1. Chapter 9- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter Nine New-Product Development and Product Life-Cycle Strategies

2. Chapter 9- slide 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development and Product Life-Cycle Strategies New-Product Development Strategy New-Product Development Process Managing New-Product Development Product Life-Cycle Strategies Additional Product and Service Considerations Topic Outline

3. Chapter 9- slide 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Strategy Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development Two ways to obtain new products

4. Chapter 9- slide 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Reasons for new product failure Overestimation of market sizePoor designIncorrect positioningWrong timingPriced too highIneffective promotionManagement influenceHigh development costsCompetition

5. Chapter 9- slide 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a reason that a new product might fail? 1.The product is priced too high. 2.The product is poorly designed. 3.The estimated market for the product is too large. 4.All of the above are reasons that a new product might fail.

6. Chapter 9- slide 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a reason that a new product might fail? 1.The product is priced too high. 2.The product is poorly designed. 3.The estimated market for the product is too large. 4.All of the above are reasons that a new product might fail.

7. Chapter 9- slide 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Major Stages in New-Product Development

8. Chapter 9- slide 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Idea generation is the systematic search for new-product ideas Sources of new-product ideas Internal External Idea Generation

9. Chapter 9- slide 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms Idea Generation

10. Chapter 9- slide 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a good external source of ideas? 1.Customers 2.The R&D department 3.Suppliers 4.Competitors

11. Chapter 9- slide 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a good external source of ideas? 1.Customers 2.The R&D department 3.Suppliers 4.Competitors

12. Chapter 9- slide 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Identify good ideas and drop poor ideas R-W-W Screening Framework: –Is it real? –Can we win? –Is it worth doing? Idea Screening

13. Chapter 9- slide 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or potential product Concept Development and Testing

14. Chapter 9- slide 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Concept testing refers to testing new-product concepts with groups of target consumers Concept Development and Testing

15. Chapter 9- slide 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Marketing strategy development refers to the initial marketing strategy for introducing the product to the market Marketing strategy statement includes: –Description of the target market –Value proposition –Sales and profit goals Marketing Strategy Development

16. Chapter 9- slide 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives Marketing Strategy Development

17. Chapter 9- slide 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an increase in investment Marketing Strategy Development

18. Chapter 9- slide 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings Provides the marketer with experience in testing the product and entire marketing program before full introduction Marketing Strategy Development

19. Chapter 9- slide 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall ________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. 1.Market strategy development 2.Product development 3.Business analysis 4.Forecasting

20. Chapter 9- slide 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall ________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. 1.Market strategy development 2.Product development 3.Business analysis 4.Forecasting

21. Chapter 9- slide 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall When a concept moves into a physical product to insure that the product idea can be turned into a workable product, this is referred to as ___________. 1.market strategy 2.product development 3.business analysis 4.commercialization

22. Chapter 9- slide 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall When a concept moves into a physical product to insure that the product idea can be turned into a workable product, this is referred to as ___________. 1.market strategy 2.product development 3.business analysis 4.commercialization

23. Chapter 9- slide 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Types of Test Markets Standard test marketsControlled test marketsSimulated test markets

24. Chapter 9- slide 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a form of test marketing? 1.Standard test markets 2.Controlled test markets 3.Simulated test markets 4.Perceptual test markets

25. Chapter 9- slide 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a form of test marketing? 1.Standard test markets 2.Controlled test markets 3.Simulated test markets 4.Perceptual test markets

26. Chapter 9- slide 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the company’s new ideas. 1.standard 2.controlled 3.simulated 4.Internet

27. Chapter 9- slide 27 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the company’s new ideas. 1.standard 2.controlled 3.simulated 4.Internet

28. Chapter 9- slide 28 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Advantages of simulated test markets –Less expensive than other test methods –Faster –Restricts access by competitors Disadvantages –Not considered as reliable and accurate due to the controlled setting Marketing Strategy Development

29. Chapter 9- slide 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Marketing Strategy Development When firms test market New product with large investment Uncertainty about product or marketing program When firms may not test market Simple line extension Copy of competitor product Low costs Management confidence

30. Chapter 9- slide 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall New-Product Development Process Commercialization is the introduction of the new product When to launch Where to launch Planned market rollout Marketing Strategy Development

31. Chapter 9- slide 31 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The systematic search for new-product ideas is called ________. 1.idea generation 2.idea search 3.idea screening 4.concept development

32. Chapter 9- slide 32 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The systematic search for new-product ideas is called ________. 1.idea generation 2.idea search 3.idea screening 4.concept development

33. Chapter 9- slide 33 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Once the new product ideas have been screened, the next step in the new product development process is ________. 1.marketing strategy 2.concept development and testing 3.product development 4.none of the above

34. Chapter 9- slide 34 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Once the new product ideas have been screened, the next step in the new product development process is ________. 1.marketing strategy 2.concept development and testing 3.product development 4.none of the above

35. Chapter 9- slide 35 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The final stage in new product development is referred to as ________. 1.new product penetration 2.commercialization 3.consumer initiation 4.idea screened

36. Chapter 9- slide 36 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall The final stage in new product development is referred to as ________. 1.new product penetration 2.commercialization 3.consumer initiation 4.idea screened

37. Chapter 9- slide 37 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Managing New-Product Development Successful new-product development should be: Customer centered Team centered Systematic

38. Chapter 9- slide 38 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Managing New-Product Development Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences Begins and ends with solving customer problems New-Product Development Strategies

39. Chapter 9- slide 39 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Managing New-Product Development Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage Increased control in risky or complex projects Slow New-Product Development Strategies

40. Chapter 9- slide 40 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Managing New-Product Development Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness New-Product Development Strategies

41. Chapter 9- slide 41 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Managing New-Product Development Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas Creates an innovation- oriented culture Yields a large number of new- product ideas New-Product Development Strategies

42. Chapter 9- slide 42 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Product Life Cycle

43. Chapter 9- slide 43 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product development –Sales are zero and investment costs mount Introduction –Slow sales growth and profits are nonexistent Growth –Rapid market acceptance and increasing profits. Maturity –Slowdown in sales growth and profits level off or decline Decline –Sales fall off and profits drop Product Life-Cycle Strategies

44. Chapter 9- slide 44 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a stage in the product life cycle (PLC)? 1.Idea screening 2.Growth 3.Maturity 4.Decline

45. Chapter 9- slide 45 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a stage in the product life cycle (PLC)? 1.Idea screening 2.Growth 3.Maturity 4.Decline

46. Chapter 9- slide 46 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers? 1.Introduction 2.Growth 3.Maturity 4.Decline

47. Chapter 9- slide 47 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers? 1.Introduction 2.Growth 3.Maturity 4.Decline

48. Chapter 9- slide 48 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity

49. Chapter 9- slide 49 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies

50. Chapter 9- slide 50 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall ________ tend to grow slowly, remain popular for a while, and then decline slowly. 1.Fads 2.Styles 3.Fashions 4.Designs

51. Chapter 9- slide 51 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall ________ tend to grow slowly, remain popular for a while, and then decline slowly. 1.Fads 2.Styles 3.Fashions 4.Designs

52. Chapter 9- slide 52 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Slow sales growth Little or no profit High distribution and promotion expense Introduction Stage

53. Chapter 9- slide 53 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale Growth Stage

54. Chapter 9- slide 54 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Slowdown in sales Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R&D to support sales and profits Maturity Stage

55. Chapter 9- slide 55 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Market modifying Product modifying Marketing mix modifying Maturity Stage Modifying Strategies

56. Chapter 9- slide 56 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Maintain the product Harvest the product Drop the product Decline Stage

57. Chapter 9- slide 57 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall In the ________ stage, sales start climbing quickly and competition often enters the market. 1.introduction 2.growth 3.maturity 4.decline

58. Chapter 9- slide 58 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall In the ________ stage, sales start climbing quickly and competition often enters the market. 1.introduction 2.growth 3.maturity 4.decline

59. Chapter 9- slide 59 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Product Life-Cycle Strategies Summary of Product Life Cycle

60. Chapter 9- slide 60 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Additional Product and Service Considerations Public policy and regulations regarding developing and dropping products, patents, quality, and safety Product Decisions and Social Responsibility

61. Chapter 9- slide 61 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________. 1.social responsibility 2.positioning 3.marketing mix 4.commercialization

62. Chapter 9- slide 62 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________. 1.social responsibility 2.positioning 3.marketing mix 4.commercialization

63. Chapter 9- slide 63 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Additional Product and Service Considerations Determining what products and services to introduce in which countries Standardization versus customization Packaging and labeling Customs, values, laws International Product and Service Marketing—Challenges

64. Chapter 9- slide 64 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall