Transcript Chapter 10 - Developing and Managing Products
Chapter 10
Lamb, Hair, McDaniel
MKTG
2007-2008
10 Developing and Managing Products
Designed by
Amy McGuire, B-books, Ltd.
Prepared by
Deborah Baker, Texas Christian University Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Learning Outcomes
LO LO 2 Explain the steps in the new-product development process LO 3 1 Explain the importance of developing new products and describe the six categories of new products Discuss global issues in new-product development Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 10
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Learning Outcomes
LO 4 Explain the diffusion process through which new products are adopted LO 5 Explain the concept of product life cycles Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 1 The Importance of New Products Explain the importance of developing new products and describe the six categories of new products Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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New Product
New Product A product new to the world, the market, the producer, the seller, or some combination of these.
Chapter 10 LO 1 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Categories of New Products
New-to-the-World New Product Lines Product Line Additions Improvements or Revisions Repositioned Products Chapter 10 LO 1 Lower-Priced Products Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 1
New Product for Starbucks
Starbucks recently marketed the film Akeelah and the Bee.
It says the film is a natural extension of the Starbucks experience.
Critics say the pervasive chain is overextending its welcome.
Chapter 10
SOURCE: Janet Adamy, “Lights, Camera, Action at Starbucks,” Wall Street Journal, April 22-23/2006, A2.
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LO 1
REVIEW LEARNING OUTCOME
Developing New Products Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 2 The New Product Development Process Explain the steps in the new-product development process Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 2 Chapter 10
The New-Product Development Process
New Product Success Factors Long-term commitment Company-specific approach Capitalize on experience Establish an environment Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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New-Product Development Process
LO 2 Chapter 10 New-Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 2 Chapter 10
Idea Generation
Customers Employees Distributors Competitors Sources of New-Product Ideas Vendors R & D Consultants http://www.ideo.com
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LO 2 Chapter 10
Tips for New Product Development
Disperse R & D around the globe
Keep teams small and empower employees
Flatten hierarchy
Encourage generation of crazy new ideas
Welcome mistakes Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Brainstorming
Brainstorming The process of getting a group to think of unlimited ways to vary a product or solve a problem.
LO 2 Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Idea Screening
Idea Screening 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.
LO 2 Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Concept Testing
Concept Testing A test to evaluate a new-product idea, usually before any prototype has been created.
LO 2 Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 2 Chapter 10
Business Analysis
Demand Considerations in Business Analysis Stage Cost Sales Profitability Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Development
LO 2 Chapter 10
Creation of prototype
Marketing strategy
Packaging, branding, labeling
Promotion, price, and distribution strategy
Manufacturing feasibility
Final government approvals if needed Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Simultaneous Product Development
Simultaneous Product Development A new team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process.
LO 2 Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Test Marketing
LO 2 Chapter 10 Test Marketing http://www.merwyn.com
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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Alternatives to Test Marketing
LO 2 Chapter 10
Single-source research using supermarket scanner data
Simulated (laboratory) market testing
Online test marketing http://www.newproductworks.com
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LO 2 Chapter 10
Commercialization
Production Inventory Buildup Distribution Shipments Sales Training Trade Announcements Customer Advertising Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 2
REVIEW LEARNING OUTCOME
New-Product Development Process Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Why Some Products Succeed and Others Fail
Explain why some products succeed and others fail Chapter 10
NOTE: Supplemental content – not in book.
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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 Chapter 10
NOTE: Supplemental content – not in book.
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Success Factors
Factors in Successful New Products
Match between product and market needs Different from substitute products Benefit to large number of people Chapter 10
NOTE: Supplemental content – not in book.
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Success Factors
Listening to customers Producing the best product Vision of future market Strong leadership Commitment to new product development Project-based team approach Getting every aspect right Chapter 10
NOTE: Supplemental content – not in book.
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Why Products Succeed and Others Fail
Chapter 10
NOTE: Supplemental content – not in book.
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LO 3 Global Issues in New-Product Development Discuss global issues in new-product development Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Global Marketing Questions
Develop product for potential worldwide distribution
Build in unique market requirements Chapter 10
Design products to meet regulations and key market requirements LO 3 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 3
REVIEW LEARNING OUTCOME
Global Issues in New-Product Development
Single product worldwide Modification of products Multiple products in multiple countries Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Chapter 10
LO 4 The Spread of New Products Explain the diffusion process through which new products are adopted Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Diffusion
Diffusion The process by which the adoption of an innovation spreads.
Chapter 10 LO 4 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Categories of Adopters
Innovators Early Adopters Early Majority Late Majority Laggards Chapter 10 LO 4 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Product Characteristics and the Rate of Adoption
Complexity Compatibility Relative Advantage Observability Trialability Chapter 10 http://www.electronicgadgetdepot.com
LO 4 Online Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Sales of New Audio Products
Chapter 10 LO 4 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Marketing Implications of the Adoption Process
Word of Mouth Communication Aids the Diffusion Process Chapter 10 LO 4 Direct from Marketer Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 4
REVIEW LEARNING OUTCOME
Diffusion Process for New Products Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 5
Product Life Cycles
Explain the concept of product life cycles Chapter 10 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Product Life Cycle
Product Life Cycle A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death).
Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Product Life Cycle
Introductory Stage Growth Stage Maturity Stage Decline Stage
Sales
0 Chapter 10 LO 5 Time Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
Profits
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Product Life Cycles for Styles, Fashions, and Fads
Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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U.S. Sales of Televisions
Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Introductory Stage
Chapter 10 LO 5
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 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Introductory Stage in Europe
Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Growth Stage
Increasing rate of sales
Entrance of competitors
Market consolidation
Initial healthy profits
Aggressive advertising of the differences between brands
Wider distribution Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Maturity Stage
Chapter 10
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 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Decline Stage
Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessential marketing expenses
“Organized abandonment” Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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Diffusion Process and PLC Curve
Introduction Early majority Growth Maturity Decline Late majority Product life cycle curve Early adopters Innovators Laggards Diffusion curve Chapter 10 LO 5 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
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LO 5
REVIEW LEARNING OUTCOME
Product Life Cycles Product Strategy Distribution Strategy INTRODUCTION Limited models Frequent changes GROWTH More models Frequent changes.
Limited Wholesale/ retail distributors Expanded dealers. Long term relations MATURITY DECLINE Large number of models. Eliminate unprofitable models Extensive.
Margins drop.
Shelf space Phase out unprofitable outlets Promotion Strategy Chapter 10 Pricing Strategy Awareness. Stimulate demand. Sampling Aggressive ads.
Stimulate demand High to recoup development costs Fall as result of competition & efficient production.
Advertise. Promote heavily Prices fall (usually).
Time Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Phase out promotion Prices stabilize at low level.
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