Ch8: Product Development /LCM

successful new product development requires a holistic approach that is

-Customer-centered -Team-based -systematic

marketing strategy statement consists of three parts

1. Target Marketing- describes the target market; the planned value proposition; and the sales, market-share, and profit goals for the first few years. 2. 4 P's- outlines the product's planned price, place(distribution), and promotions budget for the first year 3. Strategic Objectives- describes the planned long-run sales, profit goals, and marketing mix strategy

Product concept

A detailed version of the new product idea stated in meaningful consumer terms. Product concept development -develop alternative concepts -product concept testing alternatives -choose the best

understand this

A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product.

fashion

currently accepted or popular in a given field

Business analysis

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

OBJECTIVE 8-1 Explain how companies find and develop new product ideas

Companies find and develop new product ideas from a variety of sources. Many new product ideas stem from internal sources. Companies conduct formal R&D, or they pick the brains of their employees, urging them to think up and develop new product ideas. Other ideas come from external sources. Companies track competitors' offerings and obtain ideas from distributors and suppliers who are close to the market and can pass along information about consumer problems and new product possibilities. Perhaps the most important sources of new product ideas are customers themselves. Companies observe customers, invite them to submit their ideas and suggestions, or even involve customers in the new product development process. Many companies are now developing crowdsourcing or open-innovation new product idea programs, which invite broad communities of people—customers, employees, independent scientists and researchers, and even the general public—into the new product innovation process. Truly innovative companies do not rely only on one source for new product ideas.

Marketing strategy development

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

Product development

Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering. The product development step calls for a huge jump in investment. It will show whether the product idea can be turned into a workable product. prototype versions for the testing stage

OBJECTIVE 8-3 Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

Each product has a life cycle marked by a changing set of problems and opportunities. The sales of the typical product follow an S-shaped curve made up of five stages. The cycle begins with the product development stage in which the company finds and develops a new product idea. The introduction stage is marked by slow growth and low profits as the product is distributed to the market. If successful, the product enters a growth stage, which offers rapid sales growth and increasing profits. Next comes a maturity stage in which the product's sales growth slows down and profits stabilize. Finally, the product enters a decline stage in which sales and profits dwindle. The company's task during this stage is to recognize the decline and decide whether it should maintain, harvest, or drop the product. The different stages of the PLC require different marketing strategies and tactics.

Commercialization

Introducing a new product into the market. Decisions: -Timing of introduction- internal and external factors -Where to introduce- single location, nationally, internationally

Crowdsourcing

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

OBJECTIVE 8-4 Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

Marketers must consider two additional product issues. The first is social responsibility. This includes public policy issues and regulations involving acquiring or dropping products, patent protection, product quality and safety, and product warranties. The second involves the special challenges facing international product and services marketers. International marketers must decide how much to standardize or adapt their offerings for world markets.

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.

Customer-centered new product development

New product development that focuses on finding new ways to solve customer problems and create more customer- satisfying experiences. -discovered through customer research -involve customers in the process

Idea screening

Screening new product ideas to spot good ones and drop poor ones as soon as possible. ways of screening new ideas: -proposals reviewed by "new product committee" -RWW framework Real- is there real customer need and desire for the product? Win- Can we win? Does the product offer real sustainable advantage? Worth Doing- Does the product fit the company's overall growth strategy?

Concept testing

Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal (to find out the degree of consumer appeal toward the concepts) -present concepts to consumers symbolically or physically -ask customers their reactions

Product life cycle (PLC)

The course of a product's sales and profits over its lifetime. 1) Product development- finds/develops new product idea; no sales; increasing investment costs 2) introduction- product introduced to the market; slow sales growth; heavy investment; no profits; few competitors 3) Growth- rapid market acceptance; increasing profits; growing number of competitors 4) Maturity- product achieved acceptance by most potential buyers; sales growth slows; profits level off or start to decline; increase marketing costs to defend against competitors; stable # of competitors, beginning to decline 5) Decline- sales drop off; profits drop; declining number of competitors

new product devlopment

The development of original products, product improvements, product modifications, and new brands through the firm's own product development efforts can drive company's growth but can also be risky and expensive creating successful new products requires -understanding consumers, markets, and competitors -developing products that deliver superior value to customers

OBJECTIVE 8-2 List and define the steps in the new product development process and the major considerations in managing this process.

The new product development process consists of eight sequential stages. The process starts with idea generation. Next comes idea screening, which reduces the number of ideas based on the company's own criteria. Ideas that pass the screening stage continue through product concept development, in which a de- tailed version of the new product idea is stated in meaningful consumer terms. This stage includes concept testing, in which new product concepts are tested with a group of target consumers to determine whether the concepts have strong consumer appeal. Strong concepts proceed to marketing strategy development, in which an initial marketing strategy for the new product is developed from the product concept. In the business-analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to determine whether the new product is likely to satisfy the company's objectives. With positive results here, the ideas become more concrete through product development and test marketing and finally are launched during commercialization. New product development involves more than just going through a set of steps. Companies must take a systematic, holistic approach to managing this process. Successful new product development requires a customer-centered, team-based, systematic effort.

Test marketing

The stage of new product development at which the product and its proposed marketing program are tested in realistic market settings. -gives the marketer an experience with marketing a product before the introduction -tests the product and its marketing program -may use test markets to minimize costs and minimize time needed

idea generation

The systematic search for new product ideas. -Internal idea sources include: intrapreneurial programs, internal social networks, R&D dept. -External idea sources include: customers, distributors and suppliers, competitors, other industries, and crowdsourcing (open innovation programs)

style

a basic, distinctive mode of expression

4 step method for innovation

examples from history (study history, other industries) -> presence of mind (abandon preconceived notions; expect the unexpected; hardest step) -> flash of insight (not a new idea, but a new way of combining past ideas from different sources) -> resolution (willingness to move forward without a detailed plan; willingness to change course if a better opportunity presents itself)

sales over time

fashions, styles, fads

The new product development process takeks a new product from _____ to _______

idea generation to commercialization

Systematic new product development

organized ways to collect, review, evaluate, and manage new product ideas -not random or haphazard

RWW abbreviation

real, win, worth-doing

fad

temporary period of unusually high sales driven by immediate popularity