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Unit-12 CEMBA.ppt
1. Product Life-Cycle and New-
Product Development
12
PP Presentation by
Dr. Shaikh Rafiqul Islam
Ph.D(Malaysia), MBA(Australia), M.Com(DU)
Professor
Department of Marketing
Jagannath University
3. 8-3
New-Product Failures
• Only 10% of new products are still on the
market and profitable after 3 years.
• Failure rate for industrial products is as high as
30%.
• Why?
– Overestimation of market size
– Design problems
– Incorrectly positioned, priced, or advertised
– Pushed despite poor marketing research findings
– Development costs
– Competition
6. 8-6
Step-1 Idea Generation
When Heinz asked kids
what would make the
product more fun, they
said, “Change the color!”
so, Heinz developed and
launched EZ Squirt, now
in a variety of colors
targeted at kids. The EZ
Squirt bottle’s special
nozzle also emits a thin
stream so tykes can
autograph their burgers.
7. 8-7
Step-2 Idea Screening
• Process to spot good ideas and drop poor
ones.
• Develop system to estimate: market size,
product price, development time and
costs, manufacturing costs, and rate of
return.
• Evaluate these findings against set of
company criteria for new products.
9. 8-9
Step-3 Concept Development
and Testing
• Product Idea: idea for a possible product
that the company can see itself offering.
• Product Concept: detailed version of the
idea stated in meaningful consumer terms.
• Product Image: the way consumers
perceive an actual or potential product.
10. 8-10
• The company’s task is
to develop its fuel-
cell-powered electric
car into alternative
product concepts, find
out how attractive
each is to customers,
and choose the best
one.
DiamlerChrysler’s Fuel-Cell-
Powered Electric Car
11. 8-11
Step-4 Marketing Strategy
Development
Part One Describes:
The Target Market
Planned Product Positioning
Sales, Market Share, & Profit Goals
Part Two Outlines the First-Year’s:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Run:
Sales & Profit Goals
Marketing Mix Strategy
12. 8-12
Step-5 Business Analysis
• Involves a review of
the sales, costs, and
profit projections to
assess fit with
company objectives.
• If yes, move to the
product development
phase.
14. 8-14
Step-6 Product Development
• Develop concept into
physical product
• Calls for large jump in
investment
• Prototypes are made
• Prototype must have
correct physical
features and convey
psychological
characteristics
15. 8-15
Step-7 Test Marketing
• Product and program introduced in more
realistic market setting.
• Not needed for all products.
• Can be expensive and time consuming,
but better than making major marketing
mistake.
16. 8-16
Step-7 Test Marketing
Nokia test-marketed its new N-Gage cell phone/mobile game player extensively
before introducing it worldwide.
17. 8-17
Step-8 Commercialization
• Must decide on timing (i.e., when to
introduce the product).
• Must decide on where to introduce the
product (e.g., single location, state,
region, nationally, internationally).
• Must develop a market rollout plan.
19. 8-19
Product Life Cycle Applications
• Product class has the longest life cycle (e.g., gas-
powered cars)
• Product form tends to have the standard PLC
shape (e.g., dial telephone)
• Brand can change quickly because of changing
competitive attacks and responses (e.g., Tide,
Cheer)
• Style is a basic and distinctive mode of expression
(e.g., formal clothing, Danish modern furniture)
• Fashion is a popular style in a given field (e.g.,
business casual)
• Fad is a fashion that enters quickly, is adopted
quickly, and declines fast (e.g., pet rocks)
