PRINCIPLES OF MARKETING

Product Management / New Product Development

Prof. Rushen Chahal

Prof. Rushen Chahal

Learning contents
1. Understand and describe the product life

cycle concept 2. Appreciate the market evolution conditions 3. Describe about the approaches of product positioning 4. Understand and describe the new product development process

Prof. Rushen Chahal

1. The product lifecycle (PLC)

Product lifecycle concept:- an analytical tool to assess the life span of a product class or product form or service.
y

Product class another name for product category, e.g. clothes, toilet accessories Product form a products name or structure or type, e.g. jeans, mouthwash
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1. The product lifecycle (PLC)

Prof. Rushen Chahal

a. Stage1 Pre-launch phase Pre

During product development, sales are zero and the company's investment costs mount. Profits are negative or low because of the low sales and high distribution and promotion expenses. Much money is needed to attract distributors and build their inventories.

Prof. Rushen Chahal

b. Stage 2 - The introduction phase

Priority is to generate awareness of the product among the target segments and to stimulate product trial Need to gain strong distribution networks to build demand Need a unique competition selling point to beat

Prof. Rushen Chahal

c. Stage 3 - The growth phase

There is for a rapid increase in trial and purchases. Need to build as much brand preference and loyalty as possible. Profits hopefully will rise rapidly during this phase.

Prof. Rushen Chahal

d. Stage 4 - The mature phase

The product achieves as much as it is going to.

Heavy price competition and increased marketing expenditure may be required to retain brand loyalty.

Distribution channels

may need careful

handling during this phase.

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e. Stage 5- The decline phase 5

Once a product goes into decline for market based reasons, it is almost impossible to stop it. Decline can be as a result of a number of reasons, e.g. environmental or technological issues or poor management.

Prof. Rushen Chahal

2. Market evolution
Three components are involved in market evolution:
a. The diffusion of innovation (customers

adopt new products)

b. The evolution and acceptance of

technology.
c. The impact of competition.
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2. Market evolution
a. The diffusion of innovation.
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Innovators first movers; buy and adopt specific categories early Early adopters enters early and generates trial to mass market Early majority mass market starts to build up; but wait for best price before adopting Late majority less interested; wait and see Late adopters / laggards little interest and averse to changes
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2. Market evolution
b. Acceptance of technology.

Technological innovation can be used to extend the product lifecycle by helping to refresh and update a product. Technological innovation can also shorten a lifecycle by rendering a product obsolete.
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2. Market evolution
c. The impact of competition can be classified Competitors according to their timing in entering a market, e.g.: Pioneers. Early imitators. Early differentiators. Early nichers. Late entrants.
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3. Positioning products
There are 3 main areas for repositioning and product improvement:

Quality - reliability, durability, dependability, speed, taste, colour, price, packaging, etc. Design - appearance, texture, taste, smell feel or sound, etc. Performance convenience, handling, efficient. ease of

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3. Positioning products
Perceptual Map

QQ

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4. New-Product Development Process

1. 2. 3. 4. 5. 6. 7. Idea generation Idea screening Concept development and testing Business analysis Product development Test marketing Commercialization

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4. New-Product Development Process

1. Idea Generation Internal sources refer to the companys own formal research and development, management and staff External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and licensing

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4. New-Product Development Process

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2. Idea Screening Idea screening:- refers to reviewing newproduct ideas in order to drop poor ones as soon as possible

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4. New-Product Development Process

3. Concept Development and Testing Product idea:- an idea for a possible product that the company can see itself offering to the market Product concept:- a detailed version of the idea stated in meaningful consumer terms Product image:- the way consumers perceive an actual or potential product
9-11

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4. New-Product Development Process

4. Business Analysis Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the companys objectives

9-15

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4. New-Product Development Process

5. Product development Product development involves the creating a prototype - testing by the R&D or field/engineering departments. Requires investment an increase in

9-16

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4. New-Product Development Process

6. Test marketing Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings

Standard Test market audit (long time) Controlled Test using a research firm to test several locations or shops
9-17

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4. New-Product Development Process

7. Commercialization Commercialization is the introduction of the new product

When to launch Where to launch Planned market rollout

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