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New-Product Development & Product Life-Cycle Strategies . New Product Development Process. Idea generation. Idea screening. Concept Development & testing. Marketing strategy development. Business analysis. Product development. Test marketing. Commercialization.
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New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization
New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development The systematic search for new product ideas. Business analysis Product development Test marketing Commercialization
New Product Development Process Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible. Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization
New Product Development Process Development an attractive idea into a product concept which provides more detailed stated in meaningful consumer terms. Then test new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization
New Product Development Process Designing an initial marketing strategy for a new product based on the product concept. Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization
Marketing Strategy Statement • Consists of 3 parts: • Target market • The planned value proposition • The sales, market share, and profit goals for the first few years.
Marketing Strategy Statement Example: electric car • Product concept: • A “green” car appealing to an environmentally conscious people who want practical, low polluting transportation. • Marketing strategy statement: • The target market is younger, well-educated, moderate-to high-income individuals, couples, or small families seeking practical, environmentally responsible transportation. The car will be positioned as more fun to drive and less polluting than today’s internal combustion engine or hybrid cars. The company will aim to sell 100,000 cars in the first year, at loss of not more than $15 million. In second year, the company will aim for sales of 120,000 cars and a profit of $25 million.
New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization A review of the sales, costs, and profit projections for new product to find out whether these factors satisfy the company’s objectives.
New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization Developing the product concept into a physical product in order to ensure that the product idea can be turn into a workable market offering.
New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization The stage of new-product development in which the product and marketing program are tested in realistic market settings.
New Product Development Process Idea generation Idea screening Concept Development & testing Marketing strategy development Business analysis Product development Test marketing Commercialization Introducing a new product into the market
Product Life-Cycle Strategies • The course of a product’s sales and profits over its lifetime. • It involves five distinct stages: • Product development • Introduction • Growth • Maturity • Decline
Sales & Profits over the Product’s Life from Inception to Decline Sales and profits ($) Time Losses/ Investment ($) This shows typical product life cycle (PLC), not all products follow this PLC.
Stage 1 Product development: • Begins when company finds and develops a new-product idea. • During this stage, sales are zero and the company’s investment costs add up.
Stage 2 Introduction: • Starts when the new product is first launched. • Is a period of slow sales growth as the product is introduced in the market. • Profits are nonexistent or low in this stage because of the heavy expenses of product introduction.
Stage 3 Growth: • Is a period of rapid market acceptance and increasing profits. • Product’s sales start climbing quickly.
Stage 4 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.
Stage 5 Decline: • Is the period when sales fall off and profits drop. • Sales decline for many reasons: technological advances, shifts in consumer tastes, and increased competition. • A firm must regularly review product sales, market shares, costs, and profit trends. Then, management can decide whether to maintain, harvest, or drop the declining products.
