Transcript What Is a New Product?

Chapter 9
Product
Management
and New-Product
Development
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
At the end of this presentation,
you should be able to:
1. understand how product life cycles affect
strategy planning.
2. describe what is involved in designing new
products and what “new products” really are.
3. understand the new-product development
process.
4. appreciate the team effort that goes into newproduct development.
5. understand the need for product or brand
managers.
6. understand how total quality management
can improve goods and services.
7. understand important new terms.
9-2
The Role of Product Management and
New-Product Development in Marketing
Strategy (Exhibit 9-1)
Chapter 8:
Elements of
Product Planning
for Goods &
Services
The Product Life
Cycle
Development
• Stages
• Strategy planning
for stages
9-3
Chapter 9: Product
Management &
New- Product
Development
New Product
Development
• 5 Step Process
• Success factors
Managing brands
• Product
managers
• Managing
product quality
Typical Life Cycle of a New
Product Concept (Exhibit 9-2)
Total
industry
sales
9-4
Total industry
profit (initially loss)
Market Introduction—
Investing in the Future
Low sales
Informative
promotion
Invest for
future
profits
9-5
Market Growth Stage—Profits
Go Up and Down
Innovation Attracts
Competition
Monopolistic
Competition Develops
Profits Peak and Then
Decline
Don’t Ignore Long-Term Competitive Trends!
9-6
Market Maturity Stage—Sales
Level Off, Profits Continue Down
Persuasive, More Costly
Promotion
Brands Are More Similar
Greater Price
Competition/Price
Sensitivity
Maturity May Last a Long
Time
9-7
Sales Decline —A Time of
Replacement
New products
replace the
old
Price
competition
from dying
products
Conservative
buyers switch
late to new
products
9-8
Which Stage of PLC?
9-9
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Checking Your Knowledge
Kodak announced that it would no longer produce 35
millimeter film cameras, but would manufacture digital
cameras exclusively. Sales of digital cameras have
grown steadily and have far outpaced the sale of 35
mm cameras in recent years, even among professional
photographers. Kodak’s decision indicates that 35 mm
cameras are probably in the ________ stage of the
product life cycle.
A.
B.
C.
D.
9-10
Market introduction
Market growth
Sales decline
Market maturity
Product Life Cycles Should Be
Related to Specific Markets
Market
Definitions
Individual
Brands
• Should be
carefully
developed
• May not follow the
classic pattern
• May be introduced
in market growth
or maturity
• Not all brands are
equally strong
9-11
AND
• Different markets,
different stages
• Contribute to the
length of the
cycle
Product Life Cycles Vary in Length
Comparative
Advantage
Compatibility
Easy to Use
Products
that move
quickly through
early life
cycle stages
Trialability
9-12
Easy to
Communicate
Interactive Exercise: Adoption
9-13
Other Issues in Product
Life Cycle Length
Product Life Cycles Are
Getting Shorter
Pioneer or follower? Which
strategy works best?
Fashions and Fads
9-14
Changes in Marketing Mix Across
the Product Life Cycle (Exhibit 9-3)
Product
Place
Market Introduction
Market Growth
One or few
Variety, build brand
familiarity
Build channels, maybe selective distribution
Promotion
Pioneering, informing
Inform & persuade
Price
Skimming or
penetration
Meet competition or
price dealing
Competitive
Situation
Monopoly or
monopolistic
competition
Monopolostic
competition or
oligopoly
9-15
Changes in Marketing Mix Across
the Product Life Cycle (Exhibit 9-3)
Product
Market Maturity
Sales Decline
Battle of the brands
Some drop out
Place
Move toward more intensive distribution
Promotion
Persuading and then reminding
Price
Meeting competition or price cuts and deals
Competitive
Situation
Monopolistic competition or oligopoly –
heading toward pure competition
9-16
Managing Mature Products
9-17
Phasing Out Dying Products
Phase-out May
Be Necessary
Profitability
9-18
Product Line
Customer
Support
Don’t Pull the
Plug So Quickly
Sales Decline
Can Be
Profitable
New Product Planning
What Is a New Product?
FTC Rule: 6 Months
Ethical Dilemmas Exist
9-19
New Product
9-20
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
New-Product Development
Process (Exhibit 9-4)
1. Idea
generation
2. Screening
3. Idea
evaluation
4.Development
5. Commercialization
9-21
Step 1: Idea Generation
1. Idea
1. Idea
generation
generation
Ideas from:
2. Screening
• customers and users
• marketing research
3. Idea
• competitors
evaluation
• other markets
• company people,
4.Development
intermediaries, etc.
5. Commercialization
9-22
Step 2: Screening
1. Idea
generation
2. Screening
2. Screening
• Strengths and
3. Idea
weaknesses
evaluation
• Fit with objectives
• Market trends
4.Development
• Rough ROI estimate
5. Commercialization
9-23
Step 3: Idea evaluation
1. Idea
generation
3. Idea Evaluation
2. Screening
• Concept testing
3. Idea
• Reactions
from
evaluation
customers
• Rough estimates4.Development
of
costs, sales, and
profits
5. Commercialization
9-24
Step 4: Development
1. Idea
generation
2. Screening
4. Development
3. Idea
evaluation
• R&D
• Develop model or
4.Development
service
• Test marketing mix
• Revise plans as5. Commercialization
needed
• ROI estimate
9-25
Step 5: Commercialization
1. Idea
generation
2. Screening
5. Commercialization
3. Idea
evaluation • Finalize product and
marketing plan
4.Development
• Start production and
marketing
• “Roll out”
in select
5. Commercialmarkets ization
• Final ROI estimate
9-26
Checking Your Knowledge
Top management of a large company recently
approached the dean of a major business school about
starting a specialized MBA program for the company’s
employees. After further discussions, the dean decided
that the program did not fit well with the objectives and
resources of the school, so the program was put on the
“back burner” until conditions changed. The proposed
MBA program was at what stage of the new-product
development process when it was shelved?
A.
B.
C.
D.
E.
9-27
Idea generation
Screening
Idea evaluation
Development
Commercialization
New Product Development: A Total
Company Effort (Exhibit 9-5)
Organized newproduct
development
process
Complete
marketing
plan
Effective
transition to
regular operations
A basis for
superior
customer value
New-product
success
Effective
design
9-28
New Product Development: A Total
Company Effort (Exhibit 9-5)
Top
management
support
Culture of
innovation
Product
champion
with authority
9-29
Crossfunctional
team
Clear
understanding of
customer needs
Organized new-product
development process
Timely
development
cycle
Cost
management
(costs add
value)
Checking Your Knowledge
Which of the following statements about new-product
development are true?
A.
B.
C.
D.
E.
9-30
The process should be informal to encourage
innovation.
The greatest number of product ideas is in the
idea evaluation stage.
The best criteria for evaluating new product ideas
in the early stages is return on investment (ROI).
The process should have top management
support.
All of the above statements are true.
Need for Product Managers
Product/Brand
Managers
Common in Large
Companies
Some Are “Product
Champions”
9-31
Managing Product Quality
9-32
Building Quality into Services
Server Is Linked
to the Service
Training Is Crucial
Empowerment Works
9-33
Other Issues in Quality
Implementation Efforts
Managers Lead the Effort
Specify Jobs and
Measure Performance
Get a Return on Quality
9-34
You should now be able to:
1. understand how product life cycles affect
strategy planning.
2. describe what is involved in designing new
products and what “new products” really are.
3. understand the new-product development
process.
4. appreciate the team effort that goes into newproduct development.
5. understand the need for product or brand
managers.
6. understand how total quality management
can improve goods and services.
7. understand important new terms.
9-35
Key Terms
1.
product life cycle
2.
market introduction
3.
market growth
4.
market maturity
5.
sales decline
6.
fashion
15.
7.
fad
16.
8.
new product
9.
Federal Trade
Commission (FTC)
9-36
10.
11.
12.
13.
14.
17.
18.
Consumer Product
Safety Act
product liability
concept testing
prototype
product managers
brand managers
total quality
management (TQM)
continuous
improvement
empowerment