Instructor: Rahma Akhter

Chapter Nine
NEW-PRODUCT DEVELOPMENT AND PRODUCT LIFE-CYCLE STRATEGIES
New-Product Development and Product Life-Cycle
Strategies Topic Outline

► New-Product Development Strategy

► New-Product Development Process
► Managing New-Product
Development
► Product Life-Cycle Strategies
► Additional Product and Service
Considerations
New-Product Development Strategy
Two ways to obtain new products

Acquisition refers to the buying of a whole

company, a patent, or a license to produce
someone else’s product

New product development refers to original

products, product improvements, product
modifications, and new brands developed
from the firm’s own research and
development
New-Product Development Process
Major Stages in New-Product Development
New-Product Development Process
Idea Generation

Idea generation is the systematic

search for new-product ideas
Sources of new-product ideas
► Internal
► External
New-Product Development Process
Idea Generation

Internal sources refer to the

company’s own formal research
and development, management
and staff, and intrapreneurial
programs
External sources refer to sources
outside the company such as
customers, competitors,
distributors, suppliers, and
outside design firms
 New-Product Development Process
Crowdsourcing

Inviting broad communities of people—

customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.

Source:https://ideas.lego.com/blogs/a4ae09b6-0d4c-4307-9da8-3ee9f3d368d6/
post/03c2ec05-e60a-4ccd-9d96-13604a7e5a78
 New-Product Development Process
Crowdsourcing

Source:https://fiveminutemarketing.com/2013/08/8-reasons-why-lays-do-us-a- Source: https://digital.hbs.edu/platform-digit/submission/unilever-crowdsourci

flavour-contest-is-brilliant-marketing/ ng-sustainability/
 Activity 1

► Find an example of a crowdsourcing done in Bangladesh which

you think is very creative.
► Give a brief idea about it.
New-Product Development Process
Idea Screening

► Identify good ideas and drop poor ideas

► R-W-W Screening Framework:
► Is it real?
► Can we win?
► Is it worth doing?

Source: https://bloncampus.thehindubusinessline.com/columns/mark
eting-moves/distinguishing-a-good-idea-from-notsogood-ones/article
8332108.ece
 New-Product Development Process
Concept Development and Testing

Product idea is an idea for a possible product that the

company can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
New-Product Development Process
Concept Development and Testing

Concept testing refers to testing new-product concepts with

groups of target consumers
 New-Product Development Process
Marketing Strategy Development

► Marketing strategy development refers to the initial

marketing strategy for introducing the product to the
market
► Marketing strategy statement includes:
►Description of the target market
►Value proposition
►Sales and profit goals
 New-Product Development Process
Marketing Strategy Development

Business analysis involves a review of the sales, costs, and profit

projections to find out whether they satisfy the company’s
objectives
 New-Product Development Process
Marketing Strategy Development
Product development

► Involves the creation and testing of one or

more physical versions by the R&D or
engineering departments
► Requires an increase in investment
► Shows whether the product idea can be
turned into a workable product.
 New-Product Development Process
Marketing Strategy Development

Test marketing is the stage at

which the product and
marketing program are
introduced into more realistic
marketing settings

Provides the marketer with

experience in testing the
product and entire marketing
program before full
introduction
New-Product Development Process
Types of Test Markets

Standard test markets

Controlled test markets
Simulated test markets
 New-Product Development Process
Marketing Strategy Development

► Advantages of simulated test markets

► Less expensive than other test methods
► Faster
► Restricts access by competitors

► Disadvantages
► Not considered as reliable and accurate due to the controlled setting
New-Product Development Process
Marketing Strategy Development

When firms test When firms may not

market test market
• New product with • Simple line
large investment extension
• Uncertainty about • Copy of competitor
product or product
marketing program • Low costs
• Management
confidence
 New-Product Development Process
Marketing Strategy Development

Commercialization is the introduction

of the new product
► When to launch
► Where to launch
► Planned market
rollout
 Managing New-Product Development

Successful new-product development should be:

► Customer centered
► Systematic
► Team-based
 Managing New-Product Development
New-Product Development Strategies

Customer-centered new
product development new
ways to solve customer
problems and create more
customer satisfying
experiences
 Managing New-Product Development
New-Product Development Strategies

Systematic new-product development

innovative development approach that collects,
reviews, evaluates, and manages new-product ideas
► Creates an innovation-oriented culture
► Yields a large number of new-product ideas
 Managing New-Product Development
New-Product Development Strategies

Team-based new-product development Company

departments work closely together in cross-
functional teams, overlapping in the product-
development process to save time and increase
effectiveness
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle Strategies
Product Life Cycle
 Product Life-Cycle Strategies

► Product development
► Sales are zero and investment costs mount
► Introduction
► Slow sales growth and profits are nonexistent
► Growth
► Rapid market acceptance and increasing profits.
► Maturity
► Slowdown in sales growth and profits level off or decline
► Decline
► Sales fall off and profits drop
Product Life-Cycle Strategies
 Product Life-Cycle Strategies

Fads are temporary periods of

unusually high sales driven
by consumer enthusiasm and
immediate product or brand
popularity
 Activity 2

► Cite example of a Style, Fashion and Fad from perspective of Bangladesh.

► Specify the target market and the reason for your choice.
 Product Life-Cycle Strategies
Introduction Stage

► Slow sales growth

► Little or no profit
► High distribution and promotion expense

Types of customers: Innovators/ Early adopters

 Product Life-Cycle Strategies
Growth Stage

► Sales increase
► New competitors enter the market
► Price stability or decline to increase volume
► Consumer education
► Profits increase
► Promotion and manufacturing costs gain economies of
scale

Types of customers: Early Majority

 Product Life-Cycle Strategies
Maturity Stage

► Slowdown in sales
► Many suppliers
► Substitute products
► Overcapacity leads to competition
► Increased promotion and R&D to support sales and
profits

Type of customers: Late majority

 Product Life-Cycle Strategies
Maturity Stage Modifying Strategies

► Market modifying
► Product modifying
► Marketing mix
modifying
 Product Life-Cycle Strategies
Decline Stage

► Maintain the product

► Harvest the product
► Drop the product

Types of consumers: Laggards

 Activity 3

► Find out the stage of product life cycle in which the products belong to.
► Provide proper reason for your choice

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1
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Thanks!
Any questions?