Download MBA MKT MAN - CH15

New Market Offering
CH15
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 1
New-Product Development
Reasons for new product failure
Overestimation of market size
Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition
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Publishing as Prentice Hall
Chapter 1- slide 2
New-Product Development Process
Major Stages in New-Product Development
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Chapter 1- slide 3
New-Product Development Process
Idea Generation
Idea generation is the systematic search for
new-product ideas
Sources of new-product ideas
• Internal
• External
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Publishing as Prentice Hall
Chapter 1- slide 4
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
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Publishing as Prentice Hall
Chapter 1- slide 5
New-Product Development Process
Marketing Strategy Development
• Marketing strategy development refers to the
initial marketing strategy for introducing the
product to the market
• Marketing strategy statement includes:
– Description of the target market
– Value proposition
– Sales and profit goals
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 1- slide 6
New-Product Development Process
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
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Publishing as Prentice Hall
Chapter 1- slide 7
New-Product Development Process
Marketing Strategy Development
Product development involves
the creation and testing of
one or more physical
versions by the R&D or
engineering departments
•
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Requires an increase in
investment
Chapter 1- slide 8
New-Product Development Process
Marketing Strategy Development
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
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Publishing as Prentice Hall
Chapter 1- slide 9
New-Product Development Process
Types of Test Markets
Standard test markets
Controlled test markets
Simulated test markets
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Chapter 1- slide 10
New-Product Development Process
Marketing Strategy Development
When firms test
market
• New product
with large
investment
• Uncertainty
about product
or marketing
program
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Publishing as Prentice Hall
When firms may
not test market
• Simple line
extension
• Copy of
competitor
product
• Low costs
• Management
confidence
Chapter 1- slide 11
New-Product Development Process
Marketing Strategy Development
Commercialization is the introduction of the new
product
•
•
•
When to launch
Where to launch
Planned market rollout
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Chapter 1- slide 12
Managing New-Product Development
Successful new-product development should
be:
• Customer centered
• Team centered
• Systematic
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Chapter 1- slide 13
Managing New-Product Development
New-Product Development Strategies
Customer-centered new product
development focuses on
finding new ways to solve
customer problems and
create more customer
satisfying experiences
• Begins and ends with solving
customer problems
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Publishing as Prentice Hall
Chapter 1- slide 14
Managing New-Product Development
New-Product Development Strategies
Team-based new-product development is a
development approach where company
departments work closely together in crossfunctional teams, overlapping in the productdevelopment process to save time and increase
effectiveness
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Publishing as Prentice Hall
Chapter 1- slide 15
Managing New-Product Development
New-Product Development Strategies
Systematic new-product
development is an
innovative development
approach that collects,
reviews, evaluates, and
manages new-product
ideas
•
•
Creates an innovationoriented culture
Yields a large number of newproduct ideas
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Publishing as Prentice Hall
Chapter 1- slide 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
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Chapter 1- slide 17
Product Life-Cycle Strategies
Introduction Stage
• Slow sales growth
• Little or no profit
• High distribution and promotion expense
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Publishing as Prentice Hall
Chapter 1- slide 18
Product Life-Cycle Strategies
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
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Publishing as Prentice Hall
Chapter 1- slide 19
Product Life-Cycle Marketing Strategies
 Marketing Strategies: Growth Stage
 Improve product quality and add new product features and
improved styling
 Add new models and flanker products
 Enter new market segments
 Increase distribution coverage and enter new distribution channels
 Shift from product-awareness advertising to product-preference
advertising
 Lower prices to attract next layer of price-sensitive buyers
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Publishing as Prentice Hall
Chapter 1- slide 20
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
Marketing Strategies: Maturity Stage

Market Modification
 Expand number of brand users by:
1. Converting nonusers
2. Entering new market segments
3. Winning competitors’ customers
 Convince current users to increase usage by:
1. Using the product on more occasions
2. Using more of the product on each occasion
3. Using the product in new ways
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Publishing as Prentice Hall
Chapter 1- slide 21
Product Life-Cycle Strategies
Decline Stage
 Maintain the product, Harvest the product or Drop the product
 Marketing Strategies: Decline Stage
1. Increase firm’s investment (to dominate the market and
strengthen its competitive position)
2. Maintain the firm’s investment level until the uncertainties about
the industry are resolved.
3. Decrease the firm’s investment level selectively by dropping
unprofitable customer groups, while simultaneously
strengthening the firm’s investment in lucrative niches
4. Harvesting (“milking”) the firm’s investment to recover cash
quickly
5. Divesting the business quickly by disposing of its assets as
advantageously as possible.
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Publishing as Prentice Hall
Chapter 1- slide 22
Summary of Product Life-Cycle
Characteristics, Objectives, and Strategies
Introduction
Growth
Maturity
Sales
Low sales
Rapidly rising
sales
Peak sales
Costs
High cost per
customer
Average cost per
customer
Low cost per
customer
Profits
Negative
Rising profits
High profits
Customers
Few
Growing Number
Characteristics
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Stable number
beginning to
decline
Chapter 11-23
1- slide 23