New-Product Development and Product Life-Cycle Strategies: Principles of Marketing, Study notes of Marketing Management

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New-Product Development

and Product Life-Cycle

Strategies

Principles of Marketing

Learning Objectives

After studying this chapter, you should be able to:

1. Explain how companies find and develop new- product ideas
2. List and define the steps in the new-product development process and the major considerations in managing this process
3. Describe the stages of the product life cycle
4. Describe how marketing strategies change during the product’s life cycle
5. Discuss two additional product and services issues: socially responsible product decisions and international product and services marketing

Strategy

A firm can obtain new products through:

• Acquisition
• (^) New-product development

Strategy

Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and 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

Process

New idea generation is the systematic search for new product ideas Sources of new-product ideas

• (^) Internal
• (^) External Idea Generation

Process

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

Process

Concept Development and Testing Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or potential product

Process

Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market

Process

Marketing Strategy Development Marketing strategy statement

• (^) Part 1:
  • (^) Description of the target market
  • (^) Product positioning, sales, market share, and profit goals
• (^) Part 2:
  • (^) Price, distribution, and budget
• (^) Part 3:
  • (^) Long-term sales, profit goals, and marketing mix strategy

Process

Marketing Strategy Development Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments

• Requires an increase in investment

Process

Marketing Strategy Development Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction

Process

Approaches to test marketing

• Standard test markets
• Controlled test markets
• (^) Simulated test markets Marketing Strategy Development

Process

Marketing Strategy Development Standard test markets are small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance. Results are used to forecast national sales and profits, discover product problems, and fine- tune the marketing program.