Intro to Marketing (Schwartz) Ch 8

new products
– products developed through an org’s own research and development efforts
– includes: new products, product improvements, product modifications, new brands
– can drive company’s growth but can be risky/expensive
what does creating successful new products require?
– understanding consumers, markets, and competitors
– developing products that deliver superior value to customers
idea generation
– the systematic search for new product ideas
– made of internal and external ideas
– strategic intuition
internal idea sources
– intrapreneurial programs
– internal social networks
– R&D department
external idea sources
– customers
– distributors/suppliers
– competitors
– other industries
– crowdsourcing
idea screening
– spot good ideas and drop bad ones ASAP
ways of screening new ideas
– proposals reviewed by New Product Committee
– R-W-W framework
R-W-W framework
– Real: is there real customer need/desire for the product?
– Win: can we win? does the product offer real sustainable advantage?
– Worth: does the product fit the company’s overall growth strategy?
product concept development
– develop alternative product concepts
– find out how attractive each concept is to customers
– choose the best
product concept testing
– test a group of target consumers to find out the degree of consumer appeal toward the concepts
– present concepts to consumers symbolically or physically or with a word/picture description
– ask customers about their reactions to each
marketing strategy development
– initial marketing strategy for introducing a new product to the market
– marketing strategy statement: target market, 4P’s, strategic objectives
business analysis
– review of the sales, costs, and profit projections for a new product
– to find out whether the projections satisfy the company’s objectives
product development
– develop the product concept into a physical product
– to ensure that the product idea can be turned into a workable market offering
– prototype versions for the testing stage
test marketing
– product and proposed marketing campaign are introduced into realistic marketing settings
– gives the marketer an experience with marketing a product before the introduction
– tests the product and its marketing program
– may use test markets (minimize costs and time needed)
commercialization
– introducing the new product into the market
– need to decide on timing of introduction and where to introduce
3 aspects of successful new product development
– customer centered
– team based
– systematic
customer centered
– focuses on new ways to solve customer problems and create more customer satisfying experiences
team based
– company depts work closely in cross functional teams to save time and increase effectiveness
systematic
– organized ways to collect, review, evaluate and manage new product ideas
product lifecycle
– the course that a product’s sales and profits take over its lifetime
– product development, introduction, growth, maturity, decline
product development (product lifecycle)
– finds/develops new product idea
– no sales
– increasing investment costs
introduction (product lifecycle)
– product introduced to the market
– slow sales growth
– heavy investment costs
– no profits
growth (product lifecycle)
– rapid market acceptance
– increasing profits
maturity (product lifecycle)
– product has achieved acceptance by most potential buyers
– slowdown in sales growth
– profits level off or start to decline
– increased marketing costs to defend against competitors
decline (product lifecycle)
– sales drop off
– profits drop
product lifecycle and BCG matrix chart
– question mark –> product development and introduction
– star –> growth
– cash cow –> maturity
– dog –> decline
style
– a basic, distinctive mode of expression
– fluctuates over time, but never ends
– ex: formal wear vs casual wear
fashion
– currently accepted or popular in a given field
– fairly long lifecycle but ultimately comes to an end
– ex: definition of business casual
fad
– temporary period of unusually high sales driven by immediate popularity
– fast spike and fast burnout
– ex: tickle me elmo
introduction (characteristics, marketing objectives, and strategies)
characteristics:
– low sales
– high cost per customer
– negative profits
– innovators
– few competitors

marketing objectives:
– create product awareness and trial

strategies:
– offer a basic product
– use cost-plus price
– build selective distribution
– build product awareness among early adopters and dealers
– use heavy sales promotion to entice trial

growth (characteristics, marketing objectives, and strategies)
characteristics:
– rapidly rising sales
– average cost per customer
– rising profits
– early adopters
– growing number

marketing objectives:
– maximize market share

strategies:
– offer product extensions, service, and warranty
– price to penetrate market
– build intensive distribution
– build awareness and interest in the mass market
– reduce to take advantage of heavy consumer demand

maturity (characteristics, marketing objectives, and strategies)
– characteristics:
– peak sales
– low cost per customer
– high profits
– middle majority
– stable number beginning to decline

marketing objectives:
– maximize profit while defending market share

strategies:
– diversify brand and models
– price to match or beat competitors
– build more intensive distribution
– stress brand differences and benefits
– increase sales promotion to encourage brand switching

decline (characteristics, marketing objectives, and strategies)
characteristics:
– declining sales
– low cost per customer
– declining profits
– laggards
– declining number of competitors

marketing objectives:
– reduce expenditures and milk the brand

strategies:
– phase out weak items
– cut price
– go selective: phase out unprofitable cutlets
– reduce to level needed to retain hard-core loyals
– reduce to minimal level