1. The Product Lifecycle and New Product Development
Chapter 10

2. New Product Development
Definition - the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts.
New products can also come from acquisition of other companies, patents, or licenses – e.g. trap-ease .

3. Consumers’ perspectives on Newness (Exhibit 10-1)
Dynamically
Continuous
Innovation
Major change
Discontinuous
Innovation
Breakthrough
Continuous
Innovation
Ongoing
alteration 2

4. New Product Development
Importance of New Product Development:
Follow changing market demands
To remain competitive
Keep up with changing technology
Replace dying/old products
Diversify product offerings to reduce risks

5. Characteristics of Successful New Products and Services
Relative Advantage
Compatibility with existing consumption patterns
Trialability – The Opportunity for buyer testing
Observability – The Chance to see the newness
Simplicity of Usage

6. Exercise
Form groups of 3-4 students. Pick a new product that is less than a 1 year old. How has it become successful/unsuccessful? What was it’s marketing approach?

7. New Product Development
Successful new products:
Offer a unique superior product, such as higher quality, new features, or higher value in use
Have a well-defined (and tested) product concept, before development investment is made
New products fail at a high rate due to:
Market size may have been overestimated
Poor quality or design
Incorrect positioning, pricing, or promotion (i.e., trap-ease)

8. New Product Development
Generally a five step process:
1. Idea generation
2. Screening of ideas
3. Business analysis
4. Prototype development
5. Commercialization

9. The Product Lifecycle

10. Understanding the Product Lifecycle
Product life cycle (PLC): the course of a product’s sales and profits over its lifetime
Interesting idea, developed in the 1950’s, still here!
The product lifecycle has four stages:
Introduction
Growth
Maturity
Decline

11. Product Life-Cycle Strategies
Introduction: slow sales growth, profits still negative due to high costs of development and product launch
Growth: rapid sales growth and profits
Maturity: sales slow down, profits decline due to competition
Decline: sales and profits fall as product is replaced by new alternatives

12. Product Life-Cycle - Illustrated
Tide
Detergent
Sales
Profit
($)
Sales
VCRs
Video
Phones
Hybrid
Vehicles
Profits
Loss
($)
Development
Introduction
Growth
Maturity
Decline

13. Maturity Stage Strategy
Modifying the product.
Changing characteristics such as quality, features or style to attract new users and to inspire more usage.
How?
Improve durability, reliability, speed, taste.
Improve styling and attractiveness.
Add new features.
Expand usefulness, safety, convenience.
Chapter 9, page 360

14. Maturity Stage Strategy
Modifying the market.
Increase the consumption of the current product.
How?
Look for new users and market segments.
Reposition the brand to appeal to larger or faster-growing segment.
Look for ways to increase usage among present customers.
Modifying the marketing mix.
Improving sales by changing one or more marketing mix elements.
How?
Cut prices.
Launch a better ad campaign.
Move into larger market channels (distribution).
Offer new or improved services to buyers.
Chapter 9, page 360

15. Discussion Question – page 282, Question #2

16. Special Life Cycles Styles: Basic and distinctive mode of expression
Once accepted, popularity will vary over time
Fashion:
A currently accepted or popular style
Gains acceptance, peaks, then declines
Tend to go in cycles with generations
Fads:
Gain rapid acceptance, peak early, and decline quickly
Tend to attract limited market
Products that are novel and do not address basic needs

17. Length of the Product Life Cycle
Ranges from a few weeks to decades.
Length of individual stages varies from one product category to the next (Hershey chocolate).
Stages of any given life cycle usually last for different periods.
Some products make several different entrances and exits through the Product Life Cycle – examples?.

18. Adoption processes Awareness Interest Evaluation Trial Adoption TIME31

19. The Diffusion Process (Exhibit 10-7)

20. Expansion Strategies Product line extension Product category extension
Item added to an existing product line
Product category extension
New item or new line of items in a product category
Cannibalize
To eat into the sales revenues of another product item in the same line