this is for the product development

1. PRODUCT
DEVELOPMENT
AND
PRODUCT LIFE CYCLE

2. MANAGING
THE PRODUCT
MANAGING
THE PRODUCT
LIFE CYCLE
NEW PRODUCT
DEVELOPMENT PRODUCT

3. CHANGES IN PRODUCT STRATEGY

4. Factors demanding changes in product strategy
Customer
needs
Technology
Government
policy/laws
Product life-
cycle
Making changes in the product with the changes in
customer needs
E.g. Increased cost of land leading to restructuring
stores to increase stacking levels
Changes in technology can require either product
modification or making existing products obsolete
E.g. The jelly filled telecom cables are getting replaced
by fibre optic telecom cables.
Many companies have changed over from main frame
computers to PCs to Laptops
Change in government policies and laws enacted by
Indian Parliament requires change in product strategy
E.g. Policy of liberalisation permitted private sector to
enter various sectors original reserved for public
sectors.
In order to maintain growth in sales and profits,
industrial firms decide to drop, modify or develop new
(substitutes) products when the existing products
reach “maturity” or “decline” stages in product life-
cycles

5. NEW PRODUCT DEVELOPMENT

6. Classification of New Products
(i) Products that are innovative and new to the world
(ii) Products that are new to the Company but not new to the market
(iii) Improvements to the existing products in the existing markets
(iv) Repositioning existing products to new market segments
(v) Product with substantial cost reductions without reduction in
performance

7. Factors responsible for Success and Failure of New Industrial Products
Product not
satisfying
consumer needs
Resulting from an inadequate coordination between R & D
and Marketing (marketing research) functions
Product not
significantly
different
They are similar and perhaps imitations of the existing
products
FAILURE :
Product do not
deliver expected
performance
Products fail to meet the expectations due to poor design
Weak
development
process
Competitors copy their products but have superior quality
and marketing effectiveness
Prices are much
higher than
value perceived
This might be because the companies want to recover the
cost of design, product development and market
introduction immediately

8. Factors responsible for Success and Failure of New Industrial Products
Product
superiority &
uniqueness
Superior quality and new product features that give the
product substantial competitive advantage
Market
knowledge
The company understands the needs and wants of target
markets. Defines the same at the product concept stage of
the new product development process, and translates this
knowledge into marketing strategies and action plans
SUCCESS:
Technical &
production
capabilities
They are required to translate the product concept into
product development and commercial production

9. NEW PRODUCT DEVELOPMENT AND MANAGEMENT
STAGES IN NEW PRODUCT DEVELOPMENT
IDEAS GENERATION
IDEASCREENING
CONCEPT DEVELOPMENTAND TESTING
BUSINESSANALYSIS
MARKET TESTING
PRODUCT DEVELOPMENT
1
2
3
4
5
COMMERCIALISATION
6
7
8
CONCEPT TESTING

10. IDEAS GENERATION
Source
--- Sales persons
--- Customers
--- Distributors
--- Suppliers
--- Design engineers
--- Managers
Attracting good ideas by using techniques such as
Brainstorming Attribute listing

11. IDEA SCREENING
Stage I
To select those ideas which
are likely to succeed
Screening is done in two stages
…the product is in line with long term
objectives
…resources are adequate to make it
successful
… it is useful to customers
… it delivers more value
… if there is future growth, market size, and
competition in the new product industry
Checking the
product ideas
to ascertain if

12. Stage II
Rating of
new ideas
on
:
(A) The relative importance of these factors
by giving weightages out of a total
weight of 1
B) The management rates how well the new
product is in line with the company’s
profile on each factor on a scale of 0.0 to
1.0
(C) Eventually the scores in (A) & (B) are
multiplied to get a total score for the new
product idea

13. BUSINESS ANALYSIS
The purpose of business analysis is to develop
an estimated projection of sales, cost and
profitability in the proposed new product over
the next 5-7 years
The analysis covers aspects like ;
(a) Required investment in plant, equipment, working capital and
market development
(b) Market potential sales forecast customer and competitive
analysis
(c)Costs of product development, manufacturing and marketing
the product
(d) Likely price levels, profitability and return on investment

14. PRODUCT DEVELOPMENT
All this is done to ensure that the new products
are developed and launched in the market
before competitors
Process in which engineers and technicians
create the desired product
The R & D department develops one or more
prototypes of the product concept
The development of the prototype will confirm
or negate its ability to produce the product
within the cost estimate and performance
parameters previously established
In today's competitive environment the success
of the new product depends on how fast it is
developed

15. MARKET TESTING
Different methods of product testing are
Alfa and Beta
Testing
Alfa testing consists of testing the products internally in
the company
Beta testing is the second stage of testing at the potential
buyers site
Trade shows
Introduce new products at trade shows where large
number of prospective buyers are exposed to the new
product
Dealers show
room
If the new industrial product is sold through the
distribution channel, it can be tested at their show room
Test marketing
This method is used by certain industrial marketers to
test their product in a limited geographical area through
their sales force in normal market situations

16. COMMERCIALISATION
Activities include :
… Training of sales force
… Product catalogues
… Price lists
… Introductory advertisements
… Adequate stocks at warehouses/distributors shops
A product is commercialised or launched when
it is introduced to a target market
It involves various activities developed in an
action plan as part of the marketing plan
The marketing activities should be
synchronized with production to ensure market
entry timing

17. MARKET
TEST
SALES
EXCELLENT
LAUNCH
PRODUCT
SALES
FAIR
ORGANISE NEW
MARKET
TEST
SALES
EXCELLENT
SALES FAIR
SALES POOR
MODIFY
PRODUCT
MARKET
TEST
SALES
POOR
MODIFY
PRODUCT
DROPTHE
PRODUCT
MARKET
TEST
PRODUCT LAUNCH

18. MANAGING THE PRODUCT
LIFE CYCLE

19. Product Life Cycle
&
Marketing Strategy

20. What is the demand for these products in 2023 compared to
1990?
???
» Fixed / land-line phones
» Cell phones
» Video cassette player
» Floppy / CD
Demand for products

21. • New products meet needs better
» Maruti 800 v/s Alto 800
• Technology changes
» Video conference v/s air travel
• Substitutes replace a product
» Telegrams v/s SMS, SMS v/s Mobile Chat
• Population moves to the next level in Maslow’s NH
» Basic variant of a car to full features loaded model
Why would demand change?

22. PLC Concept is Based on Four Premises
Products have a
limited life.
Product sales pass through
distinct stages, each with
different marketing
Implications.
Profits from a product
vary at different stages
in the life cycle.
Products require different
strategies at different
life cycle stages.

23. PLC Benefits
1. Facilitates pre-planning the product launch
2. Facilitates prolonging the profitable base
3. Facilitates investment decisions on products
4. Facilitates choice of appropriate entry strategy
5. Facilitates choice of right time to exit
6. Provides useful clues for managing customers

24. Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative
Create product awareness
and trial
Offer a basic product
Use cost-plus
Distribution Build selective distribution
Promotion Advertising & Sales Promotion
Introduction Stage

25. INTRODUCTORY STAGE
--- Crucial decision is on pricing strategy to be adopted
(i) Market skimming or
(ii) market penetration
--- spend a lot on physical distribution and promotion to create an
awareness and acceptance of the product
Situation
Strategy
… There may not be ready market for the product
… Sales are low
… Products undergoes teething troubles
… Profit seems a remote possibility

26. Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer product extensions, service, warranty
Price to penetrate market
Distribution Build intensive distribution
Promotion Advertising, Direct Marketing, Personal selling
Growth Stage

27. GROWTH STAGE
Situation
sales shoot up. we are happy with profit generated by the product
competitors will enter with new product features
Cannot dictate price to the customer/channel
Strategy
--- Alteration of marketing strategies
--- Competition oriented pricing
--- Product improvement necessary.
--- Maintain same level promotional expenditure
--- Marketing and distribution efficiency
--- Product improvement necessary.

28. Sales
Costs
Profits
Marketing Objectives
Product
Price
Peak sales
Low cost per customer
High profits
Maximize profit while defending
market share
Diversify brand and models
Price to match or best competitors
Distribution Build more intensive distribution
Promotion Advertising, Direct Marketing, Personal selling
Stress brand differences and benefits
Maturity Stage

29. MATURITY STAGE
Strategy
DECLINE CAN BE ARRESTED BY BY IMPROVEMENTS IN PRODUCT AND
PROMOTION
… THINK OF NEW PRODUCT MIX.
… ELIMINATION OR REDESIGN OF CURRENT PRODUCT
Situation
… SLOW DOWN IN THE GROWTH RATE OF SALES
… DEALERS MAY DICTATE TERMS
… PRICE COMPETITION BECOMES INTENSE

30. Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and milk the brand
Phase out weak items
Cut price
Distribution Go selective: phase out unprofitable outlets
Promotion Sales Promotion /Reduce to level needed to retain
hard-core loyal customers
Decline Stage

31. DECLINE STAGE
REDUCE THE PRICE TO PROP UP THE PRODUCT’S SALES
Situation
DECLINE MAY BE SLOW OR RAPID
MAY BE DUE TO BETTER SUBSTITUTES,BETTER COMPETITION,
TECHNOLOGICAL ADVANCES
Strategy
CONSIDER ELIMINATION OF SUCH MARGINAL OR UNPROFITABLE PRODUCTS

32. OPTIONS IN DECLINE STAGE
1) IMPROVE PRODUCT QUALITY
2) ADD NEW PRODUCT FEATURES RESULTING IN EXTRA BENEFITS
3) PENETRATE NEW MARKET SEGMENTS
4) GIVE INCENTIVES TO DISTRIBUTION CHANNELS
5) FOCUS ON SELECTIVE DISTRIBUTION CHANNELS
6) IMROVE ADVERTISING AND SALES EFFORTS

33. At the heart of a great brand is a great
product
Thank you