Haagen-Dazs project

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Developing New Products

and Managing the Product Life-Cycle

MARKETING AN INTRODUCTION

Armstrong/Kotler

New-product Development Strategy

New-product development

development of original products

Product improvements

product modifications

acquisition

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Notes to Accompany Slide:

Reasons for product failure may include the company overestimating market size, poor design, incorrect positioning, launching at the wrong time, priced too high, or poorly advertised. A high-level executive might push a favorite idea despite poor marketing research findings. Sometimes the costs of product development are higher than expected, and sometimes competitors fight back harder than expected.

Why products fail?

80 – 90% of new products fail at launch

75% of successful products become obsolete within 3 – 5 years

Costs too high

Not enough demand

Positioned incorrectly

Marketing Mix variables are off

Poor quality

Competition

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Idea Generation

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Notes to Accompany Slide:

Idea Generation is the systematic search for new-product ideas.

Internal sources: includes formal research and development.

External sources: includes distributors and suppliers; competitors; online collaborative; customers.

Internal Idea Sources

External Idea Sources

Idea screening

Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible.

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Concept Development and Testing

Product concept is a detailed version of the new-product idea stated in meaningful consumer terms.

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Marketing Strategy Development

Marketing Strategy Statement

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Step 1

Step 2

Step 3

Target market

Price

Long-run sales

Planned value proposition

Sales

Market share

Profit goals

Distribution

Marketing budget

Profit goals

Marketing mix strategy

Business Analysis

A review of the sales, costs, and profit projections

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Product development

Developing the product concept into a physical product

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Test marketing

The product and marketing program are

tested in realistic

market settings.

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Notes to Accompany Slide:

Test marketing costs can be high, and it takes time that may allow competitors to gain advantages. When the costs of developing

and introducing the product are low, or when management is already confident about the new product, the company may do little or no test marketing. In fact, test marketing by consumer-goods firms has been declining in recent years.

Commercialization

Commercialization involves introducing a new product into

the market.

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Product Life-cycle Strategies

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Notes to Accompany Slide:

Product development begins when the company finds and develops a new product idea. During product development, sales are zero and the company’s investment costs mount.

Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction.

Growth is a period of rapid market acceptance and increasing profits.

Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.

Decline is the period when sales fall off and profits drop.