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Chapter 10
Strategies for New Products and
the Product Life Cycle
Objectives
Define “newness”
ID elements of successful new products
Overview stages of new product development
Understand possible reasons for new product
failure
Introduce the product life cycle
Objectives - cont’d
Relate new product diffusion to consumer
adoption patterns
ID ways to modify existing products
Explore total quality management
Review product line management
Discuss ethical considerations of product
strategy
Management Perspectives
on “New” Products
New-to-the-world
Product category
extensions
Product line extensions
Product modifications
Consumers’ Perspectives
on “New” Products
Discontinuous
Innovation
Breakthrough
Dynamically
Continuous
Innovation
Continuous
Innovation
Major change
Ongoing
alteration
New Product Failures
New Products
That Succeed
New Products
That Fail
After Introduction
80%: New Product Ideas
That Fail
Characteristics of Success
Relative advantage
Lower costs
Faster
Easier
Longer lasting
More fun
Characteristics of Success
Compatibility with
existing habits and
behaviors
Characteristics of Success
Trialability
Easily tested
Low risk
Inexpensive
No special equipment
Free samples or coupons
Sample size
Demo days
Characteristics of Success
Observability
Visible cues
Communicate hidden
qualities
Characteristics of Success
Simplicity
User friendly
Understandable
Logical extension
Easy to grasp
New Product Development
IDEA GENERATION
SCREENING
BUSINESS ANALYSIS
DEVELOPMENT
COMMERCIALIZATION
NEW PRODUCT
New Product Development
Idea generation
Ongoing
ID target market needs
Technology driven
Marketing research
Global vision
New Product Development
Screening
Reasonable
Pertinent
Appropriate
Real consumer need
Magnitude of potential
Corporate criteria / hurdle rates
New Product Development
Business analysis
Qualitative evaluation
Features
Resource needs
Basic marketing plan
Quantitative evaluation
Market demand
Costs
Investment
Competitive activity
Break-even analysis
New Product Development
Product development
Prototype
Total product (packaging,
branding, etc.)
Preliminary testing
Concept Testing
Present product to
potential customers
Test Marketing
Field testing
Laboratory testing
New Product Development
Commercialization
Launch decision
Marketing mix
Establish production capacity
Supply chain & partner
relationships
New Product Failure
 Insufficient superiority or
uniqueness
 Inadequate/inferior
planning
 Poor execution
 Technical problems
 Poor timing
Product Life Cycle
S
a
l
e
s
Introduction
Growth
Maturity
Time
Decline
Product Life Cycle
Introduction
Slow sales
Low revenue
Promote to gain awareness
Varied length
Product Life Cycle
Growth
Increasing sales
Increasing profits
Increasing competition
Product refinement
Profits peak
Promote to create brand
preference
Product Life Cycle
Maturity
Sales from increase
to decline
Intense competition
Prices and profit
margins decrease
Profits often still high
Product Life Cycle
Decline
Falling industry sales &
profits
Industry shakeout
Stimulating Adoption
Awareness
Interest
Evaluation
Trial
Adoption
TIME
Diffusion Process
INNOVATORS (2.5%)
Venturesome
Inner directed
Risk takers
Younger, better
educated & financially
stable
Buy during introduction
stage
Diffusion Process
Early Adapters (13.5%)
Similar to innovators
Often buy during growth
stage
Opinion leaders
Well educated
Important promotional
target
BUY X
Diffusion Process
BUY X
Early & late majority (68%)
mass market
buying cues from early adopters
Average SES
Fairly risk averse
OK, we will
buy X
Diffusion Process
OK, we will
Laggards
buy X.
If I have
to buy it
I will.
Resist change
Conservative
Like tradition
Nonadopters
Refuse to change
No way!
Strategies to Modify Existing
Products
Product Modification
Cost
Reductions
Repositioning
Total Quality
Management
Product Line Strategies
Full Line Strategy
Limited Line Strategy
Single-Product Strategy
Modifying Products for
International Markets
Standardization
Globalization
Strategy
•Electronics
•McDonalds
Adaptation
Customization
Strategy
•Post-It Notes
•Consumer goods
Right to Safety
Product
Obsolescence
Product
Ethics
Quality of Life and Ecology
Right to be
Informed
Review
Define “newness”
ID elements of successful new products
Overview stages of new product development
Understand possible reasons for new product
failure
Introduce the product life cycle
Review - cont’d
Relate new product diffusion to consumer
adoption patterns
ID ways to modify existing products
Explore total quality management
Review product line management
Discuss ethical considerations of product
strategy