Marketing: 8 New Product Development and Product Life Cycle (PLC) – Flashcards
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What is a new product?
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original products products that have been improved modified products new brands
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A firm can obtain new products through
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acquisition new product development
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Why do so many products fail?
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Market size over estimated poor product design incorrectly positioned products faulty pricing or communication strategy competitive activity ethnocentrism (me me me me)
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to create successful new products, a company must...
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understand its consumers, markets, competitors, and develop products that deliver superior value to customers
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New Product Development Process
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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
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Stage 1: Idea Generation
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Internal sources: R&D External Sources: Customers, Competitors, Distributors, Suppliers
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Stage 2: Idea Screening
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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 ?
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Stage 3: Concept Development and Testing
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*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)
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Product Idea
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an idea for a possible product for the market
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Product concept
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a detailed version of the new product idea stated in meaningful consumer terms
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Product image
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the way consumers perceive an actual or potential product (result of the concept test)
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Stage 4: Marketing strategy development
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Description of the target market value proposition sales and profit goals + Short term + for the first year + Long term + Marketing mix strategy
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Stage 5: Business Analysis
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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?)
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Stage 6: Product Development
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Creation and testing of one or more physical versions by the R&D or engineering departments Shows if product idea = workable product INVESTMENTS!!
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Stage 7: Test Marketing
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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
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Stage 8: Commercialisation
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Product introduced into the market. Company decisions: when to launch where to launch planned market roll out
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Product Life Cycle: key note:
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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.
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Product life cycle: Introduction stage
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Slow sales growth little or not profit high distribution and promotion expense
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Product life cycle: Growth stage
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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
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Product life cycle: maturity Stage
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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
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Product Life Cycle: Decline Stage strategies
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Maintain the product harvest the product drop the product
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Strategic options for the mature phase on the PLC
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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
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Explain how marketing or the promotional strategies may change throughout the product life cycle?
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KNOW THIS!!!!
