The Product Lifecycle and New Product Development
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The Product Lifecycle and New Product Development Chapter 10
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The Product Lifecycle and New Product Development. Chapter 10. New Product Development. Definition - the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts. - PowerPoint PPT Presentation
Transcript of The Product Lifecycle and New Product Development
The Product Lifecycle and New Product Development
Chapter 10
New Product Development
Definition - the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts.
New products can also come from acquisition of other companies, patents, or licenses – e.g. trap-ease .
Consumers’ perspectives on Newness (Exhibit 10-1)
DiscontinuousInnovation
Breakthrough
DynamicallyContinuousInnovation
Major change
ContinuousInnovation
Ongoing alteration
New Product Development
Importance of New Product Development:
Follow changing market demands To remain competitive Keep up with changing technology Replace dying/old products Diversify product offerings to reduce
risks
Characteristics of Successful New Products
and Services Relative Advantage Compatibility with existing
consumption patterns Trialability – The Opportunity for buyer
testing Observability – The Chance to see the
newness Simplicity of Usage
Exercise Form groups of 3-4 students. Pick a
new product that is less than a 1 year old. How has it become successful/unsuccessful? What was it’s marketing approach?
New Product Development
Successful new products: Offer a unique superior product,
such as higher quality, new features, or higher value in use
Have a well-defined (and tested) product concept, before development investment is madeNew products fail at a high rate
due to: Market size may have been
overestimated Poor quality or design Incorrect positioning, pricing, or
promotion (i.e., trap-ease)
New Product Development
Generally a five step process:1. Idea generation2. Screening of ideas3. Business analysis4. Prototype development5. Commercialization
What’s Happening? http://
www.youtube.com/watch?v=xbsSeVr5NSI
McDonald’s
The Product Lifecycle
Understanding the Product Lifecycle
Product life cycle (PLC): the course of a product’s sales and profits over its lifetime
Interesting idea, developed in the 1950’s, still here!
The product lifecycle has four stages: Introduction Growth Maturity Decline
Product Life-Cycle Strategies
Introduction: slow sales growth, profits still negative due to high costs of development and product launch
Growth: rapid sales growth and profits Maturity: sales slow down, profits
decline due to competition Decline: sales and profits fall as product
is replaced by new alternatives
Product Life-Cycle - Illustrated
Profits
Sales
Development Introduction Growth Maturity Decline
SalesProfit($)
Loss($)
VCRs
TideDetergent
HybridVehicles
Tablets
Maturity Stage Strategy Modifying the product.
Changing characteristics such as quality, features or style to attract new users and to inspire more usage.
How? Improve durability, reliability, speed,
taste. Improve styling and attractiveness. Add new features. Expand usefulness, safety,
convenience.
Maturity Stage Strategy Modifying the market.
Increase the consumption of the current product.
How? Look for new users and market
segments. Reposition the brand to appeal to larger
or faster-growing segment. Look for ways to increase usage among
present customers.
Modifying the marketing mix. Improving sales by changing one or
more marketing mix elements. How?
Cut prices. Launch a better ad campaign. Move into larger market channels
(distribution). Offer new or improved services to
buyers.
Discussion Question – page 282, Question #2
Special Life Cycles Styles:
Basic and distinctive mode of expression
Once accepted, popularity will vary over time
Fashion: A currently accepted or popular
style Gains acceptance, peaks, then
declines Tend to go in cycles with
generations Fads:
Gain rapid acceptance, peak early, and decline quickly
Tend to attract limited market Products that are novel and do not
address basic needs
Length of the Product Life Cycle
Ranges from a few weeks to decades.
Length of individual stages varies from one product category to the next (Hershey chocolate).
Stages of any given life cycle usually last for different periods.
Some products make several different entrances and exits through the Product Life Cycle – examples?.
Adoption processes Awareness Interest Evaluation Trial Adoption
TIME
The Diffusion Process (Exhibit 10-7)
Expansion Strategies Product line extension
Item added to an existing product line Product category extension
New item or new line of items in a product category
Cannibalize To eat into the sales revenues of
another product item in the same line
