New Product Development and Product Life-Cycle Strategies

1. New Product Development and Product Life-Cycle Strategies

2. NPD is a process which designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation. New product development

3. A product that opens an entirely new market A product that adapts or replaces an existing product A product that significantly broadens the market for an existing product An old product introduced in a new market An old product packaged in a different way An old product marketed in a different way What is a new product ?

4. To add to product portfolio To create stars and cash cows for the future To replace declining product To take advantage of new technology To defeat rivals To maintain/increase market share To keep up with rivals To maintain competitive advantage To full gap in the market Why develop a new product

5. New to the world products – innovative products New product lines – to allow the firm to enter an existing market Addition to product line – to supplement the firm’s existing product line Improvements and revisions of existing product Repositioned products – existing products targets at new market Cost reduction new product that provide similar performance at lower cost Types of new products

6. This is the strategic stage The firm assesses It current product portfolio Opportunities and threats The firm then determines the type of product which would best fit in with the corporate strategy New product planning

7. Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization New Product Development Process

8. New Product Development ProcessStep 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers

9. Process to spot good ideas and drop poor ones Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return New Product Development ProcessStep 2. Idea Screening

10. New Product Development ProcessStep 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

11. New Product Development ProcessStep 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy

12. Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives New Product Development ProcessStep 5. Business Analysis Step 6. Product Development If No, Eliminate Product Concept If Yes, Move to Product Development

13. New Product Development ProcessStep 7. Test Marketing Controlled Test Market A few stores that have agreed to carry new products for a fee. Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test Market Test in a simulated shopping environment to a sample of consumers.

14. Product Life Cycle Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($)

15. Introduction Stage of the PLC Sales Low sales Costs High cost per customer Profits Negative Create product awareness and trial Marketing Objectives Product Offer a basic product Price Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers

16. Growth Stage of the PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Product Offer product extensions, service, warranty Price Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market

17. Maturity Stage of the PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit while defending market share Product Diversify brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits

18. Decline Stage of the PLC Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and milk the brand Product Phase out weak items Price Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers