Product development involves creating physical versions of products through testing. Test marketing introduces products into realistic settings to test marketing programs. There are different types of test markets. Successful new product development is customer-centered, team-centered, and systematic. The product life cycle has four stages: development, introduction, growth, and maturity. In maturity, sales growth slows as most potential buyers have purchased.

2. Product development involves the creation and
testing of one or more physical versions by the
R&D or engineering departments
Requires an increase in investment
Marketing Strategy Development

3. Test marketing is the stage at which the product
and marketing program are introduced into more
realistic marketing settings
Provides the marketer with experience in testing
the product and entire marketing program before
full introduction

4. Types of Test Markets
Standard test markets
Controlled test markets
Simulated test markets

5. Advantages of simulated test markets
Less expensive than other test methods
Faster
Restricts access by competitors
Disadvantages
Not considered as reliable and accurate due
to the controlled setting

6. When firms test
market
• New product
with large
investment
• Uncertainty
about product
or marketing
program
When firms may
not test market
• Simple line
extension
• Copy of
competitor
product
• Low costs
• Management
confidence

7. Commercialization is
the introduction of the new product
When to launch
Where to launch
Planned market rollout

8. Managing New-Product Development
Successful new-product development should be:
Customer centered
Team centered
Systematic

9. Customer-centered new product
development focuses on finding new ways
to solve customer problems and create more
customer satisfying experiences
Begins and ends with solving customer
problems

10. Sequential new-product development is a
development approach where company
departments work closely together individually
to complete each stage of the process before
passing along to the next department or stage
 Increased control in risky or complex
projects
 Slow

11. Team-based new-product development is a
development approach where company
departments work closely together in cross-
functional teams, overlapping in the product-
development process to save time and increase
effectiveness

12. Systematic new-product development is an
innovative development approach that
collects, reviews, evaluates, and manages
new-product ideas
 Creates an innovation-oriented culture
 Yields a large number of new-product ideas

13. Fads are temporary periods of unusually
high sales driven by consumer enthusiasm
and immediate product or brand popularity
Product Life-Cycle Strategies

14. “The stages through which the individual products
develop over a period of time is known as Product Life
Cycle”
The product life cycle concept is derived from the fact
that a given product’s volume and revenue follow a
typical pattern of four-phases cycle. This life cycle is
representative fact of the existence of every product.

16. Product development:
 Begins when company finds and develops a
new-product idea.
 During this stage, sales are zero and the
company’s investment costs add up.

17. Introduction:
 Starts when the new product is first launched.
 Is a period of slow sales growth as the product is
introduced in the market.
 Profits are nonexistent or low in this stage
because of the heavy expenses of product
introduction.

18.  Sales: low
 Costs: high cost per customer
 Profits: negative
 Marketing Objective: create product awareness
and trial
 Product: offer a basic product
 Price: use cost-plus formula
 Distribution: build selective distribution
 Promotion: heavy to entice product trial

19. Growth:
 Is a period of rapid market acceptance and
increasing profits.
 Product’s sales start climbing quickly.

20.  Sales: rapidly rising
 Costs: average cost per customer
 Profits: rising
 Marketing Objective: maximize market share
 Product: offer extension, service, warranty
 Price: penetration strategy
 Distribution: build intensive distribution
 Promotion: reduce to take advantage of demand

21. Maturity:
 Is a period of slowdown in sales growth
because the product has achieved
acceptance by most potential buyers.
 Profits level off or decline because of
increased marketing outlays to defend the
product against competition.

22.  Sales: peak
 Costs: low cost per customer
 Profits: high
 Marketing Objective: maximize profits while
defending market share
 Product: diversify brand and models
 Price: match or best competitors
 Distribution: build more intensive distribution
 Promotion: increase to encourage brand
switching

23.  Modifying the Market:
 Increase the consumption of the current
product.
 How?
 Look for new users and market segments.
 Reposition the brand to appeal to larger or
faster-growing segment.
 Look for ways to increase usage among
present customers.

24.  Modifying the Product:
 Changing characteristics such as quality,
features, or style to attract new users and
to inspire more usage.
 How?
 Improve durability, reliability, speed, taste.
 Improve styling and attractiveness.
 Add new features.
 Expand usefulness, safety, convenience.

25.  Modifying the Marketing Mix:
 Improving sales by changing one or more
marketing mix elements.
 How?
 Cut prices.
 Launch a better ad campaign.
 Move into larger market channels.

26.  Modifying the Marketing Mix:
 Improving sales by changing one or more
marketing mix elements.
 How?
 One method is to launch aggressive sales
promotion programs, such as rebates.

27. Decline:
 Is the period when sales fall off and profits drop.
 Sales decline for many reasons: technological
advances, shifts in consumer tastes, and increased
competition.
 A firm must regularly review product sales,
market shares, costs, and profit trends. Then,
management can decide whether to maintain,
harvest, or drop the declining products.

28.  Sales: declining
 Costs: low cost per customer
 Profits: declining
 Marketing Objective: reduce expenditures and
milk the brand
 Product: phase out weak items
 Price: cut price
 Distribution: selective--phase out unprofitable
outlets
 Promotion: reduce to minimal level