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New ProductDevelopmentandProductLife CycleStrategies Chapter10 10 1 Objectives Understandhowcompaniesfindanddevelopnew productideas Learnthestepsinthenew productdevelopmentprocess Knowthestagesoftheproductlifecycle Understandhowmarketingstrategieschangeduringtheproduct slifecycle 10 2 50billioninprofitsover27yearsEarlynew productdevelopmentreliedheavilyoncopyingthecompetition 4 2billionannuallyinvestedinR D InnovationiscriticaltoMicrosoft sfuturesuccessMuchofR DeffortsareInternetrelatedManynewproductsandservicesareindevelopment Microsoft CaseStudy 10 3 Definition NewProductDevelopmentDevelopmentoforiginalproducts productimprovements productmodifications andnewbrandsthroughthefirm sownR Defforts 10 4 Newproductscanbeobtainedviaacquisitionordevelopment Newproductssufferfromhighfailurerates Severalreasonsaccountforfailure NewProductDevelopmentStrategy 10 5 NewProductDevelopmentProcess Stage1 IdeaGenerationInternalideasources R DExternalideasources Customers competitors distributors suppliers NewProductDevelopmentStrategy 10 6 NewProductDevelopmentProcess Stage2 IdeaScreeningProductdevelopmentcostsincreasesubstantiallyinlaterstages Ideasareevaluatedagainstcriteria mostareeliminated NewProductDevelopmentStrategy 10 7 NewProductDevelopmentProcess Stage3 ConceptDevelopmentandTestingProductconceptsprovidedetailedversionsofnewproductideas Concepttestsasktargetconsumerstoevaluateproductconcepts NewProductDevelopmentStrategy 10 8 NewProductDevelopmentProcess Stage4 MarketingStrategyDevelopmentStrategystatementsdescribe Thetargetmarket productpositioning andsales share andprofitgoalsforthefirstfewyears Productprice distribution andmarketingbudgetforthefirstyear Long runsalesandprofitgoalsandthemarketingmixstrategy NewProductDevelopmentStrategy 10 9 NewProductDevelopmentProcess Stage5 BusinessAnalysisSales cost andprofitprojectionsStage6 ProductDevelopmentPrototypedevelopmentandtesting NewProductDevelopmentStrategy 10 10 NewProductDevelopmentProcess Stage7 TestMarketingStandardtestmarketsControlledtestmarketsSimulatedtestmarketsStage8 Commercialization NewProductDevelopmentStrategy 10 11 TheTypicalProductLifeCycle PLC HasFiveStagesProductDevelopment Introduction Growth Maturity DeclineNotallproductsfollowthiscycle FadsStylesFashions ProductLife CycleStrategies 10 12 Theproductlifecycleconceptcanbeappliedtoa Productclass softdrinks Productform dietcolas Brand DietDr Pepper UsingthePLCtoforecastbrandperformanceortodevelopmarketingstrategiesisproblematic ProductLife CycleStrategies 10 13 ProductLife CycleStrategies ProductdevelopmentIntroductionGrowthMaturityDecline Beginswhenthecompanydevelopsanew productideaSalesarezeroInvestmentcostsarehighProfitsarenegative PLCStages 10 14 ProductLife CycleStrategies ProductdevelopmentIntroductionGrowthMaturityDecline LowsalesHighcostpercustomeracquiredNegativeprofitsInnovatorsaretargetedLittlecompetition PLCStages 10 15 Product OfferabasicproductPrice Usecost plusbasistosetDistribution BuildselectivedistributionAdvertising Buildawarenessamongearlyadoptersanddealers resellersSalesPromotion Heavyexpenditurestocreatetrial MarketingStrategies IntroductionStage 10 16 ProductLife CycleStrategies ProductdevelopmentIntroductionGrowthMaturityDecline RapidlyrisingsalesAveragecostpercustomerRisingprofitsEarlyadoptersaretargetedGrowingcompetition PLCStages 10 17 Product Offerproductextensions service warrantyPrice PenetrationpricingDistribution BuildintensivedistributionAdvertising BuildawarenessandinterestinthemassmarketSalesPromotion Reduceexpenditurestotakeadvantageofconsumerdemand MarketingStrategies GrowthStage 10 18 ProductLife CycleStrategies ProductdevelopmentIntroductionGrowthMaturityDecline SalespeakLowcostpercustomerHighprofitsMiddlemajorityaretargetedCompetitionbeginstodecline PLCStages 10 19 Product DiversifybrandandmodelsPrice SettomatchorbeatcompetitionDistribution BuildmoreintensivedistributionAdvertising StressbranddifferencesandbenefitsSalesPromotion Increasetoencouragebrandswitching MarketingStrategies MaturityStage 10 20 ProductLife CycleStrategies ProductdevelopmentIntroductionGrowthMaturityDecline DecliningsalesLowcostpercustomerDecliningprofitsLaggardsaretargetedDecliningcompetition PLCStages 10 21 Product

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