Transcript Ch 11

Lamb, Hair, McDaniel
2012-2013
CHAPTER 11
© 2013 by Cengage Learning Inc. All Rights
Chapter 1
Copyright ©2012 by CengageReserved.
Learning Inc. All rights reserved
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Developing and Managing
Products
Learning Outcomes
1
Explain the importance of developing new products and
describe the six categories of new products
2
Explain the steps in the new-product development
process
3
Discuss global issues in new-product development
4
Explain the diffusion process through which new products
are adopted
5
Explain the concept of product life cycles
© 2013 by Cengage Learning Inc. All Rights Reserved.
The Importance of New Products
Explain the importance
of developing new
products and describe
the six categories of
new products
1
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3
Categories of New Products
New-to-the-World
New Product Lines
Product Line Additions
Improvements or Revisions
Repositioned Products
Lower-Priced Products
4
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1
The New-Product
Development Process
Explain the steps in
the new-product
development
process
2
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5
New Product Success Factors
Long-term commitment
Company-specific approach
Capitalize on experience
Establish an environment
6
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2
Exhibit 11.1
New-Product Development Process
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Rights Reserved.
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.
8
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2
Idea Generation
Customers
Employees
Distributors
Vendors
Sources of
New-Product
Ideas
Competitors
R&D
Consultants
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2
Approaches for New Product
Development
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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.
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2
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…
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a test to evaluate a new-product idea,
usually before any prototype has been
created. Often successful for line
extensions.
2
Business Analysis
Demand
Considerations
in
Business
Analysis Stage
Cost
Sales
Profitability
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2
Development
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
Creation of prototype

Sketch marketing strategy

Packaging, branding, labeling

Promotion, price, and distribution
strategy

Manufacturing feasibility
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2
Simultaneous Product
Development
A new team-oriented approach to newproduct development where all relevant
functional areas and outside suppliers
participate in the development process.
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2
Test Marketing
Test
Marketing
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The limited introduction
of a product and a
marketing program to
determine the reactions
of potential customers
in a market situation.
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2
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
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2
Alternatives to
Test Marketing
 Single-source research using
supermarket scanner data
 Simulated (laboratory) market testing
 Online test marketing
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2
Commercialization
Ordering Materials
Production
Inventory Buildup
Distribution Shipments
Sales Force Training
Trade Announcements
Customer Advertising
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2
New-Product
Success Factors
Listening to customers
Strong leadership
Producing the best
product
Commitment to newproduct development
Vision of future market
Getting every aspect
right
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Project-based team
approach
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2
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.
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Global Issues in
New-Product Development
Discuss global
issues in newproduct
development
3
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Global Marketing Questions
• Develop product for potential worldwide
distribution
• Modify for unique market requirements
• Design products to meet regulations
and key market requirements
22
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3
The Spread of New Products
Explain the diffusion
process through
which new products
are adopted
4
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23
Diffusion
Diffusion
The process by which the
adoption of an innovation
spreads.
24
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4
Categories
of of
Adopters
Categories
Adopters
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
25
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4
Product Characteristics and
the Rate of Adoption
Complexity
Compatibility
Relative Advantage
Observability
Trialability
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4
Marketing Implications of the
Adoption Process
Word of Mouth
Communication
Aids the
Diffusion Process
Direct from
Marketer
27
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4
Product Life Cycles
Explain the concept
of product life
cycles
5
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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).
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5
Exhibit 11.2
Four Stages of the Product Life Cycle
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Exhibit 11.3
Product Life Cycles for Styles, Fashion, and
Fads
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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
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5
Growth Stage





Increasing rate of sales
Entrance of competitors
Market consolidation
Initial healthy profits
Aggressive advertising of the
differences between brands
 Wider distribution
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5
Maturity Stage








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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
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5
Decline Stage
 Long-run drop in sales
 Large inventories of
unsold items
 Elimination of all nonessential
marketing expenses
 “Organized abandonment”
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5
Exhibit 11.4
Relationships between the Diffusion Process
and the Product Life Cycle
Product
life cycle
curve
Diffusion
curve
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Chapter 11 Video
Maine Media Workshops
For most of its existence, Maine Media Workshops had
several areas of study that developed as their own
brands, but to keep the school afloat, Maine Media
Workshops has pulled its various media into one brand as
a nonprofit school. Having one brand has enabled the
school to reach out to a variety of sponsors and students
with a cohesive message.
http://www.cengage.com/marketing/book_content
/9781133190110_lamb/videos/ch11.html
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