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Chapter 10: Product Management and New-Product Development

Chapter 10: Product Management and New-Product Development. Market Introduction. Market Growth. Market Maturity. Sales Decline. Total Industry Sales. +. Total Industry Profit. $ 0. Time. –. The Product Life Cycle. Exhibit 10-1. 10-3.

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Chapter 10: Product Management and New-Product Development

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  1. Chapter 10: Product Management and New-Product Development

  2. Market Introduction Market Growth Market Maturity Sales Decline Total Industry Sales + Total Industry Profit $ 0 Time – The Product Life Cycle Exhibit 10-1 10-3

  3. How Quickly a New Product Moves through the Product Life Cycle • Comparative advantage—is the new product really better? • The new product is easy for consumers to use • Product advantages are easy to communicate • Product is easy to try on a limited basis • Product is compatible with customers' values and experiences

  4. Fashion Cycles Follow Three Stages • Distinctiveness stage • Some consumers seek—and are willing to pay for—products different from those that satisfy the majority • Emulation stage • When many consumers want to buy what is satisfying the original users or fashion leaders • Economic Emulation stage • Many consumers want the currently popular fashion, but at a lower price

  5. Fashion cycles may last for some time as they spread beyond the innovators Fad cycles may be very short Sales level Styles may come back over time as fashions and fads Sales level Patterns of Fashion, Fad, and Style Cycles for Fashion Products

  6. New Products • New products are critical to survival • markets change • competition changes • product life cycles march on • What is a new product? • Firm's perspective • a product that is new in any way • FTC's perspective • a product must be entirely new, or changed in a functionally significant way • can only be called new for six months

  7. Top Level Support Authority Key Issues Market-Guided R & D Integration & Coordination New-Product Development Management 10-7

  8. Idea Generation Screening Idea Evaluation Development Commercial -ization Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate New-Product Development Process Exhibit 10-4 10-5

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