kotler chap 9 mehtab
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This document summarizes the new product development process and product life cycle strategies. It outlines 8 steps in the new product development process: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization. It then describes the 4 stages of the product life cycle: introduction, growth, maturity, and decline. For each stage it provides characteristics, objectives, and strategies.
kotler chap 9 mehtab
- 1. 9-1 9-1 PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter Chapter 9 9 New Product Development and Product Life-Cycle Strategies © Copyright 1999 Prentice Hall
- 2. New-Product Development New-Product Development Strategies Strategies Strategies for Obtaining New Product Ideas Acquired Acquired Companies Companies Original Original Products Products Acquired Acquired Patents Patents Product Product Improvements Improvements Acquired Acquired Licenses Licenses Product Product Modifications Modifications © Copyright 1999 Prentice Hall New New Brands Brands 9-2 9-2
- 3. Causes of New Product Failures Causes of New Product Failures • Overestimation of Market Size • Product Design Problems • Product Incorrectly Positioned, Priced or Advertised • Costs of Product Development • Competitive Actions • To create successful new products, the company must: – understand it’s customers, markets and competitors – develop products that deliver superior value to customers. © Copyright 1999 Prentice Hall 9-3 9-3
- 4. New Product Development New Product Development Process Process Marketing Strategy Concept Development and Testing 9-4 9-4 Business Analysis Product Development Idea Screening Test Marketing Idea Generation Commercialization © Copyright 1999 Prentice Hall
- 5. New Product Development Process New Product Development Process 9-5 9-5 Step 1. Idea Generation Step 1. Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally and From: C C U U S S T T O O M M E E R R S S C C O O M M P P E E T T II T T O O R R S S © Copyright 1999 Prentice Hall D D II S S T T R R II B B U U T T O O R R S S S S U U P P P P L L II E E R R S S
- 6. New Product Development Process New Product Development Process Step 2. Idea Screening 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. © Copyright 1999 Prentice Hall 9-6 9-6
- 7. New Product Development Process New Product Development Process Step 3. Concept Development & Testing Step 3. Concept Development & Testing 1. Develop Product Ideas into 1. Develop Product Ideas into Alternative Alternative Product Concepts Product Concepts 2. Concept Testing --Test the 2. Concept Testing Test the Product Concepts with Groups Product Concepts with Groups of Target Customers of Target Customers 3. Choose the Best One 3. Choose the Best One © Copyright 1999 Prentice Hall 9-7 9-7
- 8. New Product Development Process New Product Development Process Step 4. Marketing Strategy Development Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One Describes Overall: Part One Describes Overall: Target Market Target Market Planned Product Positioning Planned Product Positioning Sales & Profit Goals Sales & Profit Goals Market Share Market Share Part Two Describes Short-Term: Part Two Describes Short-Term: Product’s Planned Price Product’s Planned Price Distribution Distribution Marketing Budget Marketing Budget Part Three Describes Long-Term: Part Three Describes Long-Term: Sales & Profit Goals Sales & Profit Goals Marketing Mix Strategy © Copyright 1999 Prentice Hall Marketing Mix Strategy 9-8 9-8
- 9. New Product Development Process New Product Development Process Step 5. Business Analysis Step 5. Business Analysis Step 6. Product Development Step 6. Product Development Business Analysis Business Analysis Review of Product Sales, Costs, Review of Product Sales, Costs, and Profits Projections to See if and Profits Projections to See if They Meet Company Objectives They Meet Company Objectives If No, Eliminate If No, Eliminate Product Concept Product Concept If Yes, Move to If Yes, Move to Product Development Product Development © Copyright 1999 Prentice Hall 9-9 9-9
- 10. New Product Development Process New Product Development Process Step 7. Test Marketing Step 7. Test Marketing Standard Standard Test Market Test Market Full marketing campaign Full marketing campaign in a small number of in a small number of representative cities. representative cities. Controlled Controlled Test Market Test Market A few stores that have A few stores that have agreed to carry new agreed to carry new products for a fee. products for a fee. Simulated Simulated Test Market Test Market Test in a simulated Test in a simulated shopping environment shopping environment to a sample of to a sample of consumers. consumers. © Copyright 1999 Prentice Hall 9-10 9-10
- 11. New Product Development Process New Product Development Process 9-11 9-11 Step 8. Commercialization Step 8. Commercialization Commercialization is the Introduction of the New Product into the Marketplace. When? When? Where? Where? To To Whom? Whom? © Copyright 1999 Prentice Hall How? How?
- 12. Speeding Up Development Speeding Up Development Simultaneous Step 1 Sequential 9-12 9-12 Step 2 Step 1 Step 1 Step 2 Step 2 Step 3 Step 3 Step 3 Step 4 Step 4 Step 4 © Copyright 1999 Prentice Hall
- 13. Product Life Cycle Product Life Cycle 9-13 9-13 Sales and Profits Over the Product’s Life From Introduction to Decline Sales and Profits ($) Sales Profits Time Product Development Introduction Growth Losses/ Investments ($) © Copyright 1999 Prentice Hall Maturity Decline
- 14. Introduction Stage of the PLC Introduction Stage of the PLC 9-14 9-14 Summary of Characteristics, Objectives, & Strategies Sales Sales Low sales Low sales Costs Costs High cost per customer High cost per customer Profits Profits Product Product Negative Negative Create product awareness Create product awareness and trial and trial Offer a basic product Offer a basic product Price Price Use cost-plus Use cost-plus Distribution Distribution Build selective distribution Build selective distribution Advertising Advertising Build product awareness among Build product awareness among early adopters and dealers early adopters and dealers Marketing Objectives Marketing Objectives © Copyright 1999 Prentice Hall
- 15. Growth Stage of the PLC Growth Stage of the PLC 9-15 9-15 Summary of Characteristics, Objectives, & Strategies Sales Sales Rapidly rising sales Rapidly rising sales Costs Costs Average cost per customer Average cost per customer Profits Profits Rising profits Rising profits Marketing Objectives Marketing Objectives Maximize market share Maximize market share Product Product Price Price Offer product extensions, Offer product extensions, service, warranty service, warranty Price to penetrate market Price to penetrate market Distribution Distribution Build intensive distribution Build intensive distribution Advertising Advertising Build awareness and interest in Build awareness and interest in the mass market the mass market © Copyright 1999 Prentice Hall
- 16. Maturity Stage of the PLC Maturity Stage of the PLC 9-16 9-16 Summary of Characteristics, Objectives, & Strategies Sales Sales Peak sales Peak sales Costs Costs Low cost per customer Low cost per customer Profits Profits High profits High profits Marketing Objectives Marketing Objectives Maximize profit while defending Maximize profit while defending market share market share Diversify brand and models Diversify brand and models Product Product Price Price Distribution Distribution Advertising Advertising Price to match or best Price to match or best competitors competitors Build more intensive distribution Build more intensive distribution Stress brand differences and Stress brand differences and benefits benefits © Copyright 1999 Prentice Hall
- 17. Decline Stage of the PLC Decline Stage of the PLC 9-17 9-17 Summary of Characteristics, Objectives, & Strategies Sales Sales Declining sales Declining sales Costs Costs Low cost per customer Low cost per customer Profits Profits Declining profits Declining profits Marketing Objectives Marketing Objectives Product Product Reduce expenditure and milk the Reduce expenditure and milk the brand brand Phase out weak items Phase out weak items Price Price Cut price Cut price Distribution Distribution Go selective: phase out Go selective: phase out unprofitable outlets unprofitable outlets Reduce to level needed to retain Reduce to level needed to retain hard-core loyal customers hard-core loyal customers Advertising Advertising © Copyright 1999 Prentice Hall