What is Marketing?

Download Report

Transcript What is Marketing?

Marketing: An Introduction
Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter Nine
New Product Development and
Product Life Cycle Strategies
9-1
Copyright © 2007 Pearson Education Canada
Looking Ahead
• Explain how companies find and
develop new-product ideas.
• List and define the steps in the newproduct development process.
• Describe the stages of the product life
cycle.
• Describe how marketing strategies
change during the product’s life cycle.
9-2
Copyright © 2007 Pearson Education Canada
Why Develop New Products?
•
•
•
•
•
•
Follow changing market demands.
Remain competitive.
Keep up to changing technology.
Replace dying products.
Refresh and evolve existing products.
Diversify product offering to reduce risk.
9-3
Copyright © 2007 Pearson Education Canada
Obtaining New Products
• Acquire.
– Patents.
– Licenses.
– Companies.
• Develop.
– New products.
– Modifications to existing products.
– Improvements to existing products.
9-4
Copyright © 2007 Pearson Education Canada
Some Succeed – Most Fail
• Successful new products.
– Offer a unique superior product.
– Have a well-defined product concept.
• Products fail.
– Market size may have been overestimated.
– Poor quality or design.
– Incorrect positioning, pricing or promotion.
– Does not deliver superior value.
9-5
Copyright © 2007 Pearson Education Canada
New-Product Failures
• Only 10% of new products are still on
the market and profitable after 3 years.
• Failure rate for industrial products is as
high as 30%.
–
–
–
–
–
–
9-6
Overestimation of market size.
Design problems.
Incorrectly positioned, priced or advertised.
Pushed despite poor marketing research findings.
Development costs.
Competition.
Copyright © 2007 Pearson Education Canada
Disciplined Development Process
•
•
•
•
•
•
•
•
Idea generation.
Idea screening.
Product concept.
Marketing strategy.
Business analysis.
Product development.
Test marketing.
Commercialization.
9-7
Copyright © 2007 Pearson Education Canada
Initial Stages
• Sources of new ideas.
– Employees, customers, suppliers, partners,
competitors.
• Idea screening.
– Narrow down to those worth more time and
money.
• Concept development.
– Develop prototypes and test consumer
interest.
9-8
Copyright © 2007 Pearson Education Canada
Idea Screening
• Process to spot good ideas and drop
poor ones.
• Develop system to estimate: market size,
product price, development time and
costs, manufacturing costs and rate of
return.
• Evaluate these findings against set of
company criteria for new products.
9-9
Copyright © 2007 Pearson Education Canada
Concept Development and
Testing
• Product idea.
– idea for a possible product that the
company can see itself offering.
• Product concept.
– detailed version of the idea stated in
meaningful consumer terms.
• Product image.
– the way consumers perceive an actual or
potential product.
9-10
Copyright © 2007 Pearson Education Canada
Business Case Stages
• Marketing strategy.
– Target market.
– Product positioning.
– Sales, market share and profit objectives.
• Business analysis.
– Review of sales, costs and profit
projections.
– Will product meet corporate objectives.
9-11
Copyright © 2007 Pearson Education Canada
Marketing Strategy
• Phase One.
– Target market, planned market positioning,
sales, market share, profit goals.
• Phase Two.
– Product’s planned price, distribution,
marketing budget.
• Phase Three.
– Sales and profit goals, marketing mix
strategy.
9-12
Copyright © 2007 Pearson Education Canada
Business Analysis
• Involves a review of the sales, costs
and profit projections to assess fit with
company objectives.
• If yes, move to the product
development phase.
9-13
Copyright © 2007 Pearson Education Canada
Product Development
•
•
•
•
Develop concept into physical product.
Calls for large jump in investment.
Prototypes are made.
Prototype must have correct physical
features and convey psychological
characteristics.
9-14
Copyright © 2007 Pearson Education Canada
Commercialization Stage
• Test marketing.
– Test product in selected markets.
– Can include virtual testing.
• Launch product.
– Full market distribution at once or in stages.
– Often heavy and costly promotion.
– Measure market acceptance.
– Adjust to meet launch sales objectives.
9-15
Copyright © 2007 Pearson Education Canada
Test Marketing
• Product and program introduced in more
realistic market setting.
• Not needed for all products.
• Can be expensive and time consuming,
but better than making major marketing
mistake.
9-16
Copyright © 2007 Pearson Education Canada
Commercialization
• Must decide on timing (i.e., when to
introduce the product).
• Must decide on where to introduce the
product (e.g., single location, state,
region, nationally, internationally).
• Must develop a market rollout plan.
9-17
Copyright © 2007 Pearson Education Canada
Organizing New-Product
Development
• Sequential approach.
– Each stage completed before moving to next
phase of the project.
• Simultaneous approach.
– Cross-functional teams work through
overlapping steps to save time and increase
effectiveness.
9-18
Copyright © 2007 Pearson Education Canada
Product Life Cycle
• Development -- No customers, no profits,
heavy spending.
• Introduction -- Early adopter customers, no
profits, high launch costs.
• Growth – Early majority customers, rapid
sales growth and revenues.
• Maturity – Late majority customers, flat sales,
declining profits.
• Decline – Laggard customers, declining sales,
replaced by new products.
9-19
Copyright © 2007 Pearson Education Canada
Product Life Cycle Lengths
• Product class has the longest life cycle
(e.g., gas-powered cars).
• Product form tends to have the standard
PLC shape (e.g., dial telephone).
• Brand PLCs can change quickly
because of changing competitive attacks
and responses (e.g., Tide, Cheer).
9-20
Copyright © 2007 Pearson Education Canada
Introduction Phase
•
•
•
•
•
•
•
•
Sales – low.
Costs – high cost per customer.
Profits – negative.
Marketing objectives -- create product
awareness and trial.
Product -- offer a basic product.
Price -- use cost-plus. formula
Distribution – build selection distribution.
Promotion -- heavy to entice product trial.
9-21
Copyright © 2007 Pearson Education Canada
Growth Phase
•
•
•
•
•
•
•
•
Sales – rapidly rising.
Costs – average cost per customer.
Profits – rising.
Marketing objectives – maximize market share.
Product -- offer extension, service, warranty.
Price – penetration strategy. formula
Distribution – build intense distribution.
Promotion – reduce to take advantage of
demand.
9-22
Copyright © 2007 Pearson Education Canada
Maturity Phase
•
•
•
•
•
•
•
•
Sales – peak.
Costs – low cost per customer.
Profits – high.
Marketing objectives – maximize profits while
defending market share.
Product – diversify brand and models.
Price – match or best competitors. formula
Distribution – build more intensive distribution.
Promotion – increase to encourage brand
switching.
9-23
Copyright © 2007 Pearson Education Canada
Maturity Stage Strategy
• Modifying the market.
– Increase the consumption of the current
product.
• How?
– Look for new users and market segments.
– Reposition the brand to appeal to larger or
faster-growing segment.
– Look for ways to increase usage among
present customers.
9-24
Copyright © 2007 Pearson Education Canada
Maturity Stage Strategy
• Modifying the product.
– Changing characteristics such as quality,
features or style to attract new users and to
inspire more usage.
• How?
– Improve durability, reliability, speed, taste.
– Improve styling and attractiveness.
– Add new features.
– Expand usefulness, safety, convenience.
9-25
Copyright © 2007 Pearson Education Canada
Maturity Stage Strategy
• Modifying the marketing mix.
– Improving sales by changing one or more
marketing mix elements.
• How?
– Cut prices.
– Launch a better ad campaign.
– Move into larger market channels.
– Offer new or improved services to buyers.
9-26
Copyright © 2007 Pearson Education Canada
Decline Phase
•
•
•
•
•
•
•
•
Sales – declining.
Costs – low cost per customer.
Profits – declining.
Marketing objectives – reduce expenditures and
milk the brand.
Product – phase out weak items.
Price – cut price. formula
Distribution – selective and phase out unprofitable
outlets.
Promotion – reduce to minimum level.
9-27
Copyright © 2007 Pearson Education Canada
Style, Fashion and Fads
• Style is a basic and distinctive mode of
expression (e.g., formal clothing, Danish
modern furniture).
• Fashion is a popular style in a given field
(e.g., business casual).
• Fad is a fashion that enters quickly, is
adopted quickly and declines fast (e.g.,
pet rocks).
9-28
Copyright © 2007 Pearson Education Canada
Looking Back
•
Explain how companies find and
develop new-product ideas.
List and define the steps in the newproduct development process.
Describe the stages of the product life
cycle.
Explain how marketing strategies
change during the product’s life cycle.
•
•
•
9-29
Copyright © 2007 Pearson Education Canada