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Chapter 10

Chapter 10. Strategies for New Products and the Product Life Cycle. Objectives. Define “newness” ID elements of successful new products Overview stages of new product development Understand possible reasons for new product failure Introduce the product life cycle. Objectives - cont’d.

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Chapter 10

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  1. Chapter 10 Strategies for New Products and the Product Life Cycle

  2. Objectives • Define “newness” • ID elements of successful new products • Overview stages of new product development • Understand possible reasons for new product failure • Introduce the product life cycle

  3. Objectives - cont’d • Relate new product diffusion to consumer adoption patterns • ID ways to modify existing products • Explore total quality management • Review product line management • Discuss ethical considerations of product strategy

  4. Management Perspectives on “New” Products • New-to-the-world • Product category extensions • Product line extensions • Product modifications

  5. Dynamically Continuous Innovation Discontinuous Innovation Continuous Innovation Ongoing alteration Breakthrough Major change Consumers’ Perspectives on “New” Products

  6. New Products That Fail After Introduction New Products That Succeed 80%: New Product Ideas That Fail New Product Failures

  7. Characteristics of Success • Relative advantage • Lower costs • Faster • Easier • Longer lasting • More fun

  8. Characteristics of Success • Compatibility with existing habits and behaviors

  9. Sample size Demo days Characteristics of Success • Trialability • Easily tested • Low risk • Inexpensive • No special equipment • Free samples or coupons

  10. Characteristics of Success • Observability • Visible cues • Communicate hidden qualities

  11. Characteristics of Success • Simplicity • User friendly • Understandable • Logical extension • Easy to grasp

  12. New Product Development IDEA GENERATION SCREENING BUSINESS ANALYSIS DEVELOPMENT COMMERCIALIZATION NEW PRODUCT

  13. New Product Development • Idea generation • Ongoing • ID target market needs • Technology driven • Marketing research • Global vision

  14. New Product Development • Screening • Reasonable • Pertinent • Appropriate • Real consumer need • Magnitude of potential • Corporate criteria / hurdle rates

  15. New Product Development • Business analysis • Qualitative evaluation • Features • Resource needs • Basic marketing plan • Quantitative evaluation • Market demand • Costs • Investment • Competitive activity • Break-even analysis

  16. New Product Development • Product development • Prototype • Total product (packaging, branding, etc.) • Concept Testing • Present product to potential customers • Test Marketing • Field testing • Laboratory testing

  17. New Product Development • Commercialization • Launch decision • Marketing mix • Establish production capacity • Supply chain & partner relationships

  18. New Product Failure • Insufficient superiority or uniqueness • Inadequate/inferior planning • Poor execution • Technical problems • Poor timing

  19. Introduction Growth Maturity Decline Time Product Life Cycle Sales

  20. Product Life Cycle • Introduction • Slow sales • Low revenue • Promote to gain awareness • Varied length

  21. Product Life Cycle • Growth • Increasing sales • Increasing profits • Increasing competition • Product refinement • Profits peak • Promote to create brand preference

  22. Product Life Cycle • Maturity • Sales from increase to decline • Intense competition • Prices and profit margins decrease • Profits often still high

  23. Product Life Cycle • Decline • Falling industry sales & profits • Industry shakeout

  24. TIME Stimulating Adoption • Awareness • Interest • Evaluation • Trial • Adoption

  25. Diffusion Process • INNOVATORS (2.5%) • Venturesome • Inner directed • Risk takers • Younger, better educated & financially stable • Buy during introduction stage

  26. Diffusion Process • Early Adapters (13.5%) • Similar to innovators • Often buy during growth stage • Opinion leaders • Well educated • Important promotional target BUY X

  27. Diffusion Process BUY X • Early & late majority (68%) • mass market • buying cues from early adopters • Average SES • Fairly risk averse OK, we will buy X

  28. Diffusion Process OK, we will buy X. • Laggards • Resist change • Conservative • Like tradition • Nonadopters • Refuse to change If I have to buy it I will. No way!

  29. Product Modification Cost Reductions Total Quality Management Repositioning Strategies to Modify Existing Products

  30. Full Line Strategy Limited Line Strategy Single-Product Strategy Product Line Strategies

  31. Modifying Products for International Markets Standardization Adaptation • Globalization Strategy • Electronics • McDonalds • Customization Strategy • Post-It Notes • Consumer goods

  32. Right to Safety Product Obsolescence Product Ethics Right to be Informed Quality of Life and Ecology

  33. Review • Define “newness” • ID elements of successful new products • Overview stages of new product development • Understand possible reasons for new product failure • Introduce the product life cycle

  34. Review - cont’d • Relate new product diffusion to consumer adoption patterns • ID ways to modify existing products • Explore total quality management • Review product line management • Discuss ethical considerations of product strategy

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