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8/9/2019 Marketing - New Product Presentation
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Course: Principle of Marketing
Presented To:
Miss. Sana Imran
Presented By:
Muhammad Ashfaq Abdul Karim Soomro
Saleha Ansari Musadiq Ahmed
Zahida Khatoon Muddassir Habib
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New-Product Development and
Life-Cycle Strategies
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Learning Goals
1. Learn how companies find and develop new-product ideas.
2. Understand the steps in the new-product development process.
3. Know the stages of the product life cycle.
4. Realize how marketing strategies change during the products life cycle.
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New Product Development
Development of original products, product improvements, product modifications,
and new brands through the firms own R & D efforts.
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New Product Development Strategy
1. New products can be obtained via acquisition or
development.
2. New products suffer from high failure rates.
3. Several reasons account for failure.
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Stages of the New Product Development Process
Stage 1: Idea Generation
1. Internal idea sources:
R & D2. External idea sources:
Customers, competitors, distributors, suppliers
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Contd
Stage 2: Idea Screening
1. Product development costs increase substantially in later stages so poor
ideas must be dropped.
2. Ideas are evaluated against criteria; most are eliminated
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Stage 3: C oncept Development and Testing
1. Concept development creates a detailed version of the idea stated in
meaningful consumer terms.
2. Concept testing asks target consumers to evaluate product concepts.
Contd
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Stage 4: Marketing Strategy Development
1. The target market, product positioning, and sales, share, and profitgoals for the first few years.
2. Product price, distribution, and marketing budget for the first year.
3. Long-run sales and profit goals and the marketing mix strategy.
Contd
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Stage 5:Bu
siness Analysis
Sales, cost, and profit projections
Stage 6: P rod uct Development
Prototype development and testing
Contd
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Stage 7: Test Marketing
1. Standard test markets
2. Controlled test markets
3. Simulated test markets
Stage 8: C ommercialization
Contd
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Product Life-Cycle Strategies
The Product Life Cycle (PLC) has Five Stages:
Product Development
Introduction
Growth
Maturity
Decline
Not all products follow this cycle:
Fads
Styles
Fashions
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Product Life-Cycle Strategies
The product life cycle concept can be applied to:
1. Product class (soft drinks)
2. Product form (diet colas)
3. Brand (Diet Dr. Pepper)
Using the PLC to forecast brand performance or to develop marketing
strategies is problematic
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Product Life-Cycle Strategies
1. P rod uct Development
y Begins when the company develops a new-product idea
y Sales are zero
y Investment costs are high
y Profits are negative
PLC StagesPLC Stages
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y Low sales
y High cost per customer acquired
y Negative profits
y Innovators are targeted[
y Little competition
Product Life-Cycle Strategies
PLC StagesPLC Stages
2. Introd uction
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Marketing Strategies: Introduction Stage
y Product Offer a basic product
y Price Use cost-plus basis to set
y Distribution Build selective distribution
y Advertising Build awareness among early adopters and dealers/resellers[
y Sales Promotion Heavy expenditures to create trial
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y Rapidly rising sales
y Average cost per customer
y Rising profits
y Early adopters are targeted
y Growing competition
Product Life-Cycle Strategies
PLC StagesPLC Stages
3. Growth
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y Product Offer product extensions, service, warranty
y Price Penetration pricing
y Distribution Build intensive distribution
y Advertising Build awareness and interest in the mass market
y Sales Promotion Reduce expenditures to take advantage of consumerdemand
Product Life-Cycle Strategies
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y Sales peak
y Low cost per customer
y High profits
y Middle majority are targeted
y Competition begins to decline
Product Life-Cycle Strategies
PLC StagesPLC Stages
4. Mat urity
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Maturity Stage
Product Diversify brand and models
Price Set to match or beat competition
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
Sales Promotion Increase to encourage brand switching
Product Life-Cycle Strategies
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y Declining sales
y Low cost per customer
y Declining profits[
y Laggards are targeted[
y Declining competition
Product Life-Cycle Strategies
PLC StagesPLC Stages
5. Decline
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Product Phase out weak items
Price Cut price
Distribution Use selective distribution: phase out unprofitable outlets
Advertising Reduce to level needed to retain hard-core loyalists
Sales Promotion Reduce to minimal level
Contd
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