MARKET MANAGMENT

1. NEW PRODUCT
DEVELOPMENT AND PRODUCT
LIFE-CYCLE STRATEGIES

2. Test
marketing
• New product
development
strategy

3. New product development srategy
• New-product development
– The development of original products,
product improvements, product modifications
and new brands through the firm’s own R&D
efforts
• Idea generation
– The systematic search for new-product ideas
– Internal idea sources, external idea sources
• Idea screening
– Screening new-prorduct ideas in order to
spot good ideas and drop poor ones as soon
as possible
• Concept development and testing
– Product concept: a detailed version of the
new-product idea stated in meaningful
consumer terms
– Concept testing: testing new-product
concepts with a group of target consumers to
find out if the concepts have strong
consumer appeal
• Marketing strategy development
– Designing an initial marketing strategy for a
new product based on the product concept
• Business analysis
– A review of the sales, costs, and prfoit
projections for a new product to find out
whether these factors satisfy the company’s
objectives
• Product development
– Developing the product concept into a
physical product in order to ensure that the
product idea can be turned into a workable
product
• Test marketing
– The stage of new-product development in
which the product and marketing program
are tested in more realistic settings
– Standard test markets, controlled test
markets, simulated test markets
• Commercialization
– Introducing a new product into the market

4. Product Life-Cycle Strategies
• Product life-cycle
– The course of a product’s sales and profits
over its lifetime.
• Five distinct stages
– product development,
– introduction,
– growth,
– maturity,
– decline

5. Some terms
• Style
– A basic and distinctive mode of expression
• Fashion
– A currently accepted or propular style in a given field
• Fad
– A fashion that enters quickly, is adopted with great
zeal, peaks early, and declines very quickly

6. Stages in product life-cycle
Introduction stage
• The product life-cycle stage in which the new
product is first distributed and made available for
purchase
• Takes time,
• Slow sales growth
• Negative profits
• Low sales
• High distribution and promotion expenses
• Few competitors
• Basic product forms

7. Growth stage
• The product life-cycle stage in which a product’s
sales start climbing quickly
• Early adopters will continue to buy
• The later buyers will start following their leader
• High profits
• New competitors
• Market will expand
• New versions of the product
• New features are added
• Product quality improves
• High promotion spending
• The company enters new markets

8. Maturity stage
• The stage in the product life cycle in which sales
growth slows or levels off
• Lasts longer than the previous stages
• Prices fall
• Profits drop
• Modify the market : The company looks for new
users and market segments
• Modify the product: changing characteristics, add
new features
• Modify the marketing mix: improving sales by
changing one or more marketing mix elements

9. Decline stage
• A product’s sales decline
• Some firms withdraw from the market
• Cut the promotion budget
• The company may
– Maintain the brand
– Harvest the product

10. Product life cycle characteristics
Characteristics Introduction Growth Maturity Decline
Sales Low Rapidly rising Peak sales Declining
Costs High cost per
customer
Average cost
per customer
Low cost per
customer
Low cost per
customer
Profits Negative Rising High Declining
Customers Innovaters Early adopters Middle majority Laggards
Competitors few Growing
number
Stable number Declining
number

11. Product life cycle strategies
Strategies Introduction Growth Maturity Decline
Product Offer a basic
product
Offer product
extension, service,
warranty
Diversify brand
and models
Phase out weak
items
Price Use cost-plus Price to penetrate
market
Price to match or
beat competitors
Cut price
Distribution Build selective
distribution
Build intensive
distribution
Build more
intensive
distribution
Go selective:
phase out
unprofitable
outlets
Advertising Build product
awareness among
early adopters and
dealers
Build awareness
and interest in the
mass market
Stress brand
differences and
benefits
Reduce to level
needed to
retain hard-core
loyals
Sales
promotion
Use heavy sales
promotion to entice
trial
Reduce to take
advantage of
heavy consumer
demand
Increase to
encourage brand
switching
Reduce to
minimal level