New Product Development and product life cycle
- 1. Introduction TOPIC :NEW PRODUCT DEVELOPMENT AND PRODUCT LIFE CYCLE STRATEGIES PRESENTED BY: NAME ROLL NO HASHAAM KHURSHID 05 NOMAN AKHLAQ 16 AKABAR MATLOOB 21 AHSAN LIAQUAT 35 FARHAD NAWAZ 32
- 2. New-Product Development and Product Life-Cycle Strategies Topic Outline • New-Product Development Strategy • New-Product Development Process • Managing New-Product Development • Product Life-Cycle Strategies
- 3. New-Product Development Strategy Two ways of obtaining new product Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development
- 4. New-Product Development Reasons for new product failure
- 5. New-Product Development Process Major Stages in New-Product Development
- 6. New-Product Development Process Idea generation Idea generation is the systematic search for new-product ideas Sources of new-product ideas • Internal • External Internal sources refer to the company’s own formal research and development, management and staff, and “entrepreneurial” programs External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
- 7. Idea Screening Identify good ideas and drop poor ideas The aim in idea screening is to retain the successful ideas and eliminate the ideas which could be failures - much easier to write than to carry out in practice!. If in doubt, keep the idea until more information is obtained. Idea screening can be based on tacit knowledge of the individual and of the company, with little new explicit information sought in or outside the company. Product development costs rise greatly in later stages, so the company wants to go ahead only with those product ideas that will turn into profitable products. Many companies require their executives to write up new-product ideas in a standard format that can be reviewed by a new-product committee.
- 8. Idea Screening • R-W-W Screening Framework: – Is it real? – Can we win? – Is it worth doing?
- 9. Concept Development and Testing Concept testing refers to testing new-product concepts with groups of target consumer Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or potential product
- 10. Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market. OR Marketing strategies give your small business a direction toward effective promotion. Marketing strategies differ from one business to the next and should be customized to suit the needs of the particular company. • Marketing strategy statement includes: – Description of the target market – Value proposition – Sales and profit goals
- 11. Marketing Strategy Development Business analysis. involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives Product development. involves the creation and testing of one or more physical versions by the R&D or engineering departments
- 12. Commercialization Commercialization is the introduction of the new product • When to launch • Where to launch • Planned market If the company goes ahead with commercialization ─ introducing the new product into the market ─ it will face high costs. A company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new product ─ in a single location, a region, the national market, or the international market.
- 13. Test marketing Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings. Provides the marketer with experience in testing the product and entire marketing program before full introduction.
- 14. When test Marketing is needed
- 15. Managing New-Product Development Successful new-product development should be: Customer-centered new-product development focuses on finding new ways to solve customer problems and create more customer-satisfying experiences. The most successful new products are ones that are differentiated, solve major customer problems, and offer a compelling customer value proposition. Team centered: is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness • Systematic: Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas
- 16. Product Life-Cycle Strategies • Product development – Sales are zero and investment costs mount • Introduction – Slow sales growth and profits are nonexistent • Growth – Rapid market acceptance and increasing profits. • Maturity – Slowdown in sales growth and profits level off or decline • Decline – Sales fall off and profits drop
- 17. Introduction Stage The introduction stage starts when a new product is first launched. In this stage, as compared to other stages, profits are negative or low because of the low sales and high distribution and promotion expenses. A company, especially the market pioneer, must choose a launch strategy that is consistent with the intended product positioning.
- 18. Growth Stage • Sales increase • New competitors enter the market • Price stability or decline to increase volume • Consumer education • Profits increase Promotion and manufacturing costs gain economies of scale
- 19. Maturity Stage After the Introduction and Growth stages, a product passes into the Maturity stage. The third of the product life cycle stages can be quite a challenging time for manufacturers. In the first two stages companies try to establish a market and then grow sales of their product to achieve as large a share of that market as possible. However, during the Maturity stage, the primary focus for most companies will be maintaining their market share in the face of a number of different challenges.
- 20. Maturity Stage • Slowdown in sales • Many suppliers • Substitute products • Overcapacity leads to competition • Increased promotion and R&D to support sales and profits
- 21. Decline Stage • Maintain the product • Harvest the product • Drop the product
- 22. Extending the Product Life Cycle What can businesses do to extend the product life cycle? Extension strategies extend the life of the product before it goes into decline. Again businesses use marketing techniques to improve sales. Examples of the techniques are: Advertising – try to gain a new audience or remind the current audience Price reduction – more attractive to customers Adding value – add new features to the current product, e.g. improving the specifications on a smartphone Explore new markets – selling the product into new geographical areas or creating a version targeted at different segments New packaging – brightening up old packaging or subtle changes