Marketing
Principles of Marketing Seventeenth Edition
Chapter 9 Developing New Products and
Managing the Product Life Cycle
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Learning Objectives 9-1 Explain how companies find and develop new product ideas. 9-2 List and define the steps in the new product development process and the
major considerations in managing this process. 9-3 Describe the stages of the product life cycle and how marketing strategies
change during a product’s life cycle. 9-4 Discuss two additional product issues: socially responsible product
decisions and international product and services marketing.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Learning Objective 1
Explain how companies find and develop new product ideas.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Strategy Ways to Obtain New Products 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.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Learning Objective 2 List and define the steps in the new product development process and the major considerations in managing this process.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process Idea Generation Idea generation is the systematic search for new product ideas. Sources of new product ideas • Internal • External
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Idea Generation Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs. External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process Idea Generation
Crowdsourcing involves inviting broad communities of people— customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Idea Screening Identify good ideas and drop poor ideas R-W-W screening framework: • Is it real? • Can we win? • Is it worth doing?
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Concept Development and Testing 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.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Concept Development and Testing Concept testing refers to testing new product concepts with groups of target consumers.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process Marketing Strategy Development
Marketing strategy development is designing an initial marketing strategy for a new product based on the product concept. Marketing strategy statement consists of: • Target market description • Value proposition planned • Sales, market-share, and marketing mix
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Business Analysis Business analysis is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Product Development Product development is developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process
Test Marketing Test marketing is the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process Test Marketing
Marketing Strategy Development
When test marketing is likely
• New product with large investment
• Uncertainty about product or marketing program
When test marketing is
unlikely
• Simple line extension
• Copy of competitor product
• Low costs • Management
confidence
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
New Product Development Process Commercialization Commercialization involves introducing a new product into the market. • When to launch? • Where to launch? • Planned market rollout?
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Managing New Product Development
Successful new product development should be: • Customer centered • Team based • Systematic
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Managing New Product Development
Customer-Centered New Product Development Customer-centered new product development focuses on finding new ways to solve customer problems and creating more customer-satisfying experiences.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Managing New Product Development
Team-Based New Product Development Team-based new product development involves various company departments working closely together, overlapping the steps in the product development process to save time and increase effectiveness.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Managing New Product Development Systematic New Product Development • Innovation management system
§Creates an innovation-oriented company culture §Yields a large number of new product ideas
New Product Development in Turbulent Times • Tempted to reduce spending • May become less competitive
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Learning Objective 3
Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies Product development • Zero sales and increasing investment costs Introduction • Slow sales and nonexistent profits Growth • Rapid market acceptance and increasing profits Maturity • Slow sales growth and profits level off or decline Decline • Sales fall off and profits drop
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies
Introduction Stage • Slow sales growth • Little or no profit • High distribution and promotion expenses
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies
Growth Stage • Sales increase • New competitors enter the market • Profits increase • Economies of scale • Consumer education • Lowering prices to attract more buyers
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies Maturity Stage • Slowdown in sales • Many suppliers • Substitute products • Overcapacity leads to competition • Increased promotion and R&D to support sales and profits
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies Maturity Stage Modification Strategies • Modify the market • Modify the product • Modify the marketing mix
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies
Decline Stage
• Maintain the product • Harvest the product • Drop the product
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies Table 9.2 Part I
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Product Life-Cycle Strategies Table 9.2 Part II
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Learning Objective 4
Discuss two additional product issues: socially responsible product decisions and international product and services marketing.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Additional Product and Service Considerations
Product Decisions and Social Responsibility Public policy and regulations regarding developing and dropping products, patents, quality, safety, and product warranties should be considered carefully.
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.
Additional Product and Service Considerations
International Product and Service Marketing
• Determining what products and services to introduce in which countries
• Standardization versus customization
• Packaging and labeling • Customs, values, laws