Lecture 7 New Product Development and Product Life Cycle strategies
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The document discusses new product development and product life cycle strategies. It outlines the 8 steps of the new product development process: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, commercialization, test marketing, and product development. It also describes the 4 phases of the product life cycle: introduction, growth, maturity, and decline. For each phase it provides an overview of key factors like sales, costs, profits, competition levels, and marketing approaches.
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Lecture 7 New Product Development and Product Life Cycle strategies
- 1. New Product Development and Product Life-Cycle Strategies December, 2020
- 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
- 17. B) Product Life Cycle (PLC) Strategies
- 18. B) Product Life Cycle (PLC) Strategies
- 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
Editor's Notes
- https://www.marketing91.com/coca-cola-brand-failure/
- 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.