Transcript Chapter 8 PPTS

Chapter 8
Dr. Elan’s personal web page link –
http://faculty.ksu.edu.sa/2277400269/Pages/Hom.aspx
New product development
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• Companies that excel in developing and managing
new products reap big rewards
• All products die - so developing new products very
important
• New products are a key source to growth
• New products –
– thru acquisition
– Own new product development
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Categories of New Product

New to the world products

New product lines

Additions to existing lines

Improvements to existing products

Repositioning

Cost reductions
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Challenges in New Product Development
New product development essential due to –
• Changing customer needs and wants
• New Technologies
• Shortened PLC
• Increased domestic and foreign competition
“New product development is expensive and risky”
[British - French = Concorde
Motorola – Iridium phones]
“Failure rate of new products is nearly 90 % through out the world”
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Hurdles in new product development
• Shortage of ideas
• Fragmented markets
• Social and Government constraints ‫القيود‬
• Cost of Development
• Faster development time
• Shorter Product Life Cycle’s [PLC]
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New Product Development Process
Stage 1 : Idea ‫ فكرة‬generation ‫تطوير‬
- interaction with others
- Creativity techniques [Attribute testing,
forced relationships etc.,]
Stage 2 : Idea screening ‫تصفية‬
- to drop poor ideas
- product ideas are reviewed against a
set of criteria. ‫معايير‬
.
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Stage 3: Concept Development and Testing :
a product concept is an elaborated version of the idea
expressed in meaningful consumer terms [benefits offered]
- state product category [a drink]
- state product [instant break fast drink] and brand
position
Concept testing : presenting the product concept to target
consumers and getting their reaction. ‫استجابة‬
[rapid proto typing, virtual reality]
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Stage 4 : Marketing Strategy
- after successful concept testing
- a preliminary marketing strategy plan to introduce
the new product in the market
Part 1 : Target market size, structure, behavior, product
positioning, sales, market share and profit goals
sought in the first few years
Part 2 : Planned price, distribution strategy and marketing
budget for year 1
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Stage 5 : Business Analysis [to identify business
attractiveness]
• Estimating total sales
• Estimating costs and profits
• Break even analysis
• Risk analysis [ROI, Rate of Return]
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Stage 6: Product Development
- Determining whether the product idea can be translated
into a technically and commercially ‫التقنية والتجارية‬
feasible
product
-Prototype ‫ النموذج‬is developed
Stage 7: Market Testing ‫اختبار‬
- Singapore in Asian Market
- May be a costly exercise
- Feedback taken into consideration
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Stage 8: Commercialization
Decide on WHEN, WHERE, TO WHOM, and HOW ?
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Likely success of product concept:
–
Product superiority
–
Economic advantage‫ ميزة‬to user
–
Overall company fit
–
Technological compatibility ‫متوافق‬
–
Familiarity ‫ مألوف‬to the company
–
Market need, growth, and size
–
Competitive situation
–
Defined opportunity
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Product Life Cycle & STRATEGIES
Stage 1 - Introduction stage
Stage 2 - Growth stage
Stage 3 - Maturity stage
Stage 4 - Decline stage
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PLC & STRATEGIES
Introduction stage
o Rapid-skimming strategy [high price - high promotion]
o Slow-skimming strategy [ high price and low promotion ]
o Rapid-penetration strategy [low price and high promotion]
o Slow-penetration strategy [low price & low promotion]
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PLC & STRATEGIES
Growth stage
• Improves product quality,styling, add features
• Add new models
• Enters new market segment
• Distribution coverage and new distribution channels
• Product awareness advertising to product preference
advertising
• Lower prices to price sensitive buyers
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Maturity stage
– Market modification
– Product modification
– Marketing-mix modification
Decline stage
– Identify weak products
– Determine decline marketing strategies
– Drop decision
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