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.

Product development

3,984 views

Published on

Published in: Business, Design
  • Be the first to comment

Product development

  1. 1. Chapter 9 New Product Development and Product Life-Cycle Strategies PRINCIPLES OF MARKETING
  2. 2. Causes of New Product Failures <ul><li>Overestimation of Market Size </li></ul><ul><li>Product Design Problems </li></ul><ul><li>Product Incorrectly Positioned, Priced or Advertised </li></ul><ul><li>Costs of Product Development </li></ul><ul><li>Competitive Actions </li></ul><ul><li>To create successful new products, the company must: </li></ul><ul><ul><li>understand it’s customers, markets and competitors </li></ul></ul><ul><ul><li>develop products that deliver superior value to customers. </li></ul></ul>
  3. 3. New Product Development Process <ul><li>Idea Generation and Screening </li></ul><ul><li>Concept Development and Testing </li></ul><ul><li>Marketing Strategy </li></ul><ul><li>Business Analysis </li></ul><ul><li>Product Development </li></ul><ul><li>Test Marketing </li></ul><ul><li>Commercialization </li></ul>
  4. 4. New Product Development Process Step 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers
  5. 5. <ul><li>Process to spot good ideas and drop poor ones </li></ul><ul><li>Criteria </li></ul><ul><ul><li>Market Size </li></ul></ul><ul><ul><li>Product Price </li></ul></ul><ul><ul><li>Development Time & Costs </li></ul></ul><ul><ul><li>Manufacturing Costs </li></ul></ul><ul><ul><li>Rate of Return </li></ul></ul>New Product Development Process Step 2. Idea Screening
  6. 6. New Product Development Process Step 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One
  7. 7. New Product Development Process Step 4. Marketing Strategy Development Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share
  8. 8. New Product Development Process Step 5. Business Analysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If Yes, Move to Product Development If No, Eliminate Product Concept
  9. 9. New Product Development Process Step 7. Test Marketing Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Controlled Test Market A few stores that have agreed to carry new products for a fee.
  10. 10. PRODUCT LIFE CYCLE <ul><li>THE COURSE OF A PRODUCT’S SALES AND PROFITS OVER ITS LIFE TIME. </li></ul><ul><li>AFTER LAUNCHING NEW PRODUCT EVRY COMPANY WANTS THE PRODUCT TO ENJOY A LONG AND HAPPY LIFE </li></ul><ul><li>PRODUCT LIFE CYCLE CONSISTS OF 5 STAGES </li></ul><ul><li>PRODUCT DEVELOPMENT </li></ul><ul><li>INTRODUCTION </li></ul><ul><li>GROWTH </li></ul><ul><li>MATURITY </li></ul><ul><li>DECLINE </li></ul>
  11. 11. PRODUCT DEVELOPMENT <ul><li>IT BEGINS WHEN THE COMPANY FINDS AND DEVELOPS A NEW PRODUCT IDEA </li></ul><ul><li>DURING PRODUCT DEVLOPMENT,SALES ARE ZERO AND THE COMPANY’S INVESTMENT COSTS MOUNT </li></ul>
  12. 12. Product Life Cycle Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($)
  13. 13. INTRODUCTION STAGE <ul><li>INTRODUCTION STAGE STARTS WHEN THE NEW PRODUCT IS LAUNCHED </li></ul><ul><li>INTRODUCTION IS A PERIOD OF SLOW SALES GROWTH AS THE PRODUCT IS INTRODUCED IN THE MARKET </li></ul><ul><li>PROFITS ARE NON EXISTENT IN THIS STAGE BECAUSE OF THE HEAVY EXPENSES OF PRODUCT INTRODUCTION </li></ul><ul><li>IT TAKES TIME AND SALES GROWTH ARE SLOW </li></ul>
  14. 14. Product Life Cycle Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($)
  15. 15. Introduction Stage 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 Advertising Build product awareness among early adopters and dealers
  16. 16. GROWTH STAGE <ul><li>IF NEW PRODUCT SATISFIES THE MARKET,IT WILL ENTER A GROWTH STAGE </li></ul><ul><li>SALES WILL CLIMB QUICKLY </li></ul><ul><li>EARLY ADOPTERS WILL CONTINUE TO BUY AND LATER WILL FOLLOW,WHEN THEY WILL HEAR THE WORD OF MOUTH </li></ul><ul><li>GROWTH IS A PERIOD OF RAPID ACCEPTANCE AND INCREASING PROFITS </li></ul>
  17. 17. Growth Stage 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 Advertising Build awareness and interest in the mass market
  18. 18. MATURITY STAGE <ul><li>MATURITY IS A PERIOD OF SLOW DOWN IN SALES GROWTH BECAUSE THE PRODUCT HAS ACHIEVED ACCEPTABCE BY MOST POTENTIAL BUYERS. </li></ul><ul><li>THE SLOW DOWN IN GROWTH SALES RESULTS IN MANY PRODUCERS WITH MANY PRODUCTS TO SELL,THIS LEADS TO GREATER COMPETITION </li></ul><ul><li>COMPETITORS BEGIN MARKET DOWN PRICES,INCREASE THEIR ADVERTISEMENTS </li></ul><ul><li>THESE STEPS LEAD TO DROP IN PROFIT </li></ul>
  19. 19. Maturity Stage 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 Advertising Stress brand differences and benefits
  20. 20. DECLINE STAGE <ul><li>DECLINE IS THE PERIOD WHEN SALES FALL OFF AND PROFITS DROP </li></ul><ul><li>SALES MAY PLUNGE TO ZERO </li></ul>
  21. 21. Decline Stage 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 Advertising Reduce to level needed to retain hard-core loyal customers

×