Stephan Langdon, MBA, M Ed

Topic Outline
New-Product Development Strategy New-Product Development Process Managing New-Product Development Product Life-Cycle Strategies Additional Product and Service Considerations
Chapter 2-slide 3

Two ways to obtain new products

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

Chapter 2-slide 4

Overestimation of market size Poor design Incorrect positioning Wrong timing

Priced too high

Ineffective promotion Management influence High development costs Competition
Chapter 2-slide 5

Which of the following is not a reason that a new product might fail?
1. 2. 3. 4. The product is priced too high. The product is poorly designed. The estimated market for the product is too large. All of the above are reasons that a new product might fail.

Chapter 2-slide 6

Which of the following is not a reason that a new product might fail?
1. 2. 3. 4. The product is priced too high. The product is poorly designed. The estimated market for the product is too large. All of the above are reasons that a new product might fail.

Chapter 2-slide 7

Major Stages in New-Product Development

Chapter 2-slide 8

Idea generation is the systematic search for new-product ideas Sources of new-product ideas Internal External

Idea Generation

Chapter 2-slide 9

Idea Generation
Internal sources refer to the companys 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
Chapter 2-slide 10

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

1. 2. 3. 4. Customers The R&D department Suppliers Competitors

Chapter 2-slide 11

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

1. 2. 3. 4. Customers The R&D department Suppliers Competitors

Chapter 2-slide 12

Idea Screening
Identify good ideas and drop poor ideas R-W-W Screening Framework:
Is it real? Can we win? Is it worth doing?

Chapter 2-slide 13

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

Chapter 2-slide 14

Concept Development and Testing

Concept testing refers to testing new-product concepts with groups of target consumers

Chapter 2-slide 15

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

Chapter 2-slide 16

Marketing Strategy Development

Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the companys objectives

Chapter 2-slide 17

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
Chapter 2-slide 18

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
Chapter 2-slide 19

________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the companys objectives.
1. 2. 3. 4. Market strategy development Product development Business analysis Forecasting

Chapter 2-slide 20

________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the companys objectives.
1. 2. 3. 4. Market strategy development Product development Business analysis Forecasting

Chapter 2-slide 21

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. 2. 3. 4. market strategy product development business analysis commercialization

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. 2. 3. 4. market strategy product development business analysis commercialization

Chapter 2-slide 23

Types of Test Markets

Standard test markets

Controlled test markets Simulated test markets

Chapter 2-slide 24

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

1. 2. 3. 4. Standard test markets Controlled test markets Simulated test markets Perceptual test markets

Chapter 2-slide 25

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

1. 2. 3. 4. Standard test markets Controlled test markets Simulated test markets Perceptual test markets

Chapter 2-slide 26

Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the companys new ideas.
1. 2. 3. 4. standard controlled simulated Internet

Chapter 2-slide 27

Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the companys new ideas.
1. 2. 3. 4. standard controlled simulated Internet

Chapter 2-slide 28

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

Chapter 2-slide 29

Marketing Strategy Development

When firms test market New product with large investment Uncertainty about product or marketing program When firms may not test market Simple line extension Copy of competitor product Low costs Management confidence
Chapter 2-slide 30

Marketing Strategy Development

Commercialization is the introduction of the new product When to launch Where to launch Planned market rollout

Chapter 2-slide 31

The systematic search for new-product ideas is called ________.

1. 2. 3. 4. idea generation idea search idea screening concept development

Chapter 2-slide 32

The systematic search for new-product ideas is called ________.

1. 2. 3. 4. idea generation idea search idea screening concept development

Chapter 2-slide 33

Once the new product ideas have been screened, the next step in the new product development process is ________.
1. 2. 3. 4. marketing strategy concept development and testing product development none of the above

Chapter 2-slide 34

Once the new product ideas have been screened, the next step in the new product development process is ________.
1. 2. 3. 4. marketing strategy concept development and testing product development none of the above

Chapter 2-slide 35

The final stage in new product development is referred to as ________.

1. 2. 3. 4. new product penetration commercialization consumer initiation idea screened

Chapter 2-slide 36

The final stage in new product development is referred to as ________.

1. 2. 3. 4. new product penetration commercialization consumer initiation idea screened

Chapter 2-slide 37

Successful new-product development should be: Customer centered Team centered Systematic

Chapter 2-slide 38

New-Product Development Strategies

Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences Begins and ends with solving customer problems
Chapter 2-slide 39

New-Product Development Strategies

Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage Increased control in risky or complex projects Slow

Chapter 2-slide 40

New-Product Development Strategies

Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness

Chapter 2-slide 41

New-Product Development Strategies

Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas
Creates an innovationoriented culture Yields a large number of new-product ideas
Chapter 2-slide 42

Product Life Cycle

Chapter 2-slide 43

 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
Chapter 2-slide 44

Which of the following is not a stage in the product life cycle (PLC)?
1. 2. 3. 4. Idea screening Growth Maturity Decline

Chapter 2-slide 45

Which of the following is not a stage in the product life cycle (PLC)?
1. 2. 3. 4. Idea screening Growth Maturity Decline

Chapter 2-slide 46

Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers?
1. 2. 3. 4. Introduction Growth Maturity Decline

Chapter 2-slide 47

Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers?
1. 2. 3. 4. Introduction Growth Maturity Decline

Chapter 2-slide 48

Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity

Chapter 2-slide 49

Chapter 2-slide 50

________ tend to grow slowly, remain popular for a while, and then decline slowly.
1. 2. 3. 4. Fads Styles Fashions Designs

Chapter 2-slide 51

________ tend to grow slowly, remain popular for a while, and then decline slowly.
1. 2. 3. 4. Fads Styles Fashions Designs

Chapter 2-slide 52

Introduction Stage
Slow sales growth Little or no profit High distribution and promotion expense

Chapter 2-slide 53

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

Chapter 2-slide 54

Slowdown in salesMaturity Stage Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R&D to support sales and profits

Chapter 2-slide 55

Maturity Stage Modifying Strategies

Market modifying Product modifying Marketing mix modifying

Chapter 2-slide 56

Decline Stage
Maintain the product Harvest the product Drop the product

Chapter 2-slide 57

In the ________ stage, sales start climbing quickly and competition often enters the market.
1. 2. 3. 4. introduction growth maturity decline

Chapter 2-slide 58

In the ________ stage, sales start climbing quickly and competition often enters the market.
1. 2. 3. 4. introduction growth maturity decline

Chapter 2-slide 59

Summary of Product Life Cycle

Chapter 2-slide 60

Product Decisions and Social Responsibility Public policy and regulations regarding developing and dropping products, patents, quality, and safety

Chapter 2-slide 61

Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________.
1. 2. 3. 4. social responsibility positioning marketing mix commercialization

Chapter 2-slide 62

Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________.
1. 2. 3. 4. social responsibility positioning marketing mix commercialization

Chapter 2-slide 63

International Product and Service MarketingChallenges

Determining what products an services to introduce in which countries Standardization versus customization Packaging and labeling Customs, values, laws
Chapter 2-slide 64

Stephan Langdon, MBA, M Ed