Instructor: Rahma Akhter
Chapter Nine
NEW-PRODUCT DEVELOPMENT AND PRODUCT LIFE-CYCLE STRATEGIES
New-Product Development and Product Life-Cycle
Strategies
Topic Outline
New-Product Development Strategy
New-Product Development Process
Managing New-Product
Development
Product Life-Cycle Strategies
Additional Product and Service
Considerations
New-Product Development Strategy
Two ways to obtain new products
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
New-Product Development Process
Major Stages in New-Product Development
New-Product Development Process
Idea Generation
Idea generation is the systematic
search for new-product ideas
Sources of new-product ideas
Internal
External
New-Product Development Process
Idea Generation
Internal sources refer to the
company’s own formal research
and development, management
and staff, and intrapreneurial
programs
External sources refer to sources
outside the company such as
customers, competitors,
distributors, suppliers, and
outside design firms
New-Product Development Process
Crowdsourcing
Inviting broad communities of people—
customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.
Source:https
://[Link]/blogs/a4ae09b6-0d4c-4307-9da8-3ee9f3d368d6/post/03c2ec
05-e60a-4ccd-9d96-13604a7e5a78
New-Product Development Process
Crowdsourcing
Source:https
Source: [Link]
://[Link]/2013/08/8-reasons-why-lays-do-us-a-flavour-cont ng-sustainability/
est-is-brilliant-marketing/
Activity 1
Find an example of a crowdsourcing done in Bangladesh which
you think is very creative.
Give a brief idea about it.
New-Product Development Process
Idea Screening
Identify good ideas and drop poor ideas
R-W-W Screening Framework:
Is it real?
Can we win?
Is it worth doing?
Source: [Link]
eting-moves/distinguishing-a-good-idea-from-notsogood-ones/article
[Link]
New-Product Development 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
New-Product Development Process
Concept Development and Testing
Concept testing refers to testing new-product concepts with
groups of target consumers
New-Product Development Process
Marketing Strategy Development
Marketing strategy development refers to the initial
marketing strategy for introducing the product to the
market
Marketing strategy statement includes:
Description of the target market
Value proposition
Sales and profit goals
New-Product Development Process
Marketing Strategy Development
Business analysis involves a review of the sales, costs, and profit
projections to find out whether they satisfy the company’s
objectives
New-Product Development 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
Shows whether the product idea can be
turned into a workable product.
New-Product Development Process
Marketing Strategy Development
Test marketing is the stage at
which the product and
marketing program are
introduced into more realistic
marketing settings
Provides the marketer with
experience in testing the
product and entire marketing
program before full
introduction
New-Product Development Process
Types of Test Markets
Standard test markets
Controlled test markets
Simulated test markets
New-Product Development Process
Marketing Strategy Development
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 controlled setting
New-Product Development Process
Marketing Strategy Development
When firms test When firms may not
market test market
• New product with • Simple line
large investment extension
• Uncertainty about • Copy of competitor
product or product
marketing program • Low costs
• Management
confidence
New-Product Development Process
Marketing Strategy Development
Commercialization is the introduction
of the new product
When to launch
Where to launch
Planned market
rollout
Managing New-Product Development
Successful new-product development should be:
Customer centered
Systematic
Team-based
Managing New-Product Development
New-Product Development Strategies
Customer-centered new
product development new
ways to solve customer
problems and create more
customer satisfying
experiences
Managing New-Product Development
New-Product Development Strategies
Systematic new-product development
innovative development approach that collects,
reviews, evaluates, and manages new-product ideas
Creates an innovation-oriented culture
Yields a large number of new-product ideas
Managing New-Product Development
New-Product Development Strategies
Team-based new-product development Company
departments work closely together in cross-
functional teams, overlapping in the product-
development process to save time and increase
effectiveness
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle Strategies
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 or decline
Decline
Sales fall off and profits drop
Product Life-Cycle Strategies
Product Life-Cycle Strategies
Fads are temporary periods of
unusually high sales driven
by consumer enthusiasm and
immediate product or brand
popularity
Activity 2
Cite example of a Style, Fashion and Fad from perspective of Bangladesh.
Specify the target market and the reason for your choice.
Product Life-Cycle Strategies
Introduction Stage
Slow sales growth
Little or no profit
High distribution and promotion expense
Product Life-Cycle Strategies
Growth Stage
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 Life-Cycle Strategies
Maturity Stage
Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to competition
Increased promotion and R&D to support sales and
profits
Product Life-Cycle Strategies
Maturity Stage Modifying Strategies
Market modifying
Product modifying
Marketing mix
modifying
Product Life-Cycle Strategies
Decline Stage
Maintain the product
Harvest the product
Drop the product
Activity 3
Find out the stage of product life cycle in which the products belong to.
Provide proper reason for your choice
2 4
1
3 5
Thanks!
Any questions?
