DEVELOPING

&
MANAGING PRODUCT

CHAPTER 6
 NEW PRODUCT

New Product A product new to the

world, the market, the
producer, the seller, or
some combination of
these.
CATEGORIES OF NEW
PRODUCTS
New-to-the-World
New-to-the-World

New
New Product
Product Lines
Lines

Product
Product Line
Line Additions
Additions

Improvements
Improvements or
or Revisions
Revisions

Repositioned
Repositioned Products
Products

Lower-Priced
Lower-Priced Products
Products
REVIEW LEARNING OUTCOME
DEVELOPING NEW PRODUCTS
NEW-PRODUCT DEVELOPMENT
PROCESS

1) New-Product Strategy
2) Idea Generation
3) Idea Screening
4) Business Analysis
5) Development
6) Test Marketing
7) Commercialization
New Product
 2) IDEA GENERATION

Customers

Employees

Distributors

Competitors

Vendors
Sources of
New-Product
Ideas R&D

Consultants
 BRAINSTORMING

Brainstorming The process of getting

a group to think of
unlimited ways to vary
a product or solve a
problem.
3) IDEA SCREENING

The first filter in the

Screening product
development process,
which eliminates ideas
that are inconsistent
with the organization’s
new-product strategy or
are inappropriate for
some other reason.
 CONCEPT TEST

Concept Test A test to evaluate a

new-product idea,
usually before any
prototype has been
created.
4) BUSINESS ANALYSIS

Demand

Consideration
Consideration Cost
ss in
in
Business
Business
Analysis
Analysis Sales
Stage
Stage

Profitability
 5) DEVELOPMENT
 Creation of prototype
 Marketing strategy
 Packaging, branding,
labeling
 Promotion, price, and
distribution strategy
 Manufacturing feasibility
 Final government approvals
if needed
SIMULTANEOUS PRODUCT
DEVELOPMENT

Simultaneous
Product
A new team-oriented
Development approach to new-
product development
where all relevant
functional areas and
outside suppliers
participate in the
development process.
6) TEST MARKETING

Test The limited

Marketing
introduction of a
product and a
marketing program to
determine the
reactions of potential
customers in a market
situation.
 ALTERNATIVES TO TEST
MARKETING

 Single-source research using supermarket scanner

data

 Simulated (laboratory) market

testing

 Online test marketing

7) COMMERCIALIZATION

Production
Production

Inventory
Inventory Buildup
Buildup

Distribution
Distribution Shipments
Shipments

Sales
Sales Training
Training

Trade
Trade Announcements
Announcements

Customer
Customer Advertising
Advertising
REVIEW LEARNING OUTCOME
NEW-PRODUCT DEVELOPMENT
PROCESS
WHY NEW PRODUCTS FAIL

 No discernible benefits
 Poor match between features and customer
desires
 Overestimation of market size
 Incorrect positioning
 Price too high or too low
 Inadequate distribution
 Poor promotion
 Inferior product
SUCCESS FACTORS
Factors in Successful
New Products

Match between product and market needs

Different from substitute products

Benefit to large number of people

 SUCCESS FACTORS
Listening to
Strong leadership
customers

Producing the best Commitment to new-

product product development

Vision of future Project-based team

market approach

Getting every aspect

right
REVIEW LEARNING OUTCOME
WHY PRODUCTS SUCCEED AND
OTHERS FAIL
PRODUCT LIFE CYCLE

Product A concept that

Life Cycle provides a way to trace
the stages of a
product’s acceptance,
from its introduction
(birth) to its decline
(death).
 PRODUCT LIFE CYCLE
Introductory Growth Maturity Decline
Stage Stage Stage Stage Sales
Dollars

Profits

Time
 PRODUCT LIFE CYCLES FOR
STYLES, FASHIONS, AND FADS
U.S. SALES OF TELEVISIONS
INTRODUCTORY STAGE
 High failure rates
 Little competition
 Frequent product modification
 Limited distribution
 High marketing and production costs
 Negative profits with slow sales increases
 Promotion focuses on awareness and information
 Communication challenge is to stimulate primary
demand
INTRODUCTORY STAGE IN
EUROPE
GROWTH STAGE
 Increasing rate of sales
 Entrance of competitors
 Market consolidation
 Initial healthy profits
 Aggressive advertising of the
differences between brands
 Wider distribution
 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
 DECLINE STAGE
 Long-run drop in sales
 Large inventories of
unsold items
 Elimination of all nonessential
marketing expenses
 “Organized abandonment”
DIFFUSION PROCESS AND PLC CURVE

Introduction Growth Maturity Decline

Product
life cycle
Sales

curve
Early majority
Late majority
Early adopters
Innovators
Laggards
Diffusion
curve
THANK
YOU…