New Product Development and Product Life-Cycle Strategies

1. New Product Development and Product Life-Cycle Strategies

2. New product development (NPD): the development of: Original products (“new-to-the world”), Product modifications Product category extensions Product line extensions through the firm’s own R&D efforts New products can also come from acquisition of other companies, patents, or licenses New Product Development • NPD is important to: • Follow changing market demands • Remain competitive • Keep up to changing technology • Replace dying products • Diversify product offering to reduce risk

3. Dynamically Continuous Innovation Discontinuous Innovation Continuous Innovation Ongoing alteration Breakthrough Major change Consumers’ perspectives on Newness (Exhibit 10-1, page 255)

4. Did your mother make you drink milk when you were young? Do you still drink it today? If you do not, what happened to make you stop? For many, a sign of maturity was when you could order something to drink other than milk at a restaurant. Sodas, water, juices, and just about any other liquid has had greater appeal for children for several decades. This may, however, be about to change if Mac Farms of Burlington, Vermont has anything to say about it. Responding to research efforts on what kids like to drink, Mac Farms has developed E-Moo. E-Moo is a carbonated, milk-based product that is designed to give a healthy alternative to sodas. E-Moo may just make it “cool” to drink milk. E-Moo is loaded with vitamins, low in cholesterol and sodium, and comes in three flavors—Orange Creamsicle, Bubble Gum, and Raspberry. Is this a drink for the children born to the Internet age?. What about P.B. Slices?

5. Amount of investment Idea generation - Stages inNew Product Development Idea screening Business analysis Product development Commercialization + Figure 9-1

6. Investment in NPD is large, $1.5 billion on the Mach3 razor system, with 35 patents Company employees shave at work as part of new product testing Same attitude towards innovation applies to promotional efforts New Product Development at Gillette • Founded in 1901, its success has been driven by new product innovation, to remain competitive • Dominates razor and blade markets, but also competes in batteries, toiletries, cosmetics, stationery products, dental care, and electrical appliances • Company-wide culture that supports innovation

7. Characteristics of Success • Relative Advantage • Compatibility with Existing Consumption Patterns • Trialability – The Opportunity for Buyer Testing • Observability – The Chance to See the Newness • Simplicity of Usage Blu-Ray

8. Question #3. • Yoplait’s recent entry in the highly competitive $2 billion a year yogurt market—a tubular yogurt called Go-Gurt—seems to be a hit with the lunchbox set. Why tubular yogurt? Children like yogurt but are not impressed with it. Some believe yogurt is “old people food.” Not so with Go-Gurt. With flavors like Chill-Out Cherry and Rad Raspberry, Go-Gurt can be eaten like regular yogurt, frozen like a frozen pop, or carried in a shirt pocket. • see http://www.yoplait.com/products_gogurt.aspx • Can this product be expanded to an adult market? Devise a plan for testing the product concept for 25 to 45 year-old adults. • What factors would be critical to your test? What types of test subjects would you want for your test?

9. Why do new products fail? • Insufficient superiority or uniqueness • Inadequate/inferior planning • Poor execution • Technical problems • Poor timing

10. New Product Adoption Processes • Awareness • Interest • Evaluation • Trial • Adoption

11. The diffusion process(EXHIBIT 10-7, PAGE 272)

12. Sales Profit ($) Sales Profits Loss ($) Development Introduction Growth Maturity Decline Product Life-Cycle Strategies Figure 9-2

13. Alternative PLC Curves Examples of fads?

14. Summary of PLC/Marketing Mix

15. Maturity Stage Strategy • Modify the market. • Increase the consumption of the current product (eg. Baking soda, Bounce) • Modify the product • Changing characteristics such as quality, features or style to attract new users and to inspire more usage (eg. Tide, Crayola) • Modify the marketing mix • Improving sales by changing one or more marketing mix elements.