Copyright © 2002 by Nelson, a division of Thomson Canada Limited.Chapter 10 10-1 10 chapter...
39
Chapter 10 10-1 Copyright © 2002 by Nelson, a division of Thomson Canada Limited. 10 chapt er Prepared by Prepared by Angela Zigras, Seneca College Angela Zigras, Seneca College Deborah Baker, Texas Christian Deborah Baker, Texas Christian University University DEVELOPING DEVELOPING AND AND MANAGING MANAGING PRODUCTS PRODUCTS
-
Upload
lee-wright -
Category
Documents
-
view
214 -
download
0
Transcript of Copyright © 2002 by Nelson, a division of Thomson Canada Limited.Chapter 10 10-1 10 chapter...
Chapter 10 10-1Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
10ch
apte
r
Prepared byPrepared byAngela Zigras, Seneca CollegeAngela Zigras, Seneca College
Deborah Baker, Texas Christian UniversityDeborah Baker, Texas Christian University
DEVELOPING DEVELOPING
AND AND
MANAGING MANAGING
PRODUCTSPRODUCTS
Chapter 10 10-2Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
You Will Learn To ...You Will Learn To ...
1.1. Explain the importance of developing new Explain the importance of developing new products and describe the six categories products and describe the six categories of new products.of new products.
2. Explain the steps in the new-product 2. Explain the steps in the new-product development process.development process.
3. Explain why some products succeed and 3. Explain why some products succeed and others fail.others fail.
Chapter 10 10-3Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
You Will Learn To ...You Will Learn To ...
4. Discuss global issues in new-product 4. Discuss global issues in new-product development.development.
5. Describe the organizational groups or structures 5. Describe the organizational groups or structures used to facilitate new-product development.used to facilitate new-product development.
6. Explain the diffusion process through which 6. Explain the diffusion process through which new products are adopted.new products are adopted.
7. Explain the concept of product life cycles.7. Explain the concept of product life cycles.
Chapter 10 10-4Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
New ProductNew Product
A product new to the world, A product new to the world,
the market, the producer, the market, the producer,
the seller, or some the seller, or some
combination of these.combination of these.
Chapter 10 10-5Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Categories of New ProductsCategories of New Products
New-To-The-WorldNew-To-The-World
New Product LinesNew Product Lines
Product Line AdditionsProduct Line Additions
Improvements/RevisionsImprovements/Revisions
Repositioned ProductsRepositioned Products
Lower-Priced ProductsLower-Priced Products
SixCategories
ofNew
Products
SixCategories
ofNew
Products
Chapter 10 10-6Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Successful New-Product Successful New-Product Development ProcessDevelopment Process
New ProductNew ProductSuccessSuccessFactorsFactors
New ProductNew ProductSuccessSuccessFactorsFactors
Long-Term CommitmentLong-Term Commitment
New Product StrategyNew Product Strategy
Capitalize on ExperienceCapitalize on Experience
Establish an EnvironmentEstablish an Environment
Chapter 10 10-7Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
New-Product StrategyNew-Product Strategy
Idea GenerationIdea Generation
Idea ScreeningIdea Screening
Business AnalysisBusiness Analysis
DevelopmentDevelopment
Test MarketingTest Marketing
CommercializationCommercialization
New ProductNew Product
New-Product New-Product Development ProcessDevelopment Process
Chapter 10 10-8Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Idea GenerationIdea Generation
CustomersCustomers
EmployeesEmployees
DistributorsDistributors
CompetitorsCompetitors
R & DR & D
ConsultantsConsultants
Creative ThinkingCreative Thinking
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
Sources ofSources ofNew-ProductNew-Product
IdeasIdeas
Chapter 10 10-9Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
BrainstormingBrainstorming
The process of getting a The process of getting a
group to think of unlimited group to think of unlimited
ways to vary a product or ways to vary a product or
solve a problem.solve a problem.
Chapter 10 10-10Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Idea ScreeningIdea Screening
The first filter in the product The first filter in the product
development process, development process,
which eliminates ideas that which eliminates ideas that
are inconsistent with the are inconsistent with the
organization’s new-product organization’s new-product
strategy or are strategy or are
inappropriate for some inappropriate for some
other reason.other reason.
Chapter 10 10-11Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Concept TestConcept Test
A test to evaluate a A test to evaluate a
new-product idea, new-product idea,
usually before any prototype has usually before any prototype has
been created.been created.
Chapter 10 10-12Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Business AnalysisBusiness Analysis
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Preliminary Demand
Cost
Sales
Profitability
Chapter 10 10-13Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
DevelopmentDevelopment
Creation of prototype
Marketing strategy
Technical production feasibility
Final government approvals if needed
Chapter 10 10-14Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Test MarketingTest Marketing
The limited introduction of a The limited introduction of a
product and a marketing product and a marketing
program to determine the program to determine the
reactions of potential reactions of potential
customers in a market situation.customers in a market situation.
Chapter 10 10-15Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Choosing a Test MarketChoosing a Test Market
Similar to planned distribution Relative isolation and free of influences Advertising availability; multiple media Diversified cross section No atypical purchase habits Representative population/income Not overly used or easily “jammed” Year-round sales stability Available research/audit and retailers
Chapter 10 10-16Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Alternatives to Test MarketingAlternatives to Test Marketing
Single-source research using supermarket scanner data
Simulated (laboratory) market testing
Chapter 10 10-17Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
CommercializationCommercialization
ProductionProduction
Inventory BuildupInventory Buildup
Distribution ShipmentsDistribution Shipments
Sales TrainingSales Training
Trade AnnouncementsTrade Announcements
Customer AdvertisingCustomer Advertising
Steps in Steps in Marketing a Marketing a New Product New Product
Steps in Steps in Marketing a Marketing a New Product New Product
Chapter 10 10-18Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Why New Products FailWhy New Products Fail
No discernible benefits
Poor match between features and customer desires
Overestimation of market size
Incorrect positioning
Price too high or too low
Inadequate distribution
Poor promotion
Inferior product
Chapter 10 10-19Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Success FactorsSuccess Factors
Match between product and
market needs
Match between product and
market needs
Unique but superior product
Unique but superior product
Benefit to large number of peopleBenefit to large
number of people
Factors in SuccessfulFactors in SuccessfulNew ProductsNew Products
Factors in SuccessfulFactors in SuccessfulNew ProductsNew Products
Chapter 10 10-20Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Success FactorsSuccess Factors
Chapter 10 10-21Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Global IssuesGlobal Issues
Develop product for potential worldwide distribution
Build in unique market requirements
Design products to meet regulations and key market requirements
Chapter 10 10-22Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Organization For New Product Organization For New Product DevelopmentDevelopment
Groups or Structures within an Groups or Structures within an organization that facilitate new organization that facilitate new product development:product development:
New Product Committees and New Product Committees and departments.departments.
Venture Teams and Intrapreneurs.Venture Teams and Intrapreneurs. Design products to meet regulations Design products to meet regulations
and key market requirementsand key market requirements
Chapter 10 10-23Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Organization For New Product Organization For New Product DevelopmentDevelopment
New Product New Product CommitteesCommittees
An ad hoc groupwhose members manage the new-
product development process
New Product New Product DepartmentsDepartments
Full-time department that recommends
new-product objectives and plans
New Product Development
Chapter 10 10-24Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Organization For New Product Organization For New Product DevelopmentDevelopment
Venture TeamsVenture Teams
A market-oriented group staffed by
representatives from different disciples.
Venture TeamsVenture Teams
A market-oriented group staffed by
representatives from different disciples.
IntrapreneurIntrapreneur
An entrepreneur working inside a
large organization.
IntrapreneurIntrapreneur
An entrepreneur working inside a
large organization.
New Product Development
New Product Development
Chapter 10 10-25Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Simultaneous Simultaneous Product DevelopmentProduct Development
A new team-oriented approach A new team-oriented approach
to new-product development.to new-product development.
Cross functional teams operate Cross functional teams operate
in unison to capitalize on in unison to capitalize on
specialized knowledge.specialized knowledge.
Chapter 10 10-26Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Categories of AdoptersCategories of Adopters
LaggardsLaggards
Late MajorityLate Majority
Early MajorityEarly Majority
Early AdoptersEarly Adopters
InnovatorsInnovators
Categories of Categories of AdoptersAdopters
in thein theDiffusion ProcessDiffusion Process
Categories of Categories of AdoptersAdopters
in thein theDiffusion ProcessDiffusion Process
Chapter 10 10-27Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
DiffusionDiffusion
The process by which the The process by which the
adoption of an innovation adoption of an innovation
spreads.spreads.
Chapter 10 10-28Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Categories of AdoptersCategories of AdoptersP
erc
en
tag
e o
f A
do
pte
rs
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%Laggards
16%
Chapter 10 10-29Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Product Characteristics and Product Characteristics and the Rate of Adoptionthe Rate of Adoption
TrialabilityTrialability
ObservabilityObservability
Relative AdvantageRelative Advantage
CompatibilityCompatibility
ComplexityComplexity
ProductProductCharacteristics Characteristics Predict Rate of Predict Rate of
AdoptionAdoption
ProductProductCharacteristics Characteristics Predict Rate of Predict Rate of
AdoptionAdoption
Chapter 10 10-30Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Marketing Implications Marketing Implications of the Adoption Processof the Adoption Process
Direct fromMarketer to
adopter
Direct fromMarketer to
adopter
Word of MouthWord of Mouth
Two Types ofCommunication
Aids theDiffusion Process
Two Types ofCommunication
Aids theDiffusion Process
Chapter 10 10-31Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Product Life CycleProduct Life Cycle
A concept that provides a A concept that provides a
way to trace the stages of a way to trace the stages of a
product’s acceptance, from product’s acceptance, from
its introduction (birth) its introduction (birth)
to its decline (death).to its decline (death).
Chapter 10 10-32Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Product Life CycleProduct Life Cycle
Time
Do
llar
s
ProductCategory Profits
ProductCategory Sales
IntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
0
Chapter 10 10-33Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Extending the PLCExtending the PLC
Change product
Change product use
Change product image
Change product positioning
Chapter 10 10-34Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Introductory StageIntroductory Stage
High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and
information Intensive personal selling to channels
Full-Scale Launch of New Products
Full-Scale Launch of New Products
Chapter 10 10-35Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Growth StageGrowth Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered
Offered in more sizes, flavours, options
Offered in more sizes, flavours, options
Chapter 10 10-36Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Maturity StageMaturity Stage
Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge
Many consumer products are in Maturity
Many consumer products are in Maturity
Chapter 10 10-37Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Decline StageDecline Stage
Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing
expenses
Rate of decline depends on change in tastes or
adoption of substitute products
Rate of decline depends on change in tastes or
adoption of substitute products
Chapter 10 10-38Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Marketing Strategies for PLCMarketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited modelsFrequent changes
More modelsFrequent changes.
Large number of models.
Eliminate unprofitable
models
LimitedWholesale/
retail distributors
Expanded dealers. Long-term relations
Extensive.Margins drop.Shelf space
Phase out unprofitable
outlets
Awareness. Stimulate
demand.Sampling
Aggressive ads.Stimulatedemand
Advertise. Promote heavily
Phase outpromotion
Higher/recoupdevelopment
costs
Fall as result ofcompetition &
efficient produc-tion.
Prices fall (usually).
Prices stabilize at low level.
Chapter 10 10-39Copyright © 2002 by Nelson, a division of Thomson Canada Limited.
Diffusion Process and PLC CurveDiffusion Process and PLC Curve
Innovators
Early adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cyclecurvecurve
DiffusionDiffusioncurvecurve
Introduction Growth Maturity Decline
Sal
es
