in concept tests.
    13. 13. New ProductDevelopment StrategyNew Product Development Process: Stage 4: Marketing Strategy Development  Strategy statements describe: • The target market, product positioning, and sales, share, and profit goals for the first few years. • Product price, distribution, and marketing budget for the first year. • Long-run sales and profit goals and the marketing mix strategy.
    14. 14. New ProductDevelopment StrategyNew Product Development Process: Stage 5: Business Analysis  Sales, cost, and profit projections Stage 6: Product Development  Prototype development and testing
    15. 15. Daimler is currently road-testing itsprototype NECAR 5 (New Electric Car)
    16. 16. BusinessNowSensable Video Clip Computer modeling is being used to aid in product design
    17. 17. New ProductDevelopment StrategyNew Product Development Process: Stage 7: Test Marketing  Standard test markets  Controlled test markets  Simulated test markets Stage 8: Commercialization
    18. 18. New Product Development StrategyIRI BehaviorScanprovides an in-market laboratoryfor testing newproducts andmarketing programs IRI BehaviorScan
    19. 19. Simulated Test Markets (STM) In-DepthAdvantages: Types of STMs: Reduces risk – capital,  ASSESSOR marketing dollars,  BASES cannibalization  MarkeTest Increases efficiency  Merwyn Maintains security –  And others competitors have less time to plan counter strategies Saves the company time
    20. 20. Simulated Test Markets (STM) In-DepthModel Inputs: Model Inputs: The markets size  Price Copy testing results  The proportion of Advertising budget for the stores carrying the test test product and product and the competitors. number of shelf facings Media schedule, by month. Consumer promotion,  Expected marketing Trade promotion by costs and margin month. contribution.
    21. 21. Simulated Test Markets (STM) In-DepthDo‘s & Don’ts of STMs Do‘s & Don’ts of STMs  Be a champion for your  Calculate different levels new product--but be of competitive response. objective  Dont estimate a level of  Choose the proper sample. support in a simulated  Expose people to your market that you would not product and its advertising maintain nationally. in a way that best simulates  Be very careful in the real world. estimating all marketing  Use proven research input factors—the more technology to forecast you guess incorrectly, the market behavior and sales. less accurate the forecast.
    22. 22. Figure 10-2: Sales and ProfitsOver A Product’s Life
    23. 23. Product Life-Cycle StrategiesThe Typical Product Life Cycle(PLC) Has Five Stages Product Development, Introduction, Growth, Maturity, Decline Not all products follow this cycle:  Fads  Styles  Fashions
    24. 24. Figure 10-3:Styles, Fashions, and Fads
    25. 25. Companieswant theirproducts toenjoy a longlife cycle.Hershey’sactivelypromotesthe fact thatit has been“unchangedsince 1899”
    26. 26. Product Life-Cycle StrategiesAdditional marketinginvestments canmove a product backinto the growth stage,as in the case ofCracker Jack.
    27. 27. Product Life-Cycle StrategiesThe product life cycle concept canbe 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
    28. 28. Product Life-Cycle Strategies PLC Stages Begins when the company Product develops a new- development product idea Introduction Sales are zero Growth Investment costs are high Maturity Profits are
    29. 29. Product Life-Cycle Strategies PLC Stages Low sales High cost per Product customer development acquired Introduction Negative profits Growth Innovators are Maturity targeted
    30. 30. Marketing Strategies: Introduction StageProduct – Offer a basic productPrice – Use cost-plus basis to setDistribution – Build selective distributionAdvertising – Build awareness amongearly adopters and dealers/resellersSales Promotion – Heavy expenditures tocreate trial
    31. 31. Product Life-Cycle Strategies PLC Stages Rapidly rising sales Product Average cost per development customer Introduction Rising profits Growth Early adopters are targeted Maturity Growing
    32. 32. Marketing Strategies: Growth StageProduct – Offer product extensions,service, warrantyPrice – Penetration pricingDistribution – Build intensive distributionAdvertising – Build awareness andinterest in the mass marketSales Promotion – Reduce expendituresto take advantage of consumer demand
    33. 33. Product Life-Cycle Strategies PLC Stages Sales peak Low cost per Product customer development High profits Introduction Middle majority Growth are targeted Maturity Competition
    34. 34. Marketing Strategies: Maturity StageProduct – Diversify brand and modelsPrice – Set to match or beat competitionDistribution – Build more intensivedistributionAdvertising – Stress brand differencesand benefitsSales Promotion – Increase to encouragebrand switching
    35. 35. Product Life-Cycle Strategies PLC Stages Declining sales Low cost per Product customer development Declining profits Introduction Laggards are Growth targeted Maturity Declining
    36. 36. Marketing Strategies: Decline StageProduct – Phase out weak itemsPrice – Cut priceDistribution – Use selective distribution:phase out unprofitable outletsAdvertising – Reduce to level needed toretain hard-core loyalistsSales Promotion – Reduce to minimallevel