New product development and product life cycle strategies
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New Product Development and Product Life-Cycle Strategies. NPD is a process which designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation. New product development.

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New Product Development and Product Life-Cycle Strategies

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New product development and product life cycle strategies

New Product Development

and

Product Life-Cycle Strategies


New product development

NPD is a process which designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation.

New product development


What is a new product

A product that opens an entirely new market

A product that adapts or replaces an existing product

A product that significantly broadens the market for an existing product

An old product introduced in a new market

An old product packaged in a different way

An old product marketed in a different way

What is a new product ?


Why develop a new product

To add to product portfolio

To create stars and cash cows for the future

To replace declining product

To take advantage of new technology

To defeat rivals

To maintain/increase market share

To keep up with rivals

To maintain competitive advantage

To full gap in the market

Why develop a new product


Types of new products

New to the world products – innovative products

New product lines – to allow the firm to enter an existing market

Addition to product line – to supplement the firm’s existing product line

Improvements and revisions of existing product

Repositioned products – existing products targets at new market

Cost reduction new product that provide similar performance at lower cost

Types of new products


New product planning

This is the strategic stage

The firm assesses

It current product portfolio

Opportunities and threats

The firm then determines the type of product which would best fit in with the corporate strategy

New product planning


New product development process

Idea Generation and Screening

Concept Development and Testing

Marketing Strategy

Business Analysis

Product Development

Test Marketing

Commercialization

New Product Development Process


New product development and product life cycle strategies

New Product Development ProcessStep 1. Idea Generation

Systematic Search for New Product Ideas

Internal sources

Customers

Competitors

Distributors

Suppliers


New product development and product life cycle strategies

Process to spot good ideas and drop poor ones

Criteria

Market Size

Product Price

Development Time & Costs

Manufacturing Costs

Rate of Return

New Product Development ProcessStep 2. Idea Screening


New product development and product life cycle strategies

New Product Development ProcessStep 3. Concept Development & Testing

1. Develop Product Ideas into

Alternative

Product Concepts

2. Concept Testing - Test the

Product Concepts with Groups

of Target Customers

3. Choose the Best One


New product development and product life cycle strategies

New Product Development ProcessStep 4. Marketing Strategy Development

Marketing Strategy Statement Formulation

Part One - Overall:

Target Market

Planned Product Positioning

Sales & Profit Goals

Market Share

Part Two - Short-Term:

Product’s Planned Price

Distribution

Marketing Budget

Part Three - Long-Term:

Sales & Profit Goals

Marketing Mix Strategy


New product development and product life cycle strategies

Business Analysis

Review of Product Sales, Costs,

and Profits Projections to See if

They Meet Company Objectives

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

If No, Eliminate

Product Concept

If Yes, Move to

Product Development


New product development and product life cycle strategies

New Product Development ProcessStep 7. Test Marketing

Controlled

Test Market

A few stores that have

agreed to carry new

products for a fee.

Standard

Test Market

Full marketing campaign

in a small number of

representative cities.

Simulated

Test Market

Test in a simulated

shopping environment

to a sample of

consumers.


Product life cycle

Product Life Cycle

Sales and

Profits ($)

Sales

Profits

Time

Product

Develop-

ment

Introduction

Growth

Maturity

Decline

Losses/

Investments ($)


Introduction stage of the plc

Introduction Stage of the PLC

Sales

Low sales

Costs

High cost per customer

Profits

Negative

Create product awareness

and trial

Marketing Objectives

Product

Offer a basic product

Price

Use cost-plus

Distribution

Build selective distribution

Advertising

Build product awareness among early adopters and dealers


New product development and product life cycle strategies

Growth Stage of the PLC

Sales

Rapidly rising sales

Costs

Average cost per customer

Profits

Rising profits

Marketing Objectives

Maximize market share

Product

Offer product extensions, service, warranty

Price

Price to penetrate market

Distribution

Build intensive distribution

Advertising

Build awareness and interest in the mass market


New product development and product life cycle strategies

Maturity Stage of the PLC

Sales

Peak sales

Costs

Low cost per customer

Profits

High profits

Marketing Objectives

Maximize profit while defending

market share

Product

Diversify brand and models

Price

Price to match or best competitors

Distribution

Build more intensive distribution

Advertising

Stress brand differences and benefits


New product development and product life cycle strategies

Decline Stage of the PLC

Sales

Declining sales

Costs

Low cost per customer

Profits

Declining profits

Marketing Objectives

Reduce expenditure and milk the brand

Product

Phase out weak items

Price

Cut price

Distribution

Go selective: phase out unprofitable outlets

Advertising

Reduce to level needed to retain

hard-core loyal customers


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