Chapter 8: New-product development and product life cycle strategies Flashcards
Strategies for obtaining new-product ideas:
> acquisition of: companies, patents, licenses
new products: original products, improvements, modifications
Only 10% of new products are still on the market and profitable after 3 years. Why?
- overestimating of market size
- design problems
- incorrectly positioned, prices or advertised
- pushed despite poor marketing research findings (sunk costs)
- development costs
- competition
Major Stages in New-Product Development:
1.Idea generation
2. idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. test marketing
8. commercialisation
Idea Generation:
systematic search for new product ideas.
- internal idea sources (company employees)
- external idea sources
- crowdsourcing: inviting broad communities of people into the new product innovation process (customers, researchers
Idea screening:
screening new product ideas to spot good ones and drop poor ones as soon as possible
- process to spot good ideas and drop poor ones
- develop system to estimate (market size, product price, development time and costs, manufacturing costs)
- evaluate these finding against set if company criteria for new products
Concept Development and Testing:
- product concept: idea for a possible product that the company can see itself offering to the market - product idea: detailed version of the idea stated in meaningful consumer terms
- product image: the way consumers perceive an actual or potential product
- 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.
1. Describe:
- target market
- planned product positioning
- market share and profit goals
2. Outlines the first year’s:
- product’s planned price
- distribution
- marketing budget
3. Describes Long Run:
- sales and profit goals - marketing
Business Analysis:
review of the sales, costs and profit 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 to ensure that the product idea can be turned into a workable market offering.
- calls for large jump in investment
- prototypes, must have correct physical features and convey psychological characteristics
Test Marketing:
stage of new product development at which the product and its proposed marketing program are tested in realistic market settings
- not needed for all products
- can be expensive and time consuming but better than making major marketing mistake
Commercialization:
act of introducing a new product into the market.
- must decide on timing
- must decide on where to introduce the product
- must develop a market rollout plan
Organizational New-Product Development:
> sequential approach: each stage is completed before moving to the next phase of the project
simultaneous approach: cross-functional teams work through overlapping steps to save time and increase effectiveness.
Managing New-Product Development:
- consumer-centered - time-based
- systematic
Product Life Cycle:
course of a product’s sales and profits over its lifetime
Product Life Cycle Strategies:
1.developement- finds and develops a new product idea. sales are zero and investment costs mount.
2. introduction- slow sales growth. Profits are non-existing cause heavy expenses of product introduction.
3. growth- rapid market acceptance and increasing profits.
4. maturity- slowdown in sales growth. reached most buyers. level off or decline because of increased marketing outlays to defend the product against competition.
5. decline- period when sales fall off and
profits drop.
