2. Companies face with two major challenges:
A) Development of new products Product Life Cycle strategiesB)
3. A) New Product Development (NDP)
A) ACQUISITION
NDP (R&D)B)
A company can obtain a new product in 2 ways:
Buying a company, a patent, a license
to produce someone else’s product
Research & Development in the
company
4. A) New Product Development (NDP)
A)
What is a NEW product?
Totally new product on the market
B)
C)
D)
New product for the company
Product modifications
Repositioning
TV plasma, electric car, I-Phone 11 pro max
Mars chocolates + Mars Ice-cream
Lipsticks with different flavors
Ajvar in Africa!
GOOD for Customers:
Variety of products for his/her needs!
GOOD for Companies:
Source of Growth & Profit
5. A) New Product Development (NDP)
New product for the company
6. A) New Product Development (NDP)
90% of new products FAIL!
Idea is good, market overestimated!
Poor designed product
Product launched at wrong time!
Price is too high!
Not advertised properly!
Badly chosen name! Harley-Davidson cake decorating kit
7. A) New Product Development (NDP)
Home exercises:
Why New Coke failed? Why McDonald’s Arch Deluxe failed?
8. A) New Product Development (NDP) Process
The NDP Process has 8 steps:
Idea generation
Idea screening
Concept developing and testing
Marketing strategy development
Business analysis
Commercialization
Test marketing
Product development
9. A) New Product Development (NDP) Process
1) Ideageneration: search for new product ideas!
Internal sources: External sources:
Ideas from engineers, R&D, salespersons Ideas from customers, competitors & distributors / suppliers
15%rule!
10. A) New Product Development (NDP) Process
2) Ideascreening: reducing the number of ideas!
Possible questions:
Is there a real need for the product?
Does the product provide a new usage?
Can the idea be technically developed?
Will the product bring profit?
Will the product satisfy customer needs?
11. A) New Product Development (NDP) Process
3) Concept development and testing: concretization of an idea!
Different concepts!
Different concept testing!
Presentation as a “word”, “picture”
Finding out mistakes!
12. A) New Product Development (NDP) Process
4) Marketing strategydevelopment: positioning, sales, marketing mix!
13. A) New Product Development (NDP) Process
5) Business Analysis: sales, costs, profits, market share
14. A) New Product Development (NDP) Process
6) Product development: making a physical product (prototype)
15. A) New Product Development (NDP) Process
7) Test marketing: testing the entire Marketing program
16. A) New Product Development (NDP) Process
8) Commercialization: final decision to launch the new product
$ 1 billion
global
$ 300 mil
USA
19. B) Introduction phase
Sales
Costs
Profit
Marketing aim
Product
Price
Competition
Promotion
Low price
Negative, even evident losses
Low sales, first time on the market
High costs per consumer
Product awareness and familiarity
Basic product
Small or none at all
Product awareness
20. B) Growth phase
Sales
Costs
Profit
Marketing aim
Product
Price
Competition
Promotion
Price for market penetration
Growing profits
Fast, increased sales (market boom)
Average costs per consumer
Maximizing market share
Modifications, services, warranties, servicing
Competition is increasing
Wide promotion, mass marketing
21. B) Maturity phase
Sales
Costs
Profit
Marketing aim
Product
Price
Competition
Promotion
Price war, declined due to competition
Highest profits
Peak sales
Low cost per consumer
Protection of the market share
Product differentiation
Fierce and strong competition
Promotion of the best features
22. B) Decline phase
Sales
Costs
Profit
Marketing aim
Product
Price
Competition
Promotion
Low price
Declining of profits
Declining sales
Low cost per consumer
To reduce the costs
Appearance of new products
Declining competition
Only loyal customers
23. Homework
Fill in the table
Introduction Growth Maturity Decline
Competition
Sales
Profit
Promotion
Product
Width
The width of a company's product mix pertains to the number of product lines that a company sells. For example, if a company has two product lines, its product mix width is two. Small and upstart businesses will usually not have a wide product mix. It is more practical to start with some basic products and build market share. Later on, a company's technology may allow the company to diversify into other industries and build the width of the product mix.
Length
Product mix length pertains to the number of total products or items in a company's product mix, according to Philip Kotler's textbook "Marketing Management: Analysis, Planning, Implementation and Control." For example, ABC company may have two product lines, and five brands within each product line. Thus, ABC's product mix length would be 10. Companies that have multiple product lines will sometimes keep track of their average length per product line. In the above case, the average length of an ABC Company's product line is five.
Depth
Depth of a product mix pertains to the total number of variations for each product. Variations can include size, flavor and any other distinguishing characteristic. For example, if a company sells three sizes and two flavors of toothpaste, that particular brand of toothpaste has a depth of six. Just like length, companies sometimes report the average depth of their product lines; or the depth of a specific product line.
Consistency
Product mix consistency pertains to how closely related product lines are to one another--in terms of use, production and distribution. A company's product mix may be consistent in distribution but vastly different in use. For example, a small company may sell its health bars and health magazine in retail stores. However, one product is edible and the other is not. The production consistency of these products would vary as well.