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CHAPTER 6
DEVELOPING&
MANAGING PRODUCT
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New Product A product new to the
world, the market, theproducer, the seller, or
some combination of these.
NEW PRODUCT
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CATEGORIES OF NEWPRODUCTS
New-to-the-World
New-to-the-World
New Product Lines
New Product Lines
Product Line Additions
Product Line Additions
Improvements or Revisions
Improvements or Revisions
Repositioned Products
Repositioned Products
Lower-Priced Products
Lower-Priced Products
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REVIEW LEARNING OUTCOMEDEVELOPING NEW PRODUCTS
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NEW-PRODUCT DEVELOPMENTPROCESS
1) New-Product Strategy1) New-Product Strategy
2) Idea Generation2) Idea Generation
3) Idea Screening3) Idea Screening4) Business Analysis4)
Business Analysis
5) Development5) Development6) Test Marketing6) Test Marketing7)
Commercialization7) Commercialization
New ProductNew Product
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2) IDEA GENERATION
Customers
Employees
Distributors
Competitors
Vendors
R & D
Consultants
Sources of Sources of
New-ProductNew-ProductIdeasIdeas
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Brainstorming The process of getting
a group to think of unlimited ways to vary
a product or solve aproblem.
BRAINSTORMING
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Screening
3) IDEA SCREENING
The first filter in theproduct
development process,which eliminates ideas
that are inconsistentwith the organizations
new-product strategy orare inappropriate forsome other
reason.
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CONCEPT TEST
Concept Test A test to evaluate a
new-product idea,usually before any
prototype has beencreated.
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5) DEVELOPMENT
Creation of prototype
Marketing strategy
Packaging, branding,labeling
Promotion, price, anddistribution strategy
Manufacturing feasibility
Final government approvalsif needed
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SIMULTANEOUS PRODUCTDEVELOPMENT
SimultaneousProduct
Development
A new team-orientedapproach to new-
product developmentwhere all relevant
functional areas andoutside suppliers
participate in thedevelopment process.
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TestMarketing
The limited
introduction of aproduct and amarketing program to
determine thereactions of potentialcustomers in a market
situation.
6) TEST MARKETING
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ALTERNATIVES TO TESTMARKETING
Single-source research using supermarket scannerdata
Simulated (laboratory) markettesting
Online test marketing
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7) COMMERCIALIZATION
ProductionProduction
Inventory BuildupInventory Buildup
Distribution ShipmentsDistribution Shipments
Sales TrainingSales Training
Trade AnnouncementsTrade Announcements
Customer AdvertisingCustomer Advertising
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REVIEW LEARNING OUTCOMENEW-PRODUCT DEVELOPMENT
PROCESS
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WHY NEW PRODUCTS FAIL
No discernible benefits
Poor match between features and customerdesires
Overestimation of market size
Incorrect positioning
Price too high or too low
Inadequate distributionPoor promotion
Inferior product
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SUCCESS FACTORS
Match between product and market needs
Different from substitute products
Factors in Successful Factors in Successful New ProductsNew
Products
Benefit to large number of people
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SUCCESS FACTORS
Listening tocustomers
Producing the bestproduct
Vision of futuremarket
Strong leadership
Commitment to new-product development
Project-based teamapproach
Getting every aspectright
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REVIEW LEARNING OUTCOMEWHY PRODUCTS SUCCEED AND
OTHERS FAIL
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ProductLife Cycle
PRODUCT LIFE CYCLE
A concept thatprovides a way to trace
the stages of aproducts acceptance,from its introduction(birth)
to its decline
(death).
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PRODUCT LIFE CYCLE
Time
D o
l l a r
s
Profits
SalesSalesIntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
0
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PRODUCT LIFE CYCLES FORSTYLES, FASHIONS, AND FADS
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U.S. SALES OF TELEVISIONS
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INTRODUCTORY STAGE INEUROPE
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GROWTH STAGE
Increasing rate of sales
Entrance of competitors
Market consolidation
Initial healthy profits
Aggressive advertising of thedifferences between brands
Wider distribution
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MATURITY STAGE
Sales increase at a decreasing rate
Saturated markets
Annual models appear
Lengthened product lines
Service and repair assume important roles
Heavy promotions to consumers and dealers
Marginal competitors drop out
Niche marketers emerge
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DECLINE STAGE
Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessentialmarketing expenses
Organized abandonment
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DIFFUSION PROCESS AND PLC CURVE
Innovators
Early adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cycle
curvecurve
DiffusionDiffusioncurvecurve
Introduction Growth Maturity Decline
S a l e s
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THANK YOU
