Transcript Ch.11 (PLC)
Lamb, Hair, McDaniel 2011-2012 CHAPTER 11 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 © imagesource/photolibrary Developing and Managing Products Learning Outcomes LO 1 Explain the importance of developing new products and describe the six categories of new products LO 2 Explain the steps in the new-product development process LO 3 Discuss global issues in new-product development LO 4 Explain the diffusion process through which new products are adopted LO 5 Explain the concept of product life cycles Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 The Importance of New Products Explain the importance of developing new products and describe the six categories of new products LO1 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 Categories of New Products New-to-the-World New Product Lines Product Line Additions Improvements or Revisions Repositioned Products LO1 Chapter 11 Lower-Priced Products Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 The New-Product Development Process Explain the steps in the new-product development process LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 The New-Product Development Process New Product Success Factors Long-term commitment Company-specific approach Capitalize on experience LO2 Chapter 11 Establish an environment Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Exhibit 11.1 New-Product Development Process LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 New-Product Strategy New-Product Strategy is… a plan that links the new-product development process with the objectives of the marketing department, the business unit, and the corporation. LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Idea Generation Customers Employees Distributors Vendors Sources of New-Product Ideas Competitors R&D Consultants LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Approaches for New Product Development Brainstorming The process of getting a group to think of umlimited ways to vary a product or solve a problem. Focus Group The objective of focus group interviews is to stimulate insightful comments through group interaction. LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Idea Screening Screening is… the first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. A Concept Test is… LO2 Chapter 11 a test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions. Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Business Analysis Demand Considerations in Business Analysis Stage Cost Sales Profitability LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Development Creation of prototype Sketch marketing strategy Packaging, branding, labeling Promotion, price, and distribution strategy Manufacturing feasibility LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Simultaneous Product Development A new team-oriented approach to newproduct development where all relevant functional areas and outside suppliers participate in the development process. LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Test Marketing Test Marketing The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Costs of Test Marketing • Often take 1 year or more • Can cost over $1 million • Exposes new product to competitors • Competitors can “jam” testing programs with their own promotions LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Alternatives to Test Marketing Single-source research using supermarket scanner data Simulated (laboratory) market testing Online test marketing LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Commercialization Ordering Materials Production Inventory Buildup Distribution Shipments Sales Force Training Trade Announcements LO2 Chapter 11 Customer Advertising Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 New-Product Success Factors Listening to customers Strong leadership Producing the best product Commitment to newproduct development Vision of future market Project-based team approach Getting every aspect right LO2 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Beyond the Book Why New Products Fail • • • • • • • • No discernible benefits Poor match between features and customer desires Overestimation of market size Incorrect positioning Price too high or too low Inadequate distribution Poor promotion Inferior product NOTE: Supplemental content – not in book. Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Global Issues in New-Product Development Discuss global issues in newproduct development LO3 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Global Marketing Questions • Develop product for potential worldwide distribution • Modify for unique market requirements • Design products to meet regulations and key market requirements LO3 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 The Spread of New Products Explain the diffusion process through which new products are adopted LO4 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Diffusion Diffusion The process by which the adoption of an innovation spreads. LO4 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Categories of Adopters Innovators Early Adopters Early Majority Late Majority LO4 Chapter 11 Laggards Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Product Characteristics and the Rate of Adoption Complexity Compatibility Relative Advantage Observability Trialability LO4 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Marketing Implications of the Adoption Process Word of Mouth Communication Aids the Diffusion Process Direct from Marketer LO4 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Product Life Cycles Explain the concept of product life cycles LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Product Life Cycle Product Life Cycle (PLC) A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Exhibit 11.2 Four Stages of the Product Life Cycle LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Exhibit 11.3 Product Life Cycles for Styles, Fashion, and Fads LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 Introductory Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion focuses on awareness and information Communication challenge is to stimulate primary demand LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Maturity Stage Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Niche marketers emerge LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Decline Stage Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses “Organized abandonment” LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 Exhibit 11.4 Relationships between the Diffusion Process and the Product Life Cycle Product life cycle curve Diffusion curve LO5 Chapter 11 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Beyond the Book Chapter 11 Videos Chapter 11 Kodak – Developing and Managing Products Place Kodak’s digital cameras in the product life cycle. http://www.cengage.com/marketing/boo k_content/1439039429_lamb/company_c lips/ch11.html Copyright ©2012 by Cengage Learning Inc. All rights reserved 37