MKT Ch. 8: Developing new products and managing the product life cycle

internal idea sources

R&D internal soical networks intraprenneurial programs that. encourage employees to dvlp new product ideas

**8 major stages of new product development (fig 8.1) (IICMBPTC)

1. Idea generation 2. Idea Screening 3. Concept development and Testing 4. Marketing Strategy Development 5. Business Analytics 6. Product development 7. Test marketing 8. commercialization

5 stages of PLC (P-I-G-M-D)

1. Product development begins when the company finds and develops a new product idea. During product development, sales are zero, and the company's investment costs mount. 2. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. 3. Growth is a period of rapid market acceptance and increasing profits. 4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. 5. Decline is the period when sales fall off and profits drop.

systematic new product development

Innovation management systems collect, review, evaluate, and manage new product ideas The innovation management system approach yields two favorable outcomes. First, it helps create an innovation-oriented company culture. Second, it will yield a larger number of new product ideas, among which will be found some especially good ones. The good new ideas will be more systematically developed, producing more new product successes.

8) Commercialization

Introducing a new product into the market

crowdsourcing

Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large into the new-product innovation process. (P&G, Under Armour, Quirky)

Team-based new product development

New product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. The team-based approach does have some limitations, however, for it sometimes creates more organizational tension and confusion than the more orderly sequential approach. but the rewards of fast and flexible product development far outweigh the risks

Customer-centered new product development

New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences. Successful new product development begins and ends with understanding customers and involving them in the process

Managing new product development

Requires a holistic approach Customer-centered new product development Team-based new product development Systematic new product development.

concept testing

Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal

Introduction stage

The PLC stage in which a new product is first distributed and made available for purchase.

Decline Stage

The PLC stage in which a product's sales fade away.

Maturity Stage

The PLC stage in which a product's sales growth slows or levels off

Growth Stage

The PLC stage in which a product's sales start climbing quickly.

new product development

The development of original products, product improvements, product modifications, and new brands through the firm's own product development efforts.

product concept

a detailed version of the new product idea state in meaningfyl consumer terms

5) Business Analysis

a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's objectives. If the projections satisfy the company objectives, the product can move to the product development stage.

2 ways firms obtain new products

acquisition new product development

4) Marketing Strategy development

designing an initial marketing strategy for a new product based on the product concept

6) Product development

developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering huge jump in investment, marketers often involve actual customers in product dvlpmnt and testing the R&D department will develop and test one or more physical versions of the product concept. R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted costs.

external idea sources

distributors suppliers competitors customers

concept development

marketer's task is to dvll this new product into alternative product concepts,

marketing strategy statement (3 parts)

part 1) describes the target market: the planned value proposition; and the sales, market0share, and profit goals for the first few years part 2) outlines the product's planned price, distribution, and marketing budget for the 1st yr part 3) describes the planned long-run sales, profit goals, and marketing mix strategy

2) idea screening

screening new product ideas to spot good ones and drop poor ones as soon as possible purpose: to reduce the number of new product ideas the 1st idea-reducing stage RWW new product screening framework Is it real? is there a real need, desire for the product and will customers buy it? Can we win? does it offer a sustainable comp advantage. is it worth doing? does it fits company's overall growth strategy? sufficient profit potential?

styles, fashions, and fads

style - a basic and distinctive mode of expression fashion - a currently acceptable or popular style in a given field fad - a temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity (pokemon Go)

Product life cycle (PLC)

the course of a product's sales and profits over its lifetime

7) test marketing

the stage of new product development at which the product and its proposed marketing program are tested in realistic market settings Test marketing gives the marketer experience with marketing a product before going to the great expense of full introduction. It lets the company test the product and its entire marketing program—targeting and positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels. However, test marketing costs can be high, and testing takes time that may allow market opportunities to slip by or competitors to gain advantages. Companies sometimes shorten or skip test marketing to take advantage of fast-changing market developments, as Starbucks did with its hugely successful mobile payments app.

1) idea generation

the systematic search for new product ideas purpose: to create a large # of ideas