Chapter 9: Marketing: NEW PRODUCT DEVELOPMENT Flashcards
Ways to Obtain New Products
New product development +Acquisition
New product development refers to original products,
product improvements, product modifications, and new
brands developed from the firm’s own research and
development.
Acquisition refers to the buying of a whole company, a
patent, or a license to produce someone else’s product.
New Product Development
Idea Generation
Idea generation is the systematic search for new product ideas.
Sources of new product ideas
* Internal
* External
Internal sources refer to the company’s own formal
research and development, management and staff, and
intrapreneurial programs.
External sources refer to sources outside the company
such as customers, competitors, distributors, suppliers,
and outside design firms.
(e.g. hackatons, crowdsourcing)
New Product Development
Idea Screening
Identify good ideas and drop poor ideas
R-W-W screening framework:
* Is it real?
* Can we win?
* Is it worth doing?
New Product Development
Concept Development and Testing
▪ Product idea is an idea for a possible product that the
company can see itself offering to the market.
▪ Product concept is a detailed version of the idea stated in
meaningful consumer terms.
▪ Product image is the way consumers perceive an actual
or potential product.
Concept testing refers to testing new product concepts
with groups of target consumers.
New Product Development
Marketing strategy development +Marketing strategy statement
Marketing strategy development is designing an initial
marketing strategy for a new product based on the product
concept.
Marketing strategy statement consists of:
* Target market description
* Value proposition planned
* Sales, market-share, and marketing mix
New Product Development
Business analysis
Business analysis is a review of the sales, costs, and profit
projections for a new product to find out whether these
factors satisfy the company’s objectives.
New Product Development
Product Development
Product development is developing the product concept
into a physical product to ensure that the product idea can be
turned into a workable market offering.
New Product Development
Test marketing
Test marketing is the stage of new product development in
which the product and its proposed marketing program are
tested in realistic market settings.
Test marketing: To figure out if and how to best market its plantbased, meatless McPlant burger, McDonald’s spent more than three years test marketing the product.
Marketing Strategy Development
* When test marketing is likely
– New product with large investment
– Uncertainty about product or marketing program
* When test marketing is unlikely
– Simple line extension
– Copy of competitor product
– Low costs
– Management confidence
New Product Development
Commercialization
Commercialization involves introducing a new product into
the market.
* When to launch?
* Where to launch?
* Planned market rollout?
Successful new product development should be:
* Customer centered
* Team based
* Systematic
Customer-centered new product development focuses on finding new ways to solve customer problems and
creating more customer-satisfying experiences.
Team-based new product development involves various
company departments working closely together, overlapping
the steps in the product development process to save time
and increase effectiveness.
Systematic New Product Development
* Innovation management system
– Creates an innovation-oriented company culture
– Yields a large number of new product ideas
New Product Development in Turbulent Times
* Tempted to reduce spending
* May become less competitive
Product Life-Cycle Strategies
Introduction Stage
- Slow sales growth
- Little or no profit
- High distribution and promotion expenses
Product Life-Cycle Strategies
Growth Stage
- Sales increase
- New competitors enter the market
- Profits increase
- Economies of scale
- Consumer education
- Pricing tactics & extensions to attract more buyers
Product Life-Cycle Strategies
Maturity Stage
- Slowdown in sales
- Many suppliers
- Substitute products
- Overcapacity leads to competition
- Increased promotion and R&D to support sales and profits
Most products are in the maturity stage of the life cycle,
and therefore most of marketing management deals with
a mature product.
Modification Strategies
* Modify the market
* Modify the product
* Modify the marketing mix
* When modifying the market, the company tries to increase consumption by finding new users and new market segments for its brands.
Product Life-Cycle Strategies
Decline Stage
- Maintain the product
- Harvest the product
- Drop the product
