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Product Life-Cycle Strategies
New-Product Development
Strategies
Strategies for Obtaining New Product Ideas
Acquired
Companies
Acquired
Patents
Acquired
Licenses
Six categories of New
Products
New-to-the-world product
New product lines
Additions to the existing product
lines
Improvements of existing products
Repositioning
Cost reductions
New Product
Development
companies must be constantly modifying
existing products/services and developing
new ones; the marketplace demands it
how new is new? most new products are
modifications of or extensions to existing
ones
the introduction of a new product is a
strategic decision which should be guided
by the company’s goals and a new product
introduction strategy
Criteria for New Products
there must be adequate market demand:
necessary but not sufficient for success
must satisfy key financial criteria
must be compatible with environmental
standards
must fit with the company’s marketing
structure
should also be compatible with production
capabilities, satisfy legal requirements,
and fit with corporate goals and objectives
Causes of New Product
Failures
Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced or
Advertised
Costs of Product Development
Competitive Actions
Concept Product
Development Developmen
and Testing
Idea Test
Screening Marketing
Idea Commercialization
Generation
New Product Development Process
Step 1. Idea Generation
Idea Generation is the Systematic Search for New
Product Ideas Obtained Internally and From:
D
C
C I S
O
U S U
M
S T P
P
T R P
E
O I L
T
M B I
I
E U E
T
R T R
O
S O S
R
R
S
S
Idea Generation- Creativity
Techniques
AttributeListings
Forced relationship
Morphological analysis
Reverse assumption analysis
New contexts
Mind mapping
Lateral marketing
New Product Development Process
Step 2. Idea Screening
Process to spot good ideas and drop poor
ones as soon as possible.
Many companies have systems for rating
and screening ideas which estimate:
– Market Size
– Product Price
– Development Time & Costs
– Manufacturing Costs
– Rate of Return
Then, the idea is evaluated against a set of
general company criteria.
New Product Development Process
Step 3. Concept Development & Testing
Conjoint Analysis
New Product Development Process
Step 4. Marketing Strategy Development
Business Analysis
If No, Eliminate
Product Concept
If Yes, Move to
Product Development
New Product Development Process
Step 7. Test Marketing
Standard Controlled
Test Market Test Market
Full marketing campaign A few stores that have
in a small number of agreed to carry new
representative cities. products for a fee.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
New Product Development Process
Step 8. Commercialization
Commercialization is the
Introduction of the New Product
into the Marketplace.
To
When? Where? How?
Whom?
Product Life
SalesCycle
and Profits Over the Product’s Life From
Introduction to Decline
Sales and
Profits ($)
Sales
Profits
Time
Product Introduction Growth Maturity Decline
Develop
ment
Losses/
Investments ($)
Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Profits Negative
Marketing Objectives Create product awareness
and trial
Product Offer a basic product
Price Use cost-plus
Distribution Build selective distribution
Build product awareness among
Advertising early adopters and dealers
Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies