1. © 2002 Pearson Education Canada Inc. 9-1 MGT330F – October 29, 2003 Review of upcoming ‘deliverables’ Marketing in the News Group Presentations: “Landmark Sports” –Group 6: Auguston, et al –Group 7: Murage, et al Lecture Topics: New Product Development and Pricing Strategies

2. © 2002 Pearson Education Canada Inc. 9-2 MGT330F - Upcoming November 5/03 – Part 2 of the Marketing Plan is due November 12/03 – Individual Case #4 (Chapter 10, “PeoplePC”) is due for those NOT presenting ‘Becel November 14/03 – Individual Case #4 is due for those presenting “Becel” (Groups 1 and 4)

3. © 2002 Pearson Education Canada Inc. 9-3 Marketing in the News General Motors decides to change the name of new Buick model, “La Cross” Classic ‘mis-namings’

4. © 2002 Pearson Education Canada Inc. 9-4 Group Presentations Landmark Sports Group: Athlete Relationships and Olympic Promotions Group 6 – Auguston, Caouette, Fairall, and Thompson Group 7 – Murage, Nkini, and Rasch

5. © 2002 Pearson Education Canada Inc. 9-5 New Product Design Finding and developing new product ideas The new-product development process The stages of the product life cycle Changes in marketing strategies change over the product life cycle

6. © 2002 Pearson Education Canada Inc. 9-6 New Product Development: Overview New product development –New to replace aging Life-cycle strategies –Adapt to changing: Two major challenges

7. © 2002 Pearson Education Canada Inc. 9-7 New Product Development Strategy Two sources of new products –Acquisition - company, patent, licence –New product development internally New product development meaning –Original products, product improvements, or product modifications, and new brands through the firm’s own R & D efforts Risk and failure rates are high

8. © 2002 Pearson Education Canada Inc. 9-8 New Product Development Strategy: Why Do New Products Fail? Overestimated market Poor design Incorrect positioning Error in pricing Poor marketing communication Production-orientation Cost overrun Competition

9. © 2002 Pearson Education Canada Inc. 9-9 New Product Development Strategy: Success Factors Unique superior product Well defined product concept from startup Specific criteria Specific strategic role Systematic new- product process

10. © 2002 Pearson Education Canada Inc. 9-10 New-Product Development Process: Major Stages Idea generation Idea screening Concept development and testing Marketing strategy Business analysis Product development Commercialization Test marketing

11. © 2002 Pearson Education Canada Inc. 9-11 New-Product Development Process: Idea Generation Major Sources of New-Product Ideas –Internal sources Employees, sales people, R & D, managers Intrapreneurial programs –Customers –Competitors –Distributors and suppliers –Entrepreneurs

12. © 2002 Pearson Education Canada Inc. 9-12 New-Product Development Process: Idea Generation Systematic process –Idea manager –Multidisciplinary committee –Toll-free number –Staff encouragement –Formal recognition Yields –innovation culture –more ideas

13. © 2002 Pearson Education Canada Inc. 9-13 New-Product Development Process: Idea Screening Purpose –Identify good ideas drop poor ones fast Challenge –Maintain creativity and stream of ideas Proposal format

14. © 2002 Pearson Education Canada Inc. 9-14 New-Product Development Process: Concept Development and Testing Product concept –New-product idea in detail stated in meaningful consumer terms Concept development –Expanding the new-product idea into various alternative forms

15. © 2002 Pearson Education Canada Inc. 9-15 New-Product Development Process: Concept Development and Testing Concept testing –Target consumers exposed to new- product concepts –Word or picture description –Physical presentation of the concept –Question reactions

16. © 2002 Pearson Education Canada Inc. 9-16 New-Product Development Process: Marketing Strategy Development Marketing Strategy Statement - Part one –Target market –Planned product positioning –Sales, market share and profit goals Marketing Strategy Statement - Part two –Outline price, distribution and first year marketing budget

17. © 2002 Pearson Education Canada Inc. 9-17 New-Product Development Process: Marketing Strategy Development Marketing Strategy Statement - Part three –Planned long-run sales –Profit goals –Marketing mix strategy

18. © 2002 Pearson Education Canada Inc. 9-18 New-Product Development Process: Business Analysis Review sales, costs and profit projections Compare projected results to objectives Estimate maximum and minimum sales –Company history and market opinion Assess risk Estimate product costs and profits Analyze attractiveness using sales and costs

19. © 2002 Pearson Education Canada Inc. 9-19 New-Product Development Process: Product Development Performed by engineering or R & D Transform product concept into a physical product Prototype - functional and psychological Major investment

20. © 2002 Pearson Education Canada Inc. 9-20 New-Product Development Process: Test Marketing Advantages Reduce uncertainty about product and marketing approach Saves risk and expense of full launch Gain experienceDisadvantages High cost Longer time-to-market

21. © 2002 Pearson Education Canada Inc. 9-21 New-Product Development Process: Test Markets Standard Test Markets –Use small number of representative test cities –Conducts full marketing campaign and audit results –Costly and time consuming –Competitor reaction Controlled Test Markets –Client specifies stores and locations –Shelf space/location, displays, promotion and price controlled –Less time and costs Simulated Test Markets (or pre-test markets)

22. © 2002 Pearson Education Canada Inc. 9-22 New-Product Development Process: Commercialization Major investment in manufacturing facilities High initial advertising and promotion expense Introduction timing critical Launch location? Local, regional roll-out, national, or global?

23. © 2002 Pearson Education Canada Inc. 9-23 Product Life-Cycle Strategies Profits Sales DevelopmentIntroductionGrowthMaturityDecline Sales Profit ($) Loss ($)

24. © 2002 Pearson Education Canada Inc. 9-24 Product Life-Cycle Strategies Can describe a: –Product class –Product form –Brand Applicable to: –Styles – distinctive –Fashion – currently popular –Fads – fashions that peak and fizzle Sales Time Style Sales Time Fashion Sales Time Fad

25. © 2002 Pearson Education Canada Inc. 9-25 Product Life-Cycle Strategies

26. © 2002 Pearson Education Canada Inc. 9-26 Product Life-Cycle Strategies