Marketing: 8 New Product Development and Product Life Cycle (PLC)

What is a new product?
original products
products that have been improved
modified products
new brands
A firm can obtain new products through
acquisition
new product development
Why do so many products fail?
Market size over estimated
poor product design
incorrectly positioned products
faulty pricing or communication strategy
competitive activity
ethnocentrism (me me me me)
to create successful new products, a company must…
understand its consumers, markets, competitors,
and develop products that deliver superior value to customers
New Product Development Process
1. Idea Generation
2. Idea Screening
3. Concept development + testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialisation
Stage 1: Idea Generation
Internal sources: R&D
External Sources: Customers, Competitors, Distributors, Suppliers
Stage 2: Idea Screening
Used to spot good ideas and drop poor ideas before they get $$$

Screening criteria:
– Fit to company mission? Marketing strategy?
-enough resources to develop?
-competitive advantage ?
-can it be easily distributed/ promoted ?

Stage 3: Concept Development and Testing
*Concept Development* developing product ideas into alternative product concepts to find out how attractive it is to consumers

*Concept testing* testing the concept with a group of target consumers to determine if they have strong consumer appeal

(important to test before to turn them into actual products)

Product Idea
an idea for a possible product for the market
Product concept
a detailed version of the new product idea stated in meaningful consumer terms
Product image
the way consumers perceive an actual or potential product (result of the concept test)
Stage 4: Marketing strategy development
Description of the target market
value proposition
sales and profit goals

+ Short term + for the first year
+ Long term + Marketing mix strategy

Stage 5: Business Analysis
Review of sales, cost and profit projections for a new product —> will it satisfy the company objectives?

BCG Matrix Anylsis (will the ‘?’ turn into a Star, Cash cow or dog?)

Stage 6: Product Development
Creation and testing of one or more physical versions by the R&D or engineering departments
Shows if product idea = workable product
INVESTMENTS!!
Stage 7: Test Marketing
Product introduced into a more realistic marketing setting

Not all products are test marketed
It can be costly, but not doing it could be even more costly
does not guarantee success

Stage 8: Commercialisation
Product introduced into the market.

Company decisions:
when to launch
where to launch
planned market roll out

Product Life Cycle: key note:
Product Life Cycle: key note:
Through good marketing, can the cycle be extended
(nivea)

Some enter the decline stage but are then cycled back into the growth stage through strong promotion or repositioning.

Some products die quickly.

Product life cycle: Introduction stage
Product life cycle: Introduction stage
Slow sales growth
little or not profit
high distribution and promotion expense
Product life cycle: Growth stage
Product life cycle: Growth stage
sales and profits increase
new competitors enter the market
price to increase volume and market share
invest in consumer education
promotion and manufacturing costs gain economies of scale
Product life cycle: maturity Stage
Product life cycle: maturity Stage
slow does in sales
substitute products emerge
number of competitors begins to decline
increased promotion needed to support sales and profits
product modification or repositioning may be required
Product Life Cycle: Decline Stage strategies
Maintain the product
harvest the product
drop the product
Strategic options for the mature phase on the PLC
when sales slows down, they can..

*Market modifications*:
-New users and market segments
-Increased usage among present customers
-brand repositioning

*Product modification*
-Change product characteristics or features
-Quality improvements
-Style improvements

Marketing mix modifications

Explain how marketing or the promotional strategies may change throughout the product life cycle?
Explain how marketing or the promotional strategies may change throughout the product life cycle?
KNOW THIS!!!!