For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 10: Product Management and New-Product Development

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Product Life Cycle (PLC) 10-3 Exhibit 10-1 Total Industry Profit + – $ 0 Market Introduction Market Growth Market Maturity Sales Decline Time Total Industry Sales

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Product Life Cycle Issues The product life cycle refers to industry profits and sales for a new product idea. There is no time limit placed on the PLC. PLCs are getting shorter. Some products move faster than others through the PLC. Profits don’t always go to the innovators. Fashions have short life cycles, fads even shorter. Firms often try to extend the PLC for a product.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Introducing New Products Managing Mature Products Future Adaptation New Markets Dying Products Budget / Rate of Growth Persuasion / Less Profit New or Improve? New Strategies Phase Out Focus: Planning for Life Cycle Stages 10-4

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill New-Product Planning A new product is one that is new in any way for the company concerned. The FTC says that a firm can call a product “new” for six months if the product is entirely new or has been changed in a “functionally significant or substantial respect.”

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Screening Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Idea Evaluation Concept testing Customer reactions Rough estimates of cost, sales, profits Development R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate 10-5 Exhibit 10-4 New-Product Development Process

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Issues Top Level Support Market-Guided R & D Integration & Coordination Authority 10-7 New-Product Development Management