Chapter 9: New product development

Product Life Cycle

*Product development* -Zero sales and increasing investment costs *Introduction* -Slow sales and nonexistent profits *Growth* -Rapid market acceptance and increasing profits -Economies of scale *Maturity* -Slow sales growth and profits level off or decline *Decline* -Sales fall off and profits drop

International Product & Service Lifecycle Considerations

-Determining what products and services to introduce in which countries -Standardization versus customization -Packaging and labeling -Customs, values, laws

Decline Stage (Management Strategies)

-Maintain the product -Harvest the product -Drop the product

Modification Strategies (Maturity Stage Management Strategies)

-Modify the market -Modify the product -Modify the marketing mix *Arm & Hammer* -Baking Soda -Fridge deodorizers -Carpet deodorizers -Cat litter -Pool maintenance -Toothpaste & toothbrushes -Men's & women's deodorant -Car & vacuum filters -Co-branded products with Hefty, Dutch boy, etc...

Marketing strategy statement

-Target market description -Value proposition planned -Sales, market-share, and marketing mix

New product development process

Idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization

Idea screening

Identify good ideas and drop poor ideas R-W-W Screening Framework: Is it real? Can we win? Is it worth doing?

systematic (PDLC) -(new product development)

Innovation management system -Creates an innovation-oriented company culture -Yields a large number of new product ideas

Crowdsourcing

Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new-product innovation process.

Product Decisions & Social Responsibility

Public policy and regulations regarding developing and dropping products, patents, quality, safety, and product warranties should be considered carefully.

Managing New-Product Development

Successful new-product development should be: Customer centered, Team-based, and Systematic. (Solving a customer problem and offering value)

test marketing likely and unlikely

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

Customer-centered (new-product development)

focuses on finding new ways to solve customer problems and creating more customer-satisfying experiences.

Business analysis

involves a review of the sales, costs, and profit projections to find out whether they satisfy the company's objectives

Commercialization

involves introducing a new product into the market. -When to launch? -Where to launch? -Planned market roll out?

Product concept

is a detailed version of the idea stated in meaningful consumer terms (midsize sporting compact car appealing to young singles)

Product idea

is an idea for a possible product that the company can see itself offering to the market (company coming up with new compact car) more vague

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.

Idea generation

is the systematic search for new-product ideas (two sources: external and internal)

Product image

is the way consumers perceive an actual or potential product; can be a word or picture

External sources

refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms

Internal sources

refer to the company's own formal research and development, management and staff, and intrapreneurial programs

New product development

refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development

Concept testing

refers to testing new-product concepts with groups of target consumers (Picture of a sports car. Haven't built it out yet and haven't tested the actual product yet. Now we're going to move into the marketing strategy development)

Acquisition

refers to the buying of a whole company, a patent, or a license to produce someone else's product

Marketing strategy development

refers to the initial marketing strategy for introducing the product to the market

Test marketing

the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings. -Beta testing -Soft launch