Product Development and Product Life-Cycle Strategies Essay Example

Product Development and Product Life-Cycle Strategies Essay New-Product Development and Product Life-Cycle Strategies Based on: Philip Kotler et al. , Principles of Marketing International Marketing Prof. Dr. Thomas Laukamm Objectives Understand how companies find and develop newproduct ideas. Learn the steps in the new-product development process. Know the stages of the product life cycle. Understand how marketing strategies change during the product’s life cycle. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 1 Definition New Product Development Development of original products, product improvements, product modifications, and new brands through the firm’s own R D efforts. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 2 New Product Development Strategy New products can be obtained via acquisition or development. New products suffer from high failure rates. Several reasons account for failure. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 3 Ne w Product Development Strategy New Product Development Process: + Stage 1: Idea Generation †¢ Internal idea sources: RD †¢ External idea sources: Customers, competitors, distributors, suppliers Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 4 New Product Development Strategy New Product Development Process: + Stage 2: Idea Screening †¢ Product development costs increase substantially in later stages. †¢ Ideas are evaluated against criteria; most are eliminated. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 5 New Product Development Strategy New Product Development Process: + Stage 3: Concept Development and Testing †¢ Product concepts provide detailed versions of new product ideas. Concept tests ask target consumers to evaluate product concepts. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 6 New Product Development Strategy New Product Development Process: + Stage 4: Marketing Strategy Development †¢ Strategy statements describe: The target market, product positioning, and sales, share, and profit goals for the first few years. Product price, distribution, and marketing budget for the first year. Long-run sales and profit goals and the marketing mix strategy. Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm New Product Development Strategy New Product Development Process: + Stage 5: Business Analysis We will write a custom essay sample on Product Development and Product Life-Cycle Strategies specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Product Development and Product Life-Cycle Strategies specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Product Development and Product Life-Cycle Strategies specifically for you FOR ONLY $16.38 $13.9/page Hire Writer †¢ Sales, cost, and profit projections + Stage 6: Product Development †¢ Prototype development and testing Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 8 New Product Development Strategy New Product Development Process: + Stage 7: Test Marketing †¢ Standard test markets †¢ Controlled test markets †¢ Simulated test markets + Stage 8: Commercialization Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 9 Product Life-Cycle Strategies The Typical Product Life Cycle (PLC) Has Five Stages + Product Development, Introduction, Growth, Maturity, Decline + Not all products follow this cycle: †¢ Fads †¢ Styles †¢ Fashions Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 10 Product Life-Cycle Strategies The product life cycle concept can be applied to a: + Product class (soft drinks) + Product form (diet colas) + Brand (Diet Dr. Pepper) †¢ Using the PLC to forecast brand perform ance or to develop marketing strategies is problematic Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 11 Product Life-Cycle Strategies PLC Stages Product development Introduction Growth Maturity Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 12 Product Life-Cycle Strategies PLC Stages Product development Introduction Growth Maturity Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 13 Marketing Strategies: Introduction Stage Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 14 Product Life-Cycle Strategies PLC Stages Product development Introduction Growth Maturity Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 15 Marketing Strategies: Growth Stage Product – Offer product extensions, service, warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 16 Product Life-Cycle Strategies PLC Stages Product development Introduction Growth Maturity Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 17 Marketing Strategies: Maturity Stage Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 18 Product Life-Cycle Strategies PLC Stages Product development Introduction Growth Maturity Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 19 Marketing Strategies: Decline Stage Product – Phase out weak items Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level Fach, Dozent, Semester International Marketing Prof. Dr. Thomas Laukamm 20