New-Product Development and Product Life-Cycle Strategies Flashcards
Two ways to obtain new products
Acquisition
New product development
buying of a whole company / patent / license
Acquisition
original products, product improvements, product
modifications, and new brands developed
New Product Development
original products, product improvements, product
modifications, and new brands developed
New Product Development
Major Stages in New-Product Development
Idea Generation
Idea Screening
Concept development and testing
Marketing Strategy Development
Business Analysis
Product Development
Test Marketing
Commercialization
systematic search for new-product ideas
Idea Generation
Sources of new-product ideas
Internal
External
company’s own formal R&D
Internal Sources
sources outside the company
External sources
inviting broad communities of people
Crowdsourcing
Identify good ideas and drop poor ideas
Idea Screening
- Is it real?
- Can we win?
- Is it worth doing?
RWW Screening Framework
possible product that the company can see itself
Product Idea
detailed version of the idea
Product Concept
consumers perceive an actual / potential product
Product Image
Testing new-product concepts w/ groups of target consumers
Concept Testing
Initial marketing strategy for introducing the product to the market
Marketing Strategy Development
Marketing Strategy statement includes:
- Description of the target market
- Value proposition
- Sales and profit goals
a review of the sales, costs, and profit projections
Business Analysis
Creation and testing of one or more physical versions by the R&D
Product Development
requires an increase in investment
Product Development
Shows if: Can be turned into a workable product
Product Development
Product and marketing program are introduced into more realistic marketing settings
Test Marketing
Provides the marketer with experience in testing the product
Test Marketing
Types of Test Markets
- Standard test
- Controlled
- Simulated
Advantages of simulated test markets
- Less expensive
- Faster
- Restricts access by competitors
Disadvantages of simulated test markets
Not reliable and accurate due to the controlled setting
When firms test market:
- New product with large investment
- Uncertainty about product or marketing
When firms may not test market:
- Simple line extension
- Copy of competitor product
- Low costs
- Management Confidence
the introduction of the new product
Commercialization
- When to launch
- Where to launch
- Planned market rollout
Commercialization
Successful new-product development should be:
- Customer-centered
- Team-based
- Systematic
New ways to solve customer problems and create more customer-satisfying experience
Customer-centered New Product Development
company departments work closely together individually to complete each stage of the process
Sequential New-Product Development
Increased control in risky or complex projects but may be slow
Sequential New-Product Development
Company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness
Team-based New-Product Development
Creates an innovation-oriented culture
Systematic New-Product Development
Yields a large number of new-product ideas
Systematic New-Product Development
Product Life-Cycle Strategies
(PIGMD)
Product development
Introduction
Growth
Maturity
Decline
Sales are zero and investment costs mount
Product development
Slow sales growth and profits are nonexistent
Introduction
Rapid market acceptance and increasing profits.
Growth
Slowdown in sales growth and profits level off or decline
Maturity
Sales fall off and profits drop
Decline
Temporary periods of unusually high sales
Fads
Slow sales growth
Little or no profit
High distribution and promotion expense
Introduction Stage
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain
Economies of scale
Growth Stage
Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to competition
Increased promotion and R&D to
Support sales and profits
Maturity Stage
Market modifying
Product modifying
Marketing mix modifying
Maturity Stage Modifying Strategies
Maintain the product
Harvest the product
Drop the product
Decline Stage
Public policy and regulations regarding developing and dropping products, patents, quality, and safety
Product Decisions and Social Responsibility
