Transcript Chapter 9

Part 3: The marketing mix
Chapter 9: Product management and
new-product development
Step 5: Design the marketing strategy
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–1
When we finish this lecture you should
• Appreciate how product life cycles affect strategy
•
•
•
•
•
planning
Know what new products are and what is involved
in designing new products
Understand the new-product development process
Appreciate the need for whole company
involvement and the importance of research and
development (R&D)
Recognise the need for product or brand managers
Understand the processes used by consumers
when adopting new products
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–2
Figure 9.1 The life cycle of a typical product
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–3
Market introduction stage
• A stage of the product life cycle when sales are low
as a new idea is first introduced to a market
• Company needs to use informative promotion to
advise advantages and uses of the product
• Takes time for customers to realise the product is
available
• A stage usually marked by losses due to research
and development costs, promotion, distribution
development and product refinement
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–4
Market growth stage
• Sales grow quickly
• Industry profits begin to rise and then fall as
competition increases
• Usually marked with the highest profits but many
mistakes, as competitors are often ignored until
their damage has an impact
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–5
Market maturity stage
• Sales level off and competition increases
• Industry profits decline as promotion costs rise and
•
•
•
•
some competitors cut prices to attract business
Long-run downward spiral on prices
New suppliers may enter the market to take
market share
Promotion is critical—promotion of the persuasive
type
Some companies join forces to decrease the costs
of promotion
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–6
Sales decline stage
• New products replace current offerings
• Price competition from dying products is more
vigorous
• Companies with strong brands may still make
profits
• Conservative buyers (laggards) might still be
buying
• International expansion is often used to extend the
product life cycle (PLC)
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–7
Product life cycle variations
• A life cycle relates to a total product market, not a
single brand or one company’s sales
• Each product market has its own life cycle
• In general, product life cycles are becoming shorter
• The length of the product life cycle, and in fact the
length of each stage, varies substantially between
products
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–8
Product life cycle variations—how
quickly a new product moves through
the cycle
• Comparative advantage—is the new product really
better?
• The new product is easy for consumers to use
• Product advantages are easy to communicate
• The new product is easy to try on a limited basis
• The new product is compatible with customers'
values and experiences
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–9
Fashions, fads and styles
• Fashion
–
Currently accepted or popular style
• Fad
–
An idea that is fashionable only to a certain group of
enthusiasts
• Style
–
Appearances that come back over time as fashions and
fads
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–10
Figure 9.2 Patterns of fashion, fad and style
cycles for fashion products
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–11
Figure 9.3 Typical changes in marketing variables
over the product life cycle
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–12
Extending product life cycles
• Managing maturing products
• Product improvement or new-product development
• New strategies for different markets
• Management of declining products
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–13
Figure 9.4 Examples of three marketing strategy
choices for a company in a mature market
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–14
New-product planning
• New products are critical to survival
–
–
–
Markets change
Competition changes
Product life cycles carry on
• What is a new product? From a company’s
perspective, it’s a product that is unfamiliar in any
way
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–15
Reasons for new-product failure
• Failing to offer a unique benefit
• Underestimating the competition
• Product design is not as good as it could be
• Product development costs are higher than
expected
• Incorrectly positioned in the market, not
advertised, or over-priced
• Slow or poor timing in product introduction
• An over estimated market size
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–16
New-product development process
• New product thinking should be an ongoing effort
• Top-level support is vital
• Someone should be ‘in charge’ of the effort
• Constantly generate many ideas, then narrow
down to the best opportunities
• Need a well-organised new-product development
process
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–17
Figure 9.5 New-product development process
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–18
Figure 9.6 Types of new-product opportunity
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–19
Figure 9.7 New-product development success
factors
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–20
The adoption process
Awareness
Interest
Evaluation
Trial
Decision
Confirmation
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–21
Figure 9.8 The adoption curve for a typical
successful product
90
50
%
20
5
0
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–22
What we will be doing in the next
chapter
• In the following chapter we will be discussing
managing distribution channels, including
–
–
–
Why organisations use the channels of distribution
Discuss the difference between intensive, selective and
exclusive distribution
Appreciate the use of intermediaries
Copyright  2004 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy
9–23