Kotler12e Basic 09

8/8/2019 Kotler12e Basic 09

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New-Product Developmentand Product Life-Cycle

Strategies

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Principles of Marketing


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New-Product Development Strategy

Acquisition refers to the buying of a whole company,

a patent, or a license to produce someone elsesproduct

New product development refers to original

products, product improvements, productmodifications, and new brands developed from thefirms own research and development

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New-Product Development Strategy

Reasons for new product failure

Overestimation of market size Poor design Incorrect positioning Wrong timing Priced too high

Ineffective promotion Management influence High development costs Competition

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New-Product Development Process

1. Idea generation

2. Idea screening

3. Concept development and testing

4. Marketing strategy development

5. Business analysis

6. Product development

7. Test marketing

8. Commercialization

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Idea Generation

Internal sources refer to the companys own formalresearch and development, management and staff,and entrepreneurial programs.

External sources refer to sources outside the companysuch as customers, competitors, distributors,suppliers, and outside design firms

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Idea screening refers to reviewing new-product ideas in order to drop poor onesas soon as possible

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Idea Screening


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Concept Development and Testing

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


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Concept testing refers to new-productconcepts with groups of targetconsumers

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Concept Development and Testing


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Marketing Strategy Development

Business analysis involves a review of thesales, costs, and profit projections to findout whether they satisfy the companys

objectives

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Product development involves the creationand testing of one or more physical versionsby the R&D or engineering departments

Requires an increase in investment

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Test marketing is the stage at which theproduct and marketing program areintroduced into more realistic marketingsettings

Test marketing provides the marketer withexperience in testing the product and entiremarketing program before full introduction

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Approaches to test marketing

Standard test markets

Controlled test markets

Simulated test markets

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Standard test markets are small representativemarkets where the firm conducts a full marketingcampaign and uses store audits, consumer anddistributor surveys, and other measures to gauge

product performance.Results are used to forecastnational sales and profits, discover product

problems, and fine-tune the marketing program.

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Challenges of standard test markets

Cost

Time

Competitors can monitor the test

Competitor interference

Competitors gain access to the new product beforeintroduction

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Controlled test markets are panels of storesthat have agreed to carry new products fora fee

Less expensive than standard test markets Faster than standard test markets

Competitors gain access to the new product

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Simulated test markets are events wherethe firm will create a shopping environmentand note how many consumers buy the newproduct and competing products. Providesmeasure of trial and the effectiveness ofpromotion.Researchers can interviewconsumers.

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Commercialization is the introduction of thenew product

When to launch

Where to launch Planned market rollout

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Managing New-Product

Development

Successful new product development should be:

Customer-centered

Team-centered

Systematic

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Development

New-Product Development Strategies

Customer-centered new-productdevelopment focuses on finding new waysto solve customer problems and create morecustomer-satisfying experiences

Begins and ends with solving customerproblems

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Development


Sequential new-product development is adevelopment approach where companydepartments work closely together individually tocomplete each stage of the process before passing

along to the next department or stage Increased control in risky or complex projects

Slow

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Development


Team-based new-product development isa development approach where companydepartments work closely together in cross-functional teams, overlapping in theproduct-development process to save timeand increase effectiveness

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Development


Team-based versus sequential new-productdevelopment

Team-based can increase tension and

confusion Team-based is faster and more flexible

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Development


Systematic new-product development isan innovative development approach thatcollects, reviews, evaluates, and managesnew-product ideas

Creates an innovation-oriented culture

Yields a large number of new-product ideas

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Product Life-Cycle Strategies

Product life cycle (PLC) is the coursethat a products sales and profits takeover its lifetime

Product development

Introduction

Growth Maturity

Decline

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Introduction stage is when the new product

is first launched

Takes time

Slow sales growth

Little or no profit High distribution and promotion expense

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Growth stage is when the new product satisfies themarket

Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale Product quality increases New features New market segments and distribution channels are entered

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Maturity stage is a long-lasting stage of a productthat has gained consumer acceptance

Slowdown in sales

Many suppliers

Substitute products

Overcapacity leads to competition

Increased promotion and R&D to support sales andprofits

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Modifying Strategies

Market modifying

Product modifying

Marketing mix modifying

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Market modifying strategy is when acompany tries to increase consumption ofthe current product

New users Increase usage of existing users

New market segments

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Marketing mix modifying strategy is whena company changes one or more of themarketing mix elements

Price Promotion

Distribution channels

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Decline stage is when sales decline or level off

for an extended time, creating a weakproduct

Maintain the product

Harvest the product Drop the product

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Additional Product and Service

Considerations

Product Decisions and Social Responsibility

Public policy and regulations regardingdeveloping and dropping products, patents,quality, and safety

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Additional Product and Service

Considerations

International Product and Service Marketing

Challenges

Determining what products and services tointroduce in which countries

Standardization versus customization Packaging and labeling

Customs, values, laws

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Documents

Kotler12e Basic 09