Chapter # 9

New Product Development & Product Life-Cycle Strategies

1.New-Product Development Strategy
2.New-Product Development Process
3.Managing New-Product Development
4.Product Life-Cycle Strategies
5.Additional Products & Services Considerations

1.New-Product Development Strategy

The development of original products, product improvements, product modifications & new brands through the firms own R&D efforts.
Ways for obtaining new products:
*Acquisition
*New Product Development

Reasons of Product Failures:

Overestimated market size.
Product Poorly Designed.
Incorrectly Positioned.
Launched at wrong time.
Priced to high.
Poorly Advertised

2.New-Product Development Process

Ideal Generation:
*Internal Idea Sources: Everyone in the company can contribute good new product ideas.
*External Idea Sources
Customers
Competitors
Distributors & Suppliers
Outside Firms

Ideal Screening: Screening new product ideas in order to spot good ideas & drop poor ones as soon as possible. Purpose is to reduce the # of ideas.

Concept Development & Testing:
*Product Concept: A detailed version of the new product idea stated in meaningful consumer terms.
*Concept testing: testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
*Helps the company find out the strongest appeal.

Marketing Strategy Development:
*Designing an initial marketing strategy for a new product based on the product concept.
*Market Strategy Statement:
a)Describes target market
b)Price, Distribution & Marketing budget.
c)Planned long term sales, Profit goals & Marketing mix.

Business Analysis:
*Review of sales, costs & profit projections for a new product to find out whether these factors satisfy the company’s objectives.
*It evaluates the business attractiveness.
*Sales history, Risks, Sales forecast, operating expenses e.t.c.

Product Development:
*Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product.
*The R&D designs a prototype that will satisfy & excite consumers.

Test Market:
*The stage of new product development in which the product and marketing program are tested in more realistic market settings.

Commercialization:
Introducing a new product into the market.
a)Introduction timing.
b)Where to launch the product.

3.Managing New-Product Development

Consumer centered :

*New product development that focuses on finding new ways to solve customer problems & create more customer satisfying experiences.
*Understanding what consumers need & want.

“What is innovation after all, if not products & services that offer fresh thinking in a way that meets the needs of consumers?”

Team based:

*An approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time & increase efficiency.
*The company assembles a group of people from various departments that stay with the product from the start to the end.

Systematic effort:

*The new product development should be holistic & systemic in order to give room for new ideas.
*Innovation Management System: It collects, reviews, evaluates & manages new ideas.
a)Helps create an innovation oriented company culture.
b)Yields a larger # of new product ideas.

4.Product Life-Cycle Strategies

The course of a product’s sales & profits over its life time. It involves five distinct stages:
1.Product Development
2.Introduction
3.Growth
4.Maturity
5.Decline

*Style: A basic & distinctive mode of expression.
*Fashion: A currently accepted or popular style in a given field.
*Fad: A temporary period of unusually high sales driven by consumer enthusiasm & immediate product or brand popularity.

5.Additional Products & Services Considerations

*Product Decisions & Social Responsibility: This includes public policy issues & regulations involving acquiring or dropping products, patent protection, product quality, safety & product warranties.

*International Product & Services Marketing: It involves the special challenges facing international product & service markets. International marketers must decide how much to standardize or adapt their offerings for world markets.