Developing New ProductsChapter 10Management View of a New ProductInvention: New to the world (10%)New category entriesAdditions to Product LinesRepositioning (7%)Improvements (37%)Consumers View of New ProductsNEW PRODUCT DEVELOPMENT DILEMMARewards from success highRisks of failure highnProduct SuperioritynCustomer OrientationnMarket AttractivenessnEarly EntrancenCareful TimingnExcellent Teamwork and ExecutionWhy Do New Products Succeed?Why Do New Products Fail?nImproper Targeting and PositioningnProblems in Product and Marketing PlanningnOverpromising SatisfactionnNo Competitive DifferentiationnNot Good ValuenInadequate Marketing CommunicationnPoor Channel ManagementnInadequate ProfitsQuicker Cars (WSJ 12/95)Time it takes to develop new vehicle from concept approval to production1. Idea generationGoal:ideas may come from:customer suggestionsemployeesresearch and developmentcompetitionoverseas2. Screeningevaluate new product ideas:adequacy of market demandenvironmental/social standardsfit with companys strengthsfit with companys imageAsk: is there a real consumer need for the product?do we have the scientific/ technological abilityis the potential large enough to offer some promise of profit3. Business Analysisdo serious quantitative analysisestimate costsmake financial projections4. Product Developmentturn idea into a prototypemarketing strategy outlined5. Market Testing+can uncover errors in the marketing programinforms competitors of a companys new productmay provide unreliable datano guarantee of successexpensivemay not be possible for expensive durables6. Commercializationstart-up productionbuild inventoriesship to field distributiontrain sales forceCommercialization: Key Issue How?WhenWhereWhomProductPricePlacePromotionPLC: Introductory StageProduct limited number of versionsPrice High enough to recover launch costsPlace Limited, high marginsPromotion Build primary demand Overall Strategy: market acceptance Characteristics: Low sales, Little competition, Negative or little profit.Four IntroductoryMarketing StrategiesRapid-Rapid-skimmingskimmingstrategystrategyRapid-Rapid-penetrationpenetrationstrategystrategySlow-Slow-penetrationpenetrationstrategystrategySlow-Slow-skimmingskimmingstrategystrategyPriceLowLowHighHighPromotionHighHighLowLowPLC: Growth StageProduct Expanded # of modelsPrice High to take advantage of heavy demandPlace Pipeline effectPromotion Build selective demand Overall Strategy: Market penetration; persuade mass market to prefer brand; expand users/useCharacteristics: Sales grow at increasing rate, competitors enter and profits peak toward endProduct Life Cycle: Maturity StageOverall Strategy: Defend brand position against competitionCharacteristics: Sales increase at decreasing rate; market place reaches saturation, sales peakProduct:Price:Place: Promotion: Advertise brand aggressively, promote to dealers/customersPLC: Decline StageSales declineCompetitors leaveA small loyal market may keep some items profitable during declineRepositionOverall Strategy: reduce expenses, prepare for removal, milk brand of all possible benefitsEvaluation of the Product Life Cycle Concept+ good as planning tool- applies better to categories of products than to individual products- length of time product remains in each stage unknown- several variations of PLC