Mmm2
- 1. Managing The Marketing Mix Lecture 2: Product and New Product Development Dr. Martin J. Liu Lecturer in Marketing
- 2. Review Introduction Marketing Mix: The set of controllable tactical marketing tools: product, price, What is a product? place and promotion that the firm blends to produce the response it wants in the target market. New Product Development Marketing mix is a basic tool to identify Product positioning and Segmenting the Market. Product Life Cycle (PLC) Product Positioning: The way that product is defined by consumers on important Diffusion of Innovation Cycle attributes - the place the product occupies in consumer’s minds relative to competing products. i.e. Symbolic, Functional and Summary Experiential. Market Segmentation: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
- 3. What is A Product? Introduction What is a Bundle of physical, service, and symbolic product? attributes designed to enhance buyers’ want satisfaction. New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 4. Types of Products Introduction • Actual product • Consumer Products What is a – Quality level – Convenience products product? – Features – Shopping products New Product – Design – Specialty Development – Package – unsought – Brand name Product Life Cycle (PLC) • Industrial Products • Augmented product – Material and parts Diffusion of – Installation – Capital items Innovation Cycle – After-sale service – Supplies and services Summary – Warranty – Delivery and credit – Attached benefit
- 5. New Products Commonly Accepted Categories Introduction What is a New Category Addition to product? Entries Existing Lines New Product Development Product Life Cycle New Products (PLC) Diffusion of Innovation Cycle Summary Repositioning New-to-the- world Products New Product Lines
- 6. Factors Influencing New Product Development Success Introduction What is a product? Technological factors New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 7. Risk in New Product Development Introduction • NPD is a high risk activity What is a product? – Aprox. 90% of new products fail – Only aprox. 40% of new consumer products that are brought to New Product market will be around 5 years later Development – Industrial markets 35-65% failure rate Product Life Cycle – Pharmaceutical firms spend on average E400m per drug (PLC) Diffusion of • Innovation takes time Innovation Cycle – Biotechnology average 10 years of development Summary • Why do new products fail? – Failure to understand consumer needs – Undefined market – Undifferentiated products
- 8. The Eight Stags of New Products Development Process Introduction What is a product? New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 9. The Eight Stags of New Products Development Process Introduction • (1) New Product Strategy What is a product? – Guideline for resource allocation – Sets up key criteria against which projects can be managed New Product • (2) Idea Generation Development – The search for innovative ideas and a process for the management of ideas Product Life Cycle (PLC) • (3) Screening – Initial assessment of demand for the ideas generated Diffusion of – Ideas acceptable for further development Innovation Cycle • (4) Concept Development and Testing Summary – Content & form of idea – Development of a variety of concepts – Tested for compatibility with production plant – Tested for compatibility with customer needs/tastes
- 10. The Eight Stags of New Products Development Process Introduction • (5) Business Analysis What is a product? – Market analysis, break even volume, technical costs, production implications. Fit with corporate objectives New Product • (6) Product Development & Testing Development – Determine the validity of the theoretical product, e.g., Product Life Cycle Innocent Smoothies made & tested fresh fruit smoothies at a (PLC) music festival. – Prototypes-alterations to specifications. Diffusion of Innovation Cycle • (7) Test Marketing – Small scale tests with customers. Summary – N.B. test marketing is not always feasible or desirable.
- 11. The Stage and Gate Model (Cooper 1993) Introduction What is a product? New Product Manage risk by screening at review points. Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 12. Commercialization Introduction • Product launch considerations and strategies: What is a product? –Degree of novelty of product/service New Product –Familiarity/ position in intended market Development –Competition; status/ anticipated reaction Product Life Cycle (PLC) • Timing –Diffusion theory and new product acceptance. Diffusion of Innovation Cycle –Identify the early adopters Summary • Communications –Internal and external • Monitoring the launch
- 13. Product Life Cycle (PLC) Introduction • A way to trace the stages of a product's acceptance from its What is a product? introduction to its demise. New Product • One of the most familiar concepts in marketing Development • A prevalent marketing management tool • Refers to the life of the product category. Product Life Cycle (PLC) • The time a product category spends in a stage of the product life cycle may vary from a few weeks to decades. Diffusion of • Does not predict how long a product category will remain in Innovation Cycle any one stage Summary • A tool to help marketers understand: – where their product is now – what may happen – which strategies are normally appropriate.
- 14. Product Life Cycle (PLC) Sales/Profits Development Introduction Growth Maturity Decline Rejuvenation Limited Life Cycle Product Life Cycle Profits Losses Time Break Even
- 15. Examples of PLC: High Learning Product Introduction • Significant education of the What is a product? customer is required; New Product • Extended introductory Development period. Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 16. Examples of PLC: Low Learning Product Introduction • Sales begin immediately; What is a product? • Little learning is required New Product by the consumer; Development • Benefits of purchase are readily understood . Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 17. Examples of PLC: Fashion Product Introduction • Most often appear in What is a product? women’s and men’s New Product clothing styles; Development • Length of the cycles may be years or decades. Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 18. Examples of PLC: Fad Product Introduction • Rapid sales on introduction What is a product? • Equally rapid decline; New Product • Often novelties and have a Development short life cycle. Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 19. Diffusion of An Innovation Introduction What is a product? New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 20. Crossing the Chasm Introduction What is a product? New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 21. Innovating for Mature Markets Process Integration Business Model Innovation Innovation Innovation Line Extension Marketing Experiential Innovation Innovation Innovation
- 22. Introduction What is a product? New Product Development Product Life Cycle (PLC) Diffusion of Innovation Cycle Summary
- 23. Summary Introduction • There are four main types of new products that can be What is a product? launched New Product • NPD is a high risk/ high reward activity Development • A formal review process with review points and a clear new product strategy underlying the process leads to greater Product Life Cycle success (PLC) • Product life cycle (PLC) and diffusion of innovation. Diffusion of • A strong market orientation and understanding of Innovation Cycle technological opportunities is key. Summary