Principles of Marketing- Chapter 8 Product Life Cycle

New Product Development
The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts.
Stages in New Product Development
idea generation, idea screening, concept development, marketing strategy, business analysis, product development, test marketing, and commercialization
Idea Generation
The systematic search for new product ideas. Major sources of new product ideas include
internal sources and external sources.
Crowdsourcing
Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.
Idea Screening
Screening new product ideas to spot good ones and drop poor ones as soon as possible.
ways to idea screen: new idea write-up review by a committee, R-W-W framework
R-W-W framework
“Real, Win, Worth Doing”; a new product screening
framework that asks three questions: Is it real? (is there a desire), Can we win? (does it offer a sustainable competitive adv?) , and do we have enough resources to make such a product success?
Product Concept
detailed version of the new product idea stated in meaningful consumer terms.
Concept Testing
Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
Concept Testing methods
-presenting the concepts to consumers symbolically or physically (picture description, with words)
– asking customers about their reactions to the concepts
Product Image
the way consumers perceive an actual or potential product
Marketing Strategy Development
Designing an initial marketing strategy for a new product based on the product concept.
Three Parts to Marketing Strategy Development
1. describes the target market, the planned value proposition, and the sales,
market-share, and profit goals for the first few years.

2. outlines the product’s
planned price, distribution, and marketing budget for the first year

3. describes the planned longrun
sales, profit goals, and marketing mix strategy.

Business Analysis
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.
Business Case Justification
component which
requires building the case for the new product
Product Development
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.
Test Marketing
The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings.
Alternatives to Standard test markets
– controlled test markets
– simulated test markets
Controlled Test Markets
new products and tactics are tested among controlled panels of
shoppers and stores.
Simulated test markets
measure
consumer responses to new products and marketing tactics laboratory
stores or simulated online shopping environments.
Commercialization
introducing a new product into the market
Managing New Product Development
requires a holistic approach, requires a customer-centered, teambased,
and systematic effort developments
Holistic defined:
Relating to or concerned with integrated wholes or
complete systems rather than with the analysis or treatment of separate parts
Customer-centered new product
development
focuses on finding new ways to solve customer problems and
create more customer-satisfying experiences
Team-based new product development
company departments work closely together in cross-functional teams,
overlapping the steps in the product development process to save time and
increase effectiveness.
Team-Based New Product
New product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences.
Systematic New Product Development
innovation management system to collect, review,
evaluate, and manage new product ideas
Product Life Cycle
The course of a product’s sales and profits over its lifetime.
Product development
begins when the company finds and develops a new
product idea.
Introduction Stage
The PLC stage in which a new product is first distributed and made available for purchase.
-sales: low
-costs: high cost per customer
-profits: negative or low
-customers: innovators
competitors:few
-Marketing Objective: create product awareness and trail
-Product: basic
-price: use cost-plus pricing
-distribution: selective
-advertising: awareness among early adopters and dealers
-promotion: heavy promotion (entice product)
Growth Stage
The PLC stage in which a product’s sales start climbing quickly.

-sales: rapidly rise
-costs: average cost per customer
-profits: rising profits
-customers: early adopters
competitors: growing #
-Marketing Objective: maximize market share
-Product: product extensions, service, warranty
-price: price to penetrate the market
-distribution: intensive
-advertising: awareness among the mass market
-promotion: reduce to take advantage of heavy consumer demand

Maturity Stage
he PLC stage in which a product’s sales growth slows or levels off.

-sales: peak sales
-costs: low cost per customer
-profits: high
-customers: middle majority
competitors:stable # begin to decline
-Marketing Objective: maximize profits while defending market share
-Product: diversify brand and models
-price: use cost: match or beat competitors
-distribution: more intensive
-advertising: stress brand diff & benefits
-promotion: increase to encourage brand switching

Decline Stage
The PLC stage in which a product’s sales fade away.

-sales: dealing sales
-costs: low cost per customer
-profits: decline
-customers: laggards
competitors:decline
-Marketing Objective: reduce expenditures & milk the brand
-Product: phase out weak items
-price: cut price
-distribution: selective- phase unprofitable outlets
-advertising: reduce to level needed to retain hard-core loyal
-promotion:reduced to minimal level

Style
A basic and distinctive mode of expression.
Fashion
A currently accepted or popular style in a given field.
Fad
A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.