1. Innovation, Product Development, and the Product Life Cycle
“It’s so new we don’t know what it does, but nobody else has it so we’re selling the hell out of it!”

2. 64 ideas
1 idea
Testing time
Ideas
Marketing decreases costs, improves the quality of ideas, and ensures better fit with the marketplace
10% of ideas reach the test market stage
50% of new products fail in test marketing
50% of those fail on national launch
only 2.5% ever enter the marketplace
1 entrant for every 64 ideas
the average new product that fails costs about $50 million
some product failures have losses of over $100 million for some companies

3. The Four Ps Target Market Product Price Product variety Quality Design
Features
Accessories
Brand name
Packaging
Sizes
Services
Warranties
Returns, repairs & support
List price
Wholesale pricing
Seasonal pricing
Discounts
Price flexibility
Allowances
Payment period
Payment methods
Credit terms
Product bundling
Target Market
Place
Promotion
Distribution channels
Coverage
Assortments
Locations
Inventory management
Warehousing availability
Order processing
Transportation costs
Sales promotion
Personal selling
Advertising
Sales force
Public relations
Direct marketing

5. $

11. Fairchild Semiconductor Product Lifecycle

12. What’s your product lifecycle mix?
Team activity: Construct a product life cycle diagram for one of the companies in your team
What’s your product lifecycle mix?

13. Boston Consulting Group (BCG) positions throughout the lifecycle

14. Low point share but may have high growth rate and therefore potential, but require high effort to grow; risky new ventures may become stars or dogs
High growth business strong in competitive market; high point share & ideal business; promote question marks & support R&D
Low relative share and low expected growth rate; may generate enough points to sustain but not competing; possible niche market; consider divestment
Low growth business with low point share; were stars but have lost their attractiveness; finance question marks and stars

15. The GE/McKinsey Matrix
Relative market share
Profit margins
Ability to compete on price & quality
Knowledge of customer & market
Competitive strengths & weaknesses
Technological capability
Caliber of management
The GE/McKinsey Matrix
Business Strengths
High Medium Low
Invest in, growth strategy
Market size & growth
Industry profit margins
Competitive intensity
Seasonality
Cyclicity
Economies of scale
Technology
Social, environmental, legal, & human impacts
Monitor performance, selective strategy
Industry Attractiveness
High Medium Low
No growth or investment, consider divestment or liquidation

17. Ansoff’s Product/Market Matrix Existing products New Products
Market Penetration:
Increase product purchase in existing markets (withdrawal, do nothing, consolidate, retrenchment)
Revitalize brand image
Coordinate advertising and sales training
Adapt to market change
Increase market share
Increase consumer usage (frequency, quantity, new application)
Product Development:
Introduce new products into existing markets; can be risky & expensive
Product launch
Add product features & refinements
Develop new products for same market
Existing
Markets
Market Development:
Explore new markets for existing products; when distinctive competencies rest with product not market
Expanding geographic distribution
Targeting new customer segments
Diversification:
Introduce new products into new markets; horizontal, vertical, conglomerate
Acquisition/merger
New business venture
New
Markets

18. Conclusions about marketing matrix models--
There is a risk of using matrix models is misclassifying businesses
Use multiple models to ensure better coverage
Know the strengths and limits of each model; when to use and avoid them
Integrate the information from matrices with other sources of information and comparison
Don't let the matrix make decisions-- people make decisions!

19. Market Team Formation Form team, acquainted, communication & schedules
Team name & member names
Decide on preference for marketing ethics team presentations (e.g., bottled water, marketing to kids, data mining/RFID & privacy, political campaigns, social media marketing)
Current practices & facts
Pro/con arguments
Ethical issues
Your position/resolution

20. S-e-g-m-e-n-t-a-t-i-o-n
Next Week: Market
S-e-g-m-e-n-t-a-t-i-o-n
Be able to describe yourself using segmentation concepts
Be able to discuss how your company uses (or can use) segmentation
Explore a market segment for your company and how that might add value to your business