2011-09marketingprinciples-110522214247-phpapp02

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Stephan Langdon, MBA, M Ed





Chapter 2-slide 3

• New-Product DevelopmentStrategy

• New-Product DevelopmentProcess

• Managing New-ProductDevelopment

• Product Life-Cycle Strategies

• Additional Product andService Considerations

Topic Outline



Chapter 2-slide 4

Acquisition refers to the buying of a wholecompany, a patent, or a license to producesomeone else’s product

New product development refers to originalproducts, product improvements, product

modifications, and new brands developed fromthe firm’s own research and development

Two ways to obtain new products



Chapter 2-slide 5

Overestimation of market size

Poor design

Incorrect positioning

Wrong timing

Priced too high

Ineffective promotion

Management influence

High development costs

Competition



Chapter 2-slide 6

Which of the following is not a reason that a new product

might fail?1. The product is priced too high.

2. The product is poorly designed.

3. The estimated market for the product is too large.

4. All of the above are reasons that a new product might fail.


http://slidepdf.com/reader/full/2011-09marketingprinciples-110522214247-phpapp02 7/65Chapter 2-slide 7

Which of the following is not a reason that a new product

might fail?1. The product is priced too high.

2. The product is poorly designed.

3. The estimated market for the product is too large.

4. All of the above are reasons that a new product might fail.



Major Stages in New-Product Development



Idea generation is the systematic search for new-productideas

Sources of new-product ideas

• Internal

• External

Idea Generation



Chapter 2-slide 10

Internal sources refer to thecompany’s own formal

research and development,

management and staff, andintrapreneurial programs

External sources refer tosources outside the company

such as customers,competitors, distributors,suppliers, and outside designfirms

Idea Generation



Chapter 2-slide 11

Which of the following is not a good external source of ideas?

1. Customers2. The R&D department

3. Suppliers

4. Competitors



Chapter 2-slide 12

Which of the following is not a good external source of ideas?

1. Customers2. The R&D department

3. Suppliers

4. Competitors



Chapter 2-slide 13

• Identify good ideas and drop poor ideas

• R-W-W Screening Framework:

• Is it real?

• Can we win?

• Is it worth doing?

Idea Screening



Chapter 2-slide 14

Product idea is an idea for a possible product that thecompany can see itself offering to the market

Product concept is a detailed version of the ideastated in meaningful consumer terms

Product image is the way consumers perceive anactual or potential product

Concept Development and Testing



Chapter 2-slide 15

Concept testing refers to testing new-product conceptswith groups of target consumers

Concept Development and Testing

http://www.questionpro.com/akira/showSurveyLibrary.do?surveyID=109&mode=1



Chapter 2-slide 16

• Marketing strategy development refers to the initialmarketing strategy for introducing the product to themarket

• Marketing strategy statement includes:

• Description of the target market

• Value proposition

• Sales and profit goals

Marketing Strategy Development



Chapter 2-slide 17

Business analysis involves a review of the sales, costs,and profit projections to find out whether they satisfythe company’s objectives




Chapter 2-slide 18

Product development

involves the creation andtesting of one or morephysical versions by theR&D or engineeringdepartments

• Requires an increase ininvestment




Chapter 2-slide 19

Test marketing is thestage at which theproduct and

marketing programare introduced intomore realisticmarketing settings

Provides the marketerwith experience intesting the productand entire marketingprogram before fullintroduction




Chapter 2-slide 20

________ is a review of the sales, costs, and profit

projections for a new product to find out whether thesefactors satisfy the company’s objectives.

1. Market strategy development

2. Product development

3. Business analysis

4. Forecasting



Chapter 2-slide 21

________ is a review of the sales, costs, and profit

projections for a new product to find out whether thesefactors satisfy the company’s objectives.

1. Market strategy development

2. Product development

3. Business analysis

4. Forecasting



Chapter 2-slide 22

When a concept moves into a physical product to insure that

the product idea can be turned into a workable product,this is referred to as ___________.

1. market strategy

2. product development

3. business analysis

4. commercialization



Chapter 2-slide 23

When a concept moves into a physical product to insure that

the product idea can be turned into a workable product,this is referred to as ___________.

1. market strategy


3. business analysis




Chapter 2-slide 24

Types of Test Markets

Standard test markets

Controlled test markets Simulated test markets



Chapter 2-slide 25

Which of the following is not a form of test marketing?

1. Standard test markets2. Controlled test markets

3. Simulated test markets

4. Perceptual test markets



Chapter 2-slide 26

Which of the following is not a form of test marketing?

1. Standard test markets2. Controlled test markets

3. Simulated test markets

4. Perceptual test markets



Chapter 2-slide 27

Some of the drawbacks of ________ test markets are that

they can be very costly, and they can give competitors achance to look at the company’s new ideas.

1. standard

2. controlled

3. simulated

4. Internet



Chapter 2-slide 28

Some of the drawbacks of ________ test markets are that

they can be very costly, and they can give competitors achance to look at the company’s new ideas.

1. standard

2. controlled

3. simulated

4. Internet



Chapter 2-slide 29

• Advantages of simulated test markets

• Less expensive than other test methods

• Faster• Restricts access by competitors

• Disadvantages

• Not considered as reliable and accurate due to the controlledsetting




Chapter 2-slide 30


When firms testmarket

• New productwith largeinvestment

• Uncertaintyabout product

or marketingprogram

When firms maynot test market

• Simple lineextension

• Copy ofcompetitorproduct

• Low costs• Management

confidence

http://www.decisioninsight.com/



Chapter 2-slide 31

Commercialization is the introduction

of the new product

• When to launch

• Where to launch

• Planned market

rollout




Chapter 2-slide 32

The systematic search for new-product ideas is called

________.1. idea generation

2. idea search

3. idea screening

4. concept development



Chapter 2-slide 33

The systematic search for new-product ideas is called

________.1. idea generation

2. idea search

3. idea screening

4. concept development



Chapter 2-slide 34

Once the new product ideas have been screened, the next

step in the new product development process is ________.

1. marketing strategy

2. concept development and testing


4. none of the above



Chapter 2-slide 35

Once the new product ideas have been screened, the next

step in the new product development process is ________.

1. marketing strategy

2. concept development and testing


4. none of the above



Chapter 2-slide 36

The final stage in new product development is referred to as

________.1. new product penetration


3. consumer initiation

4. idea screened



Chapter 2-slide 37

The final stage in new product development is referred to as

________.1. new product penetration


3. consumer initiation

4. idea screened



Chapter 2-slide 38

Successful new-product development should be:

• Customer centered

• Team centered

• Systematic



Chapter 2-slide 39

Customer-centered newproduct development focuses on finding newways to solve customerproblems and create morecustomer satisfying

experiences• Begins and ends with

solving customerproblems

New-Product Development Strategies



Chapter 2-slide 40

Sequential new-product development is adevelopment approach where companydepartments work closely together individually to

complete each stage of the process before passingit along to the next department or stage

• Increased control in risky or complex projects

• Slow




Chapter 2-slide 41

Team-based new-product development is a developmentapproach where company departments work closelytogether in cross-functional teams, overlapping in the

product-development process to save time andincrease effectiveness




Chapter 2-slide 42

Systematic new-productdevelopment is aninnovativedevelopment approachthat collects, reviews,evaluates, andmanages new-product

ideas• Creates an innovation-

oriented culture

• Yields a large number ofnew-product ideas




Chapter 2-slide 43

Product Life Cycle



Chapter 2-slide 44

• Product development• Sales are zero and investment costs mount

• Introduction

• Slow sales growth and profits are nonexistent

• Growth

• Rapid market acceptance and increasing profits.

• Maturity

• Slowdown in sales growth and profits level off ordecline

• Decline

• Sales fall off and profits drop



Chapter 2-slide 45

Which of the following is not a stage in the product life cycle

(PLC)?1. Idea screening

2. Growth

3. Maturity

4. Decline



Chapter 2-slide 46

Which of the following is not a stage in the product life cycle

(PLC)?1. Idea screening

2. Growth

3. Maturity

4. Decline



Chapter 2-slide 47

Which stage of the product life cycle (PLC) is characterized

by slow growth because the product has achievedacceptance by most of its potential buyers?

1. Introduction

2. Growth

3. Maturity

4. Decline



Chapter 2-slide 48

Which stage of the product life cycle (PLC) is characterized

by slow growth because the product has achievedacceptance by most of its potential buyers?

1. Introduction

2. Growth

3. Maturity

4. Decline



Chapter 2-slide 49

Fads are temporary periodsof unusually high salesdriven by consumer

enthusiasm and immediateproduct or brand popularity



Chapter 2-slide 50



Chapter 2-slide 51

________ tend to grow slowly, remain popular for a while,

and then decline slowly.1. Fads

2. Styles

3. Fashions

4. Designs



Chapter 2-slide 52

________ tend to grow slowly, remain popular for a while,

and then decline slowly.1. Fads

2. Styles

3. Fashions

4. Designs



Chapter 2-slide 53

• Slow sales growth

• Little or no profit

• High distribution and promotion expense

Introduction Stage



Chapter 2-slide 54

• Sales increase

• New competitors enter the market

• Price stability or decline to increase volume

• Consumer education• Profits increase

• Promotion and manufacturing costs gain economies ofscale

Growth Stage



Chapter 2-slide 55

• Slowdown in sales

• Many suppliers

• Substitute products

• Overcapacity leads to competition• Increased promotion and R&D to support sales and

profits

Maturity Stage

http://www.youtube.com/watch?v=pcj7QT0Abk8&feature=related



Chapter 2-slide 56

• Market modifying

• Product modifying

• Marketing mixmodifying

Maturity Stage Modifying Strategies

http://www.1000uses.com/



Chapter 2-slide 57

• Maintain the product

• Harvest the product

• Drop the product

Decline Stage



Chapter 2-slide 58

In the ________ stage, sales start climbing quickly and

competition often enters the market.1. introduction

2. growth

3. maturity

4. decline



Chapter 2-slide 59

In the ________ stage, sales start climbing quickly and

competition often enters the market.1. introduction

2. growth

3. maturity

4. decline



Chapter 2-slide 60

Summary of Product Life Cycle



Chapter 2-slide 61

Public policy and regulations regarding developingand dropping products, patents, quality, and

safety

Product Decisions and SocialResponsibility



Chapter 2-slide 62

Marketers should consider public policy issues involvingproduct safety, environment, and warranties. This isreferred to as ________.

1. social responsibility

2. positioning3. marketing mix




Chapter 2-slide 63

Marketers should consider public policy issues involvingproduct safety, environment, and warranties. This isreferred to as ________.

1. social responsibility

2. positioning3. marketing mix




Chapter 2-slide 64

• Determining what products a

services to introduce in whichcountries

• Standardization versus

customization• Packaging and labeling

• Customs, values, laws

International Product andService Marketing

—Challenges



Stephan Langdon, MBA, M Ed

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2011-09marketingprinciples-110522214247-phpapp02