Www.mhhe.com/fourps For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies,...

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For use only with Perreault and McCarthy texts.© 2006 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin

CHAPTER NINE

Product Management and New Product Development

CHAPTER NINE

Product Management and New Product Development

1. Understand how product life cycles affect strategy planning.

2. Understand what is involved in designing new products and what “new products” really are.

3. Understand the new-product development process.

4. See why product liability must be considered in screening new products.

5. Understand the need for product or brand managers.

6. Understand how total quality management can improve goods and services.

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When we finish this lecture you should

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Managing Products over Their Life CyclesExhibit 9-1

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Market Introduction – Investing in the Future

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Monopolistic Competition Develops

Monopolistic Competition Develops

Monopolistic Competition Develops

Monopolistic Competition Develops

Innovation Attracts Competition

Innovation Attracts Competition

Innovation Attracts Competition

Innovation Attracts Competition

Market Growth – Profits Go Up and Down

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Profits Peak and Then Decline

Profits Peak and Then Decline

Don’t Ignore Long-Term Competitive Trends!Don’t Ignore Long-Term Competitive Trends!

Persuasive, More Costly Promotion

Persuasive, More Costly Promotion

Brands Are More SimilarBrands Are More Similar

Greater Price Competition/Price Sensitivity

Greater Price Competition/Price Sensitivity

Persuasive, More Costly Promotion

Persuasive, More Costly Promotion

Brands Are More SimilarBrands Are More Similar

Greater Price Competition/Price Sensitivity

Greater Price Competition/Price Sensitivity

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Market Maturity – Sales Level Off, Profits Continue Down

Maturity May Last a Long Time

Maturity May Last a Long Time

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Sales Decline – A Time of Replacement

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Which Stage of the PLC?

AND

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IndividualBrands

IndividualBrands

• May not follow the classic pattern

• May be introduced in market growth or maturity

• Not all brands are equally strong

MarketDefinitions

MarketDefinitions

• Should be carefully developed

• Different markets, different stages

• Contribute to the length of the cycle

Product Life Cycles Should Be Related to Specific Markets

Can Be TriedCan Be Tried

Easy to Communicate

Easy to Communicate

Competitive Advantage

Competitive Advantage

Can Be TriedCan Be Tried

Easy to Communicate

Easy to Communicate

Competitive Advantage

Competitive Advantage Easy to UseEasy to UseEasy to UseEasy to Use

CompatibleCompatible

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Product Life Cycles Vary in Length

Some ProductsMove Fast

Some ProductsMove Fast

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Interactive Exercise: Adoption

The Early Bird Usually ProfitsThe Early Bird Usually Profits

Product Life Cycles Are Getting Shorter

Product Life Cycles Are Getting Shorter

The Early Bird Usually ProfitsThe Early Bird Usually Profits

Product Life Cycles Are Getting Shorter

Product Life Cycles Are Getting Shorter

Fashions and FadsFashions and Fads

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Other Issues in Product Life Cycle Length

Competitors May Help Adoption

Competitors May Help Adoption

Anticipate Speed of

Movement

Anticipate Speed of

Movement

Consider the Four Ps

Consider the Four Ps

Consider the Four Ps

Consider the Four Ps

Allocate Sufficient

Money

Allocate Sufficient

Money

Be FlexibleBe Flexible

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Planning for Different Stages of the Product Life Cycle

MarketIntroduction

& Growth

MarketIntroduction

& Growth

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Managing Mature Products

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Improve the Product or Develop a New OneExhibit 9-3

’’ ’’’’

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Are Product Modifications Really New Products?

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Don’t Pull the Plug So Quickly

Don’t Pull the Plug So Quickly

Don’t Pull the Plug So Quickly

Don’t Pull the Plug So Quickly

Phase-out May Be Necessary

Phase-out May Be Necessary

Phase-out May Be Necessary

Phase-out May Be Necessary

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Phasing Out Dying Products

ProfitabilityProduct LineCustomer

SupportSales Decline Can

Be ProfitableSales Decline Can

Be Profitable

What Is a New Product?What Is a New Product?What Is a New Product?What Is a New Product?

FTC Rule: 6 MonthsFTC Rule: 6 MonthsFTC Rule: 6 MonthsFTC Rule: 6 Months

Ethical Dilemmas ExistEthical Dilemmas Exist

New Product Planning

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New Product

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An Organized New Product Development Process is CriticalExhibit 9-4

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Step 1: Idea Generation

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Step 2: Screening

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Step 3: Idea Evaluation

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Step 4: Development

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Step 5: Commercialization

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New Product Development: A Total Company EffortExhibit 9-6

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Common in Large Companies

Common in Large Companies

Common in Large Companies

Common in Large Companies

Product/Brand Managers

Product/Brand Managers

Product/Brand Managers

Product/Brand Managers

Some Are “Product Champions”

Some Are “Product Champions”

Need for Product Managers

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Building Quality into the Implementation Effort

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TQM Is Easier Said Than DoneExhibit 9-7

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Why Things Go WrongExhibit 9-8

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Server Is Linked To the Service

Server Is Linked To the Service

Server Is Linked To the Service

Server Is Linked To the Service

Training Is CrucialTraining Is CrucialTraining Is CrucialTraining Is Crucial

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Building Quality into Services

Empowerment WorksEmpowerment Works

Separate the Routine from the Special

Separate the Routine from the Special

Separate the Routine from the Special

Separate the Routine from the Special

Specify Jobs and Benchmark

Specify Jobs and Benchmark

Specify Jobs and Benchmark

Specify Jobs and Benchmark

Managers Lead the EffortManagers Lead the EffortManagers Lead the EffortManagers Lead the Effort

Manage Expectations with Good Communication

Manage Expectations with Good Communication

Manage Expectations with Good Communication

Manage Expectations with Good Communication

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Other Issues in Quality Implementation Efforts

Get a Return on QualityGet a Return on Quality

• Product life cycle

• Market introduction

• Market growth

• Market maturity

• Sales decline

• Fashion

• New product

• Federal Trade Commission (FTC)

• Consumer Product Safety Act

• Product liability© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Key Terms

• Concept testing

• Product managers

• Brand managers

• Total quality management (TQM)

• Continuous improvement

• Pareto chart

• Fishbone diagram

• Empowerment

• Benchmarking