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New product development & PLC by Sonu choudhary
The document discusses new product development and the product lifecycle. It outlines the 7 steps of new product development as idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, and test marketing. It then describes the 4 stages of the product lifecycle as introduction, growth, maturity, and decline. Finally, it shows how a firm's marketing objectives and mix should relate to the different product lifecycle stages.
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New product development & PLC by Sonu choudhary
- 1. New Product Development and Product Life-Cycle Strategies SubmittedBy :- Sonu ChoudharyMs.samreen maam Submitted By:-
- 2. New Product Development ANew Product Development is the entire set of activities required to bring a new concept to a state of market readiness.
- 3. New Product DevelopmentProcess Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization
- 4. Step 1. IdeaGeneration Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers
- 5. Step 2. IdeaScreening Process to spot good ideas and drop poor ones. Criteria • Market Size • Product Price • Development Time & Costs • Manufacturing Costs • Rate of Return
- 6. 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. Step 4. MarketingStrategy Development Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy
- 8. Step 5. BusinessAnalysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If No, Eliminate Product Concept If Yes, Move to Product Development
- 9. Step 7. TestMarketing Standard Test Market Full marketing campaign in a small number of representative cities. Standard Test Market Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee. Controlled Test Market A few stores that have agreed to carry new products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Simulated Test Market Test in a simulated shopping environment to a sample of consumers.
- 10. Product Life Cycle Theproduct life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.
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- 12. Introductory Stage Highfailure rates Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and information Intensive personal selling to channels Full-Scale Launch of New Products Full-Scale Launch of New Products
- 13. Increasing rateof sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered Offered in more sizes, flavors, options Offered in more sizes, flavors, options Growth stage
- 14. Declining salesgrowth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge Many consumer products are in Maturity Stage Many consumer products are in Maturity Stage Maturity Stage
- 15. Long-run dropin sales Large inventories of unsold items Elimination of all nonessential marketing expenses Rate of decline depends on change in tastes or adoption of substitute products Rate of decline depends on change in tastes or adoption of substitute products Decline Stage
- 16. How stages ofthe product life cycle relate to firm’s marketing objectives & marketing mix actions INTRODUCTION GROWTH MATURITY DECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.
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Editor's Notes
- #13 Notes: During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product. Production costs are high. Promotion strategy focuses on developing product awareness and informing consumers about the product’s potential benefits. Intensive personal selling is often required. Promotion of convenience products may require heavy consumer sampling and couponing. Shopping and specialty products demand educational advertising and personal selling to the final consumer.
- #14 Notes: In the growth stage, sales grow at an increasing rate, many competitors enter the market, and larger companies may acquire small pioneering firms. Profits rise rapidly, peak, and begin declining as competition increases. Aggressive brand advertising and communication of the differences between brands is the preferred promotion strategy. Adequate distribution is a major key to establish a strong market position and product success.
- #15 On Line: McDonald’s What is McDonald’s doing to successfully compete in the maturity stage? Notes: The maturity stage begins when sales increase at a decreasing rate, and the market approaches saturation. This is normally the longest stage of the PLC. Annual models may appear during the maturity stage for shopping and specialty products. Product lines are lengthened to appeal to additional market segments. Service and repair help manufacturers distinguish their products from others. Heavy promotion is required to maintain market share. For example, consider the competitive “wars” between Coke and Pepsi, Budweiser and Miller, and McDonalds against Burger King and Wendy’s. As prices and profits continue to fall, marginal competitors drop out of the market. Niche marketers that target narrow, well-defined segments of a market emerge.
- #16 Notes: The rate of decline depends on how rapidly consumer tastes change or substitute products are adopted. A strategy for declining products includes elimination of nonessential marketing expenses, and the eventual product withdrawal as sales decline.