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Introduction To Marketing, Chapter 8 Notes

Chapter 8 discusses the importance of continuous product development and managing the product life cycle (PLC) to adapt to changing consumer preferences. It outlines the PLC stages and emphasizes the need for systematic new product development processes, including idea generation and screening. Companies like Google and LEGO exemplify successful innovation and life cycle management strategies that enhance customer satisfaction and market relevance.

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Ema Vesterová
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5 views3 pages

Introduction To Marketing, Chapter 8 Notes

Chapter 8 discusses the importance of continuous product development and managing the product life cycle (PLC) to adapt to changing consumer preferences. It outlines the PLC stages and emphasizes the need for systematic new product development processes, including idea generation and screening. Companies like Google and LEGO exemplify successful innovation and life cycle management strategies that enhance customer satisfaction and market relevance.

Uploaded by

Ema Vesterová
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 8: Developing New Products and Managing the Product Life Cycle

Overall Summary
Continuous Product Development: Companies must continually develop and manage new products to
remain vital. Products go through various stages, similar to living organisms, and must be adapted to
changing consumer preferences. This adaptability is crucial in a fast-paced market where consumer
needs evolve rapidly.

Product Life Cycle (PLC): The PLC consists of five distinct stages: introduction, growth, maturity, and
decline. Each stage presents unique challenges and opportunities for marketing management.
Understanding these stages helps companies strategize effectively to maximize product success.

Modification Strategies: Companies can modify the product, market, or marketing mix to sustain rapid
market growth and increase profits. However, they must consider the trade-off between achieving high
market share and maintaining high current profit margins. This balance is essential for long-term
sustainability.

Customer-Centered Development: Companies like Google and Apple have successfully implemented
customer-centered new product development. They focus on finding innovative ways to solve customer
problems and create more satisfying experiences. This approach not only enhances customer loyalty
but also drives sales.

Google's Innovation Process: Google is renowned for its innovation process, which produces new
product "moonshots." These are ambitious projects that, if successful, could significantly change how
people live. The speed of Google's new product development process allows it to stay ahead of
competitors.

New Product Development Process: The new product development process consists of eight sequential
stages: idea generation, idea screening, product concept development, concept testing, marketing
strategy development, business analysis, product development, and commercialization. Each stage is
critical for ensuring that only the most viable ideas move forward.

Life Cycle Management: Companies like L'Oréal and LEGO have effectively managed the life cycle of
their products by adapting to changing consumer preferences and introducing new products. This
proactive management is key to maintaining market relevance.

Business Analysis Importance: Business analysis is a crucial step in the new product development
process. It helps firms evaluate the feasibility and potential success of a product idea by analyzing
market trends, customer needs, and the competitive landscape.

R-W-W Framework: Companies can use the R-W-W (real, win, worth doing) new product screening
framework to evaluate product ideas. This framework considers market demand, competition, and
potential revenue, helping companies prioritize their development efforts.

Key Points

New Product Development


Importance of New Products: New products are essential for both customers and companies. They bring
new solutions and variety to customers' lives while serving as a key source of growth for companies in
today's fast-changing environment. The introduction of innovative products can rejuvenate a brand and
attract new customers.
Challenges of Innovation: Innovation can be expensive and risky. Statistics show that 95% of new
products fail due to various reasons, including overestimating market size, poorly designed products,
incorrect positioning, and ineffective marketing strategies. Companies must be aware of these risks and
develop robust strategies to mitigate them.
Systematic Development Process: Companies must establish a systematic new product development
process, starting with idea generation through internal and external sources. This includes gathering
insights from customers, competitors, distributors, and suppliers to ensure a comprehensive
understanding of market needs.

Idea Generation
Internal Sources: Internal idea sources include formal R&D departments, innovation centers, and
employee-driven initiatives. For example, Google's Area 120 allows employees to pitch new product
ideas, fostering a culture of innovation. Companies like Ford and Chick-fil-A also utilize innovation
centers to explore new solutions.
External Sources: External idea sources encompass distributors, suppliers, competitors, trade
magazines, and crowdsourcing programs. Engaging with customers directly can yield valuable insights.
For instance, Salesforce's IdeaExchange invites customers to share and vote on new software features,
enhancing customer engagement and satisfaction.
Purpose of Idea Generation: The goal of idea generation is to create a large pool of ideas. Subsequent
stages aim to refine this pool, developing only the best ideas into profitable products. This systematic
approach increases the likelihood of successful product launches.

New Product Development Process


Idea Generation: Systematic search for new product ideas from various sources.
Idea Screening: Evaluating new product ideas against criteria to eliminate poor options early in the
process.
Concept Development and Testing: Transforming an attractive idea into a detailed product concept and
testing it with target consumers to gauge interest and viability.
Marketing Strategy Development: Crafting an initial marketing strategy that outlines the target market,
value proposition, and sales goals.
Business Analysis: Reviewing sales, costs, and profit projections to assess the product's financial
viability.
Product Development: Developing the product concept into a physical product, ensuring it meets
consumer needs and expectations.
Test Marketing: Testing the product and its marketing program in realistic market settings to gather
feedback and make necessary adjustments.
Commercialization: Launching the new product into the market, which involves significant investment
in marketing and distribution.

Product Life Cycle (PLC)


Stages of the PLC: The PLC consists of five stages: product development, introduction, growth,
maturity, and decline. Each stage requires different marketing strategies and tactics to maximize
product success.
Marketing Strategies: Companies must adapt their marketing strategies as products move through the
PLC. For example, during the introduction stage, the focus is on building awareness, while in the
maturity stage, companies may need to defend their market share against competitors.
Innovation and Adaptation: Continuous innovation is essential for companies to thrive. Brands like
Coca-Cola and LEGO have successfully navigated the PLC by introducing new products and refreshing
existing ones to maintain consumer interest.

Managing the Product Life Cycle


Modification Strategies: Companies can modify the product, market, or marketing mix to sustain
growth. For instance, L'Oréal repositioned its makeup brand to appeal to younger consumers by
introducing a wider variety of colors and leveraging social media marketing.
Successful Management Examples: LEGO's focus on core products and innovative collaborations has
helped it remain competitive. By adapting to consumer preferences and trends, LEGO has successfully
revitalized its brand.

Social Responsibility and International Marketing


Public Policy Considerations: Marketers must consider public policy issues and regulations regarding
product quality, safety, and warranties. This is particularly important in industries with strict regulatory
requirements.
International Marketing Challenges: International marketers face challenges in deciding how much to
standardize or adapt their offerings for global markets. For example, McDonald's adapts its menu to
local tastes, demonstrating the importance of cultural sensitivity in marketing strategies.

Key Terms
New Product Development: The process of developing original products, product improvements, and
new brands.
Idea Generation: The systematic search for new product ideas.
Crowdsourcing: Inviting broad communities into the new product innovation process.
Product Life Cycle (PLC): The course of a product's sales and profits over its lifetime.
R-W-W Framework: A new product screening framework that assesses whether a product is real, can
win, and is worth pursuing.

Takeaways
Continuous Innovation: Companies must prioritize continuous innovation to thrive in competitive
markets. This involves not only developing new products but also refreshing existing ones to meet
changing consumer needs.

Systematic Approach: A systematic approach to new product development can significantly increase
the chances of success. Companies should invest in research and development, engage with
customers, and utilize data-driven decision-making.

Understanding Customer Needs: Understanding customer needs and preferences is crucial for
developing products that resonate with the market. Companies that actively involve customers in the
development process often see higher success rates.

Proactive Life Cycle Management: Companies must be proactive in managing the life cycles of their
products. This includes regularly assessing market trends, consumer preferences, and competitive
dynamics to ensure long-term viability and profitability.

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