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Chapter 9:
Product
Management and
New-Product
Development
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Chapter 9 Objectives
When you finish this chapter, you should
1. Understand how product life
cycles affect strategy
planning.
2. Understand what is involved
in designing new products
and what “new products”
really are.
3. Understand the new-product
development process.
9-2
4. See why product liability
must be considered in
screening new products.
5. Understand the need for
product or brand managers.
6. Understand how total quality
management can improve
goods and services.
7. Understand the important new
terms.
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
The Product Life Cycle
Market
Introduction
Market
Growth
Market
Maturity
Sales
Decline
Total Industry
Sales
+
Total Industry
Profit
$0
Time
–
Exhibit 9-1
9-3
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Planning for Life Cycle Stages
Introducing New
Products
Focus:
Managing Mature
Products
Focus:
Budget / Rate of Growth
Persuasion / Less Profit
Focus:
Future Adaptation
New Markets
Dying Products
9-4
New or Improve?
Focus:
New Strategies
Focus:
Phase Out
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
New-Product Development Process
Idea
Generation
Ideas from:
Customers
and users
Marketing
research
Competitors
Other
markets
Company
people
Middlemen
Screening
Idea
Evaluation
Strengths
and
Weaknesses
Fit with
objectives
Market
trends
Rough ROI
estimate
Concept
testing
Customer
reactions
Rough
estimates
of cost,
sales,
profits
Development
R&D
Develop
model or
service
prototype
Test
marketing
mix
Revise plans
as needed
ROI estimate
Commercial
-ization
Finalize
product and
marketing
plan
Start
production
and
marketing
“Roll out” in
select
markets
Final ROI
estimate
Exhibit 9-4
9-5
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Types of New Product Opportunities
Immediate Satisfaction
High
High
Long-Run
Consumer
Welfare
Low
Low
Desirable
Products
Salutary
Products
Pleasing
Products
Deficient
Products
Exhibit 9-5
9-6
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
New-Product Development Management
Top Level
Support
Key
Issues
Authority
Market-Guided
R&D
9-7
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Total Quality Management
Cost of Defects
Management
Leadership and
return on quality
Continuous
Improvement
TQM
Customer
Focus
Empowerment
Quality tools,
benchmarking,
and the like
9-8
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Key Terms
Product Life Cycle
Market Introduction
Market Growth
Market Maturity
Sales Decline
Fashion
New Product
FTC
Consumer Product Safety Act
Product Liability
9-8
Concept Testing
Product Managers
Brand Managers
Total Quality Management
(TQM)
Continuous Improvement
Pareto Chart
Fishbone diagram
Empowerment
Benchmarking
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill