Kotler10 exd
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The document discusses new product development and a product's life cycle. It describes the typical stages in new product development as idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization. It also outlines the stages in a product's life cycle as development, introduction, growth, maturity, and decline. The document provides strategies for marketing a product through each stage of its life cycle.
Kotler10 exd
- 1. New-Product Development and Product Life-Cycle Strategies Chapter 10
- 2. Objectives Understand how companies find and develop new-product ideas. Learn the steps in the new-product development process. Know the stages of the product life cycle. Understand how marketing strategies change during the product’s life cycle.
- 3. Microsoft c $50 billion in Innovation is profits over 27 critical to years Microsoft’s future success Early new product Much of R & D development relied efforts are Internet heavily on copying related the competition Many new products $4.2 billion and services are in
- 4. Definition New Product Development Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.
- 5. New Product Development Strategy New products can be obtained via acquisition or development. New products suffer from high failure rates. Several reasons account for failure.
- 6. Discussion Question Why do products fail? See if you can identify the fatal flaw in the brands below and at right. Ben-Gay Asprin Buttermilk Shampoo Fruit of the Loom Laundry Detergent
- 7. Figure 10-1: Major Stages in New-Product Development
- 8. New Product Development Strategy New Product Development Process: Stage 1: Idea Generation Internal idea sources: • R&D External idea sources: • Customers, competitors, distributors, suppliers
- 9. 3M’s corporate culture encourages, supports, and rewards new product ideas and innovation
- 10. Using the Web to Solicit Product Ideas Procter and Gamble To see how P&G solicits ideas from customers, visit the Procter and Gamble home page, click on the Resources and Offers button, then Procter & Gamble select the Share Your Thoughts listing.
- 11. New Product Development Strategy New Product Development Process: Stage 2: Idea Screening Product development costs increase dramatically in later stages. Ideas are evaluated against criteria; most are eliminated.
- 12. New Product Development Strategy New Product Development Process: Stage 3: Concept Development and Testing Product concepts provide detailed versions of new product ideas. Consumers evaluate ideas in concept tests.
- 13. New Product Development Strategy New Product Development Process: Stage 4: Marketing Strategy Development Strategy statements describe: • The target market, product positioning, and sales, share, and profit goals for the first few years. • Product price, distribution, and marketing budget for the first year. • Long-run sales and profit goals and the marketing mix strategy.
- 14. New Product Development Strategy New Product Development Process: Stage 5: Business Analysis Sales, cost, and profit projections Stage 6: Product Development Prototype development and testing
- 15. Daimler is currently road-testing its prototype NECAR 5 (New Electric Car)
- 16. BusinessNow Sensable Video Clip Computer modeling is being used to aid in product design
- 17. New Product Development Strategy New Product Development Process: Stage 7: Test Marketing Standard test markets Controlled test markets Simulated test markets Stage 8: Commercialization
- 18. New Product Development Strategy IRI BehaviorScan provides an in- market laboratory for testing new products and marketing programs IRI BehaviorScan
- 19. Simulated Test Markets (STM) In-Depth Advantages: Types of STMs: Reduces risk – capital, ASSESSOR marketing dollars, BASES cannibalization MarkeTest Increases efficiency Merwyn Maintains security – And others competitors have less time to plan counter strategies Saves the company time
- 20. Simulated Test Markets (STM) In-Depth Model Inputs: Model Inputs: The market's size Price Copy testing results The proportion of Advertising budget for the stores carrying the test test product and product and the competitors. number of shelf facings Media schedule, by month. Consumer promotion, Expected marketing Trade promotion by costs and margin month. contribution.
- 21. Simulated Test Markets (STM) In-Depth Do‘s & Don’ts of STMs Do‘s & Don’ts of STMs Be a champion for your Calculate different levels new product--but be of competitive response. objective Don't estimate a level of Choose the proper sample. support in a simulated Expose people to your market that you would not product and its advertising maintain nationally. in a way that best simulates Be very careful in the real world. estimating all marketing Use proven research input factors—the more technology to forecast you guess incorrectly, the market behavior and sales. less accurate the forecast.
- 22. Figure 10-2: Sales and Profits Over A Product’s Life
- 23. Product Life-Cycle Strategies The Typical Product Life Cycle (PLC) Has Five Stages Product Development, Introduction, Growth, Maturity, Decline Not all products follow this cycle: Fads Styles Fashions
- 24. Figure 10-3: Styles, Fashions, and Fads
- 25. Companies want their products to enjoy a long life cycle. Hershey’s actively promotes the fact that it has been “unchanged since 1899”
- 26. Product Life-Cycle Strategies Additional marketing investments can move a product back into the growth stage, as in the case of Cracker Jack.
- 27. Product Life-Cycle Strategies The product life cycle concept can be applied to a: Product class (soft drinks) Product form (diet colas) Brand (Diet Dr. Pepper) Using the PLC to forecast brand performance or to develop marketing strategies is problematic
- 28. Product Life-Cycle Strategies PLC Stages Begins when the company Product develops a new- development product idea Introduction Sales are zero Growth Investment costs are high Maturity Profits are
- 29. Product Life-Cycle Strategies PLC Stages Low sales High cost per Product customer development acquired Introduction Negative profits Growth Innovators are Maturity targeted
- 30. Marketing Strategies: Introduction Stage Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial
- 31. Product Life-Cycle Strategies PLC Stages Rapidly rising sales Product Average cost per development customer Introduction Rising profits Growth Early adopters are targeted Maturity Growing
- 32. Marketing Strategies: Growth Stage Product – Offer product extensions, service, warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand
- 33. Product Life-Cycle Strategies PLC Stages Sales peak Low cost per Product customer development High profits Introduction Middle majority Growth are targeted Maturity Competition
- 34. Marketing Strategies: Maturity Stage Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching
- 35. Product Life-Cycle Strategies PLC Stages Declining sales Low cost per Product customer development Declining profits Introduction Laggards are Growth targeted Maturity Declining
- 36. Marketing Strategies: Decline Stage Product – Phase out weak items Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level
Editor's Notes
- #17: Clicking the Video Clip icon will launch a short video (typically between 20 seconds and 1 minute in length) extracted from one of the BusinessNow Video shorts that accompany the text. You must have RealPlayer, QuickTime, or Windows Media Player installed for the video clip to function correctly. From the VIEW menu, select COMMENTS to hide this box.
- #20: Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J. ; Shulman , Robert S. ; Volume: 20 Issue: 4 Start Page: 10 “ The Future of Simulated Test Markets” http://www.acnielsenbases.com/news/news%20092002.html http://www.synovate.com/solutions/branded_solutions/marketest/ http://www.merwyn.com/
- #21: Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J.; Shulman, Robert S.; Volume: 20 Issue: 4 Start Page: 10
- #22: Source: “It's Better to Fly a New Product Simulator than Crash the Real Thing,” Planning Review ; Dayton; Jul/Aug 1992; Clancy, Kevin J.; Shulman, Robert S.; Volume: 20 Issue: 4 Start Page: 10