1. New Product Development and Product Life-Cycle Strategies

2. New Product Development
New product development (NPD): the development of:
Original products (“new-to-the world”),
Product modifications
Product category extensions
Product line extensions
through the firm’s own R&D efforts
New products can also come from acquisition of other companies, patents, or licenses
NPD is important to:
Follow changing market demands
Remain competitive
Keep up to changing technology
Replace dying products
Diversify product offering to reduce risk

3. Consumers’ perspectives on Newness (Exhibit 10-1, page 255)
Dynamically
Continuous
Innovation
Major change
Discontinuous
Innovation
Breakthrough
Continuous
Innovation
Ongoing
alteration 2

4. Did your mother make you drink milk when you were young
Did your mother make you drink milk when you were young? Do you still drink it today? If you do not, what happened to make you stop? For many, a sign of maturity was when you could order something to drink other than milk at a restaurant. Sodas, water, juices, and just about any other liquid has had greater appeal for children for several decades. This may, however, be about to change if Mac Farms of Burlington, Vermont has anything to say about it. Responding to research efforts on what kids like to drink, Mac Farms has developed E-Moo. E-Moo is a carbonated, milk-based product that is designed to give a healthy alternative to sodas. E-Moo may just make it “cool” to drink milk. E-Moo is loaded with vitamins, low in cholesterol and sodium, and comes in three flavors—Orange Creamsicle, Bubble Gum, and Raspberry.
Is this a drink for the children born to the Internet age?.
What about P.B. Slices?

5. Stages in New Product Development
Amount of investment
Idea generation -
Idea screening
Business analysis
Product development
Stages in New Product Development
Commercialization
Sequential approach.
Each stage completed before moving to next phase of the project.
Simultaneous approach.
Cross-functional teams work through overlapping steps to save time and increase effectiveness. +
Figure 9-1

6. New Product Development at Gillette
Founded in 1901, its success has been driven by new product innovation, to remain competitive
Dominates razor and blade markets, but also competes in batteries, toiletries, cosmetics, stationery products, dental care, and electrical appliances
Company-wide culture that supports innovation
Investment in NPD is large, $1.5 billion on the Mach3 razor system, with 35 patents
Company employees shave at work as part of new product testing
Same attitude towards innovation applies to promotional efforts

7. Characteristics of Success
Relative Advantage
Compatibility with Existing Consumption Patterns
Trialability – The Opportunity for Buyer Testing
Observability – The Chance to See the Newness
Simplicity of Usage
Blu-Ray

8. see http://www.yoplait.com/products_gogurt.aspx
Question #3.
Yoplait’s recent entry in the highly competitive $2 billion a year yogurt market—a tubular yogurt called Go-Gurt—seems to be a hit with the lunchbox set. Why tubular yogurt? Children like yogurt but are not impressed with it. Some believe yogurt is “old people food.” Not so with Go-Gurt. With flavors like Chill-Out Cherry and Rad Raspberry, Go-Gurt can be eaten like regular yogurt, frozen like a frozen pop, or carried in a shirt pocket.
see
Can this product be expanded to an adult market? Devise a plan for testing the product concept for 25 to 45 year-old adults.
What factors would be critical to your test? What types of test subjects would you want for your test?
As noted in the chapter, the first step to undertake would be to perform a concept test. See the questions posed in Table 9-1 for an example of questions (used for the electric car example found in the text). This could be the beginning point to design a concept test. Be specific at this stage. Could the concept be tested over the Internet (see New Directions 9-1)?
Explain and show product concept. Ask participants:
Do you understand the concept of portable, tubular yogurt?
What do you believe are the benefits of tubular yogurt relative to conventional yogurt?
What improvements in the Go-Gurt product would you suggest?
In what circumstances might you prefer tubular yogurt to conventional yogurt packaging alternatives?
What would be a reasonable price?
Would you say you would definitely, probably, probably not or definitely not buy Go-Gurt?
From understanding how the concept test might be done and why it is important to the eventual conclusions (market expansion), one should proceed to the more formal market test with the older adults. Again, refer to the reading notes in the text for direction. In this case, test marketing would prove critical. Talk to actual target market subjects to get a sense of the likelihood of acceptance. If this group will not accept the product, is it doomed to eventual failure? Why or why not? How should ads be changed to address the needs of this target market? Think of innovative ways to link this new product to success.

9. Why do new products fail?
Insufficient superiority or uniqueness
Inadequate/inferior planning
Poor execution
Technical problems
Poor timing
New products fail at a high rate. Why?
Market size may have been overestimated
Poor quality or design
Incorrect positioning, pricing, or promotion
Pushed despite poor market research findings
Production costs higher than expected
Greater than expected competition 21

10. New Product Adoption Processes
Awareness
Interest
Evaluation
Trial
Adoption 31

11. The diffusion process (EXHIBIT 10-7, PAGE 272)

12. Product Life-Cycle Strategies
Profits
Sales
Development
Introduction
Growth
Maturity
Decline
Profit
($)
Loss
Development – No customers, no profits, heavy spending.
Introduction – Early adopter customers, no profits, high launch costs.
Growth – Early majority customers, rapid sales growth and revenues.
Maturity – Late majority customers, flat sales, declining profits.
Decline – Laggard customers, declining sales, replaced by new products.
Which product life-cycle stage do you think is the most important?
Almost any stage may be deemed the most important, however, most agree that the introduction or growth stages are probably more critical to the success of a new product than the others.
Which stage has the highest risk?
The highest risk is also generally to be found in the introduction stage (because of the unknowns and the ability to have the market accept the product) and the growth stage (because of the intensity of the competition).
Which stage seems to hold the greatest profit potential?
The greatest profit seems to be found in the maturity phase though growth also is known to be profitable for most companies.
Figure 9-2

13. Alternative PLC Curves
Examples of fads?
Chapter 9, page 361
Style
a basic and distinctive mode of expression (e.g. formal clothing, Danish modern furniture).
Once accepted, popularity will vary over time
Fashion
a popular style in a given field (e.g. business casual).
Tend to go in cycles with generations
Fad
a fashion that enters quickly, is adopted quickly and declines fast (e.g. pet rocks).
Tend to attract limited market
Products that are novel and do not address basic needs

14. Summary of PLC/Marketing Mix

15. Maturity Stage Strategy
Modify the market.
Increase the consumption of the current product (eg. Baking soda, Bounce)
Modify the product
Changing characteristics such as quality, features or style to attract new users and to inspire more usage (eg. Tide, Crayola)
Modify the marketing mix
Improving sales by changing one or more marketing mix elements.
Modify the market
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.
Modify the product
Improve durability, reliability, speed, taste.
Improve styling and attractiveness.
Add new features.
Expand usefulness, safety, convenience.
Modify the marketing mix
Cut prices.
Launch a better ad campaign.
Move into larger market channels.
Offer new or improved services to buyers