The document discusses new product development and product life cycle strategies. It describes the 8 major steps in new product development: 1) idea generation, 2) idea screening, 3) concept development, 4) marketing strategy, 5) business analysis, 6) product development, 7) test marketing, and 8) commercialization. It also outlines the typical stages in a product's life cycle: introduction, growth, maturity, and decline. Strategies are discussed for each stage of the product life cycle.

1. 9-1
New-Product Development and
Product Life-Cycle Strategies

2. 9-2
Original
Products
Product
Improvements
Product
Modifications
New
Brands
Acquired
Companies
Acquired
Patents
Acquired
Licenses
New-Product Development
Strategy
Strategies for Obtaining New-Product Ideas

3. 9-3
Causes of New-Product Failures
One study estimated that as many as 80% of new
consumer packaged products fail.
Only about 40% of new consumer products are
around 5 years after introduction.
Why?
Overestimation of market size,
Product design problems,
Product incorrectly positioned, priced, or advertised,
Product may have been pushed despite poor marketing
research findings,
Costs of product development, or
Competitive actions.

4. 9-4
Improving New-Product Success
New-product success
depends on having a:
Unique superior product
(one with higher
quality, features, and
value in use), and a
Well-defined product
concept (a defined
target market, product
requirements, and
benefits).
To create successful
new products, the
company must:
understand its
consumers, markets,
and competitors, and
develop products
that deliver superior
value to customers.

5. 9-5
Major Stages in New-Product
Development (Fig. 9-1)

6. 9-6
Customers Competitors Distributors Suppliers
Systematic Search for New Product Ideas
Obtained From Employees and Also From:
New Product Development Process
Step 1. Idea Generation

7. 9-7
New Product Development Process
Step 2. Idea Screening
Helps spot good ideas and drop poor ones as
soon as possible.
Many companies have systems for rating and
screening ideas which estimate:
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
Then, the idea is evaluated against a set of
general company criteria.

8. 9-8
1. Develop New Product Ideas
into Alternative Detailed
Product Concepts
2. Concept Testing - Test the
New-Product Concepts with
Groups of Target Customers
3. Choose the One That Has the
Strongest Appeal to Target
Customers
New Product Development Process
Step 3. Concept Development
Product Image is the
Way Consumers
Perceive an Actual or
Potential Product

9. 9-9
DaimlerChrysler’s Electric Car
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.

10. 9-10
New Product Development Process
Step 4. Marketing Strategy
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales, Market Share, & Profit Goals
Part Two Describes First-Year:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Run:
Sales & Profit Goals
Marketing Mix Strategy

11. 9-11
If No, Eliminate
Product Concept
Business Analysis
Review of Product Sales, Costs, and Profits
Projections to See if They Satisfy Company Objectives
Step 5. Business Analysis
Step 6. Product Development
If Yes, Move to
Product Development

12. 9-12
New Product Development Process
Step 7. Test Marketing
Product and
marketing program
are introduced into
more realistic
market settings.
Can be very
expensive and time
consuming.
Test the following:
Positioning strategy,
Advertising,
Distribution,
Pricing,
Branding,
Packaging,
Budget levels.

13. 9-13
When is the
Right Time to
Introduce
Product?
Where to
Launch a
New
Product?
Introducing the New Product into the
Market
New Product Development Process
Step 8. Commercialization

14. 9-14
Step 1
Step 2
Step 3
Step 4
Sequential
Speeding Up New-Product
Development
Step
1
Step
2
Step 3
Step 4
Simultaneous (Team-Based)

15. 9-15
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments ($)
Sales and
Profits ($)
Sales and Profits Over the Product’s Life From Inception to
Demise
Product Life Cycle (Fig. 9-2)

16. 9-16
Applications of the Product Life
Cycle
Product class which has the longest life cycles (i.e.
gas-powered cars),
Product form which tends to have the standard PLC
shape (i.e. minivans),
Brand which can change quickly because of changing
competitive attacks and responses (i.e. Ford Taurus),
Style which is a basic and distinctive mode of
expression (formal clothing),
Fashion which is a popular style in a given field
(business casual),
Fad which is a fashion that enters quickly, is adopted
quickly, and declines fast (pet rocks).

17. 9-17
Problems Using the PLC
Trouble identifying
Which Stage of the
PLC the Product Is
In
Difficult to Forecast
the Sales Level, the
Length of Each Stage,
and Shape of the PLC
Strategy is Both a
Cause and a Result
of the Product’s Life
Cycle
The PLC Concept can be
applied by marketers for
describing how products
and markets work, but
may also present some
problems:

18. 9-18
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative or low
Create product awareness and trial
Offer a basic product
Usually is high
Distribution High distribution expenses
Advertising Spending is high to inform consumers
Summary of Characteristics, Objectives, & Strategies
Introduction Stage of the PLC

19. 9-19
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer new product features and models
Remain where they are or fall slightly
Distribution Increase number of distribution outlets
Advertising Educating consumers and meeting
competition
Summary of Characteristics, Objectives, & Strategies
Growth Stage of the PLC

20. 9-20
Sales
Costs
Profits
Marketing Objectives
Product
Price
Begin to slow
Low cost per customer
High profits, then lower profits
Maximize profits while defending
market share
May modify product
May decline
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
Summary of Characteristics, Objectives, & Strategies
Maturity Stage of the PLC

21. 9-21
Maturity Stage of the PLC
Company tries to increase consumption of
the current product
Changing characteristics such as quality,
features, or styles to attract new users
Company tries to improve sales by changing
one or more marketing mix elements

22. 9-22
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and maintain,
harvest, or drop the product
Phase out weak items
Cut price
Distribution Selective: phase out unprofitable outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
Summary of Characteristics, Objectives, & Strategies
Decline Stage of the PLC