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Marketing:AnIntroductionFifteenthEditionChapter8DevelopingNewProductsandManagingtheProductLifeCycleCopyright©2023,2020,2017PearsonEducation,Inc.AllRightsReservedObjectivesOutline(1of2)8.1Explainhowcompaniesfindanddevelopnewproductideas.8.2Listanddefinethestepsinthenewproductdevelopmentprocessandthemajorconsiderationsinmanagingthisprocess.ObjectivesOutline(2of2)8.3Describethestagesoftheproductlifecycleandhowmarketingstrategieschangeduringaproduct’slifecycle.8.4Discusstwoadditionalproductissues:sociallyresponsibleproductdecisionsandinternationalproductandservicesmarketing.FirstStop:GoogleGoogleandparentcompanyAlphabetarewildlyinnovative.Thecompany’sinnovationmachineisrenownedforproducingnewproduct“moonshots,”futuristiclongshotsthat,ifsuccessful,willprofoundlychangehowpeoplelive.ObjectiveOutline8.1Explainhowcompaniesfindanddevelopnewproductideas.NewProductDevelopmentStrategyDevelopingnewproductsthroughthefirm’sownresearchanddevelopmenteffortsCreatingsuccessfulnewproductsrequiresUnderstandingconsumers,markets,andcompetitorsDevelopingproductsthatdeliversuperiorvaluetocustomersObjectiveOutline8.1SummaryNewproductideasfromthefirm’sownresearchanddevelopmenteffortsExternalsourcesincludecompetitor'sofferings,ideasfromdistributorsandsuppliers,aswellascustomersthemselvesCrowdsourcingoropen-innovationnewproductideaprogramsObjectiveOutline8.2Listanddefinethestepsinthenewproductdevelopmentprocessandthemajorconsiderationsinmanagingthisprocess.Figure8.1
MajorStagesinNewProductDevelopmentIdeaGeneration(1of2)SystematicsearchfornewproductideasInternalideasources:InternalsocialnetworksIntrapreneurialprogramsExternalideasources:DistributorsandsuppliersCompetitorsCustomersIdeaGeneration(2of2)Internalnewproductideas:Toencouragecontinuedinternalinnovation,GooglesetupArea120,anin-houseinnovationincubatorthatletsselectedemployeesdevotefulltimetotheirdreamprojects.IdeaScreeningScreeningnewproductideastospotgoodonesanddroppooronesassoonaspossibleWaysofscreeningnewideas:Newideawrite-upreviewedbyacommitteeR-W-Wframework—Real,win,worthdoingProductConceptAproductideaisanideaforapossibleproductthatthecompanycanseeitselfofferingtothemarket.Aproductconceptisadetailedversionofthenewproductideastatedinmeaningfulconsumerterms.Productimageisthewayconsumersperceiveanactualorpotentialproduct.ConceptDevelopment(1of2)Conceptdevelopmentandtesting:ThestrikingHondaJetElitehasarangeof1,653milesandamaximumspeedof486milesperhourandcanaccommodatesevenpeopleincludingthecrew.ConceptDevelopment(2of2)DevelopinganewproductintoalternativeproductconceptsFindouthowattractiveeachconceptistocustomersChoosethebestoneConceptTestingTestingnewproductconceptswithgroupsoftargetconsumersMethods:PresentingtheconceptstoconsumerssymbolicallyorphysicallyAskingcustomerstorespondbyansweringquestionsabouttheirreactionstotheconceptsMarketingStrategyDevelopmentInitialmarketingstrategyforanewproductThreepartsofthemarketingstrategystatement:Describesthetargetmarket,plannedvalueproposition,sales,market-share,andprofitgoalsDeterminesproduct’splannedprice,distribution,andmarketingbudgetDevelopslong-runsales,profitgoals,andmarketingmixstrategyBusinessAnalysisandProductDevelopmentBusinessanalysis:Areviewofthesales,costs,andprofitprojectionsforanewproductTofindoutwhetherthesefactorssatisfythecompany’sobjectivesProductdevelopment:DevelopingtheproductconceptintoaphysicalproductToensurethattheproductideacanbeturnedintoaworkablemarketofferingTestMarketing(1of3)IntroducestheproductanditsproposedmarketingprogramintorealisticmarketsettingsGivesthemarketeranexperiencewithmarketingaproductbeforefullintroductionTeststheproductanditsmarketingprogramTestingtakestime,andcostscanbehigh.TestMarketing(2of3)Companiessometimesshortenorskiptestmarketingtotakeadvantageoffast-changingmarketdevelopments,asStarbucksdidwithitshugelysuccessfulmobilepaymentsapp.TestMarketing(3of3)AlternativestostandardtestmarketsControlledtestmarketsSimulatedtestmarketsReasonsforusingalternativetestmarketsReducingthecostsSpeedinguptheprocessCommercializationIntroducinganewproductintothemarketConsiderationsforlaunchinganewproductWhentolaunchWheretolaunchSinglelocation,region,nationalmarket,orinternationalmarketManagingNewProductDevelopmentRequiresaholisticapproachCustomer-centerednewproductdevelopmentTeam-basednewproductdevelopmentSystematicnewproductdevelopmentCustomer-CenteredNewProductDevelopment(1of2)Customer-centerednewproductdevelopmentfocusesonfindingnewwaystosolvecustomerproblemsandcreatemorecustomer-satisfyingexperiences.Customer-CenteredNewProductDevelopment(2of2)Customer-centerednewproductdevelopment:Targetusedhugeamountsofconsumerinputindevelopingitshighlysuccessfulprivate-labelGood&Gatherall-naturalgroceryproductsline.Team-BasedandSystematicNewProductDevelopmentTeam-basednewproductdevelopmentVariouscompanydepartmentsworktogether,overlappingthestepsintheproductdevelopmentprocess.SystematicnewproductdevelopmentInnovationmanagementsystemscollect,review,evaluate,andmanagenewproductideas.ObjectiveOutline8.2SummaryNewproductdevelopmentprocessincludesIdeageneration,ideascreening,productconceptdevelopmentandtesting,andmarketingstrategydevelopmentBusinessanalysis,productdevelopment,testmarketing,andcommercializationNewproductdevelopmentrequiresacustomer-centered,team-based,systematiceffort.ObjectiveOutline8.3Describethestagesoftheproductlifecycleandhowmarketingstrategieschangeduringaproduct’slifecycle.Figure8.2
SalesandProfitsovertheProduct’sLifefromInceptiontoDeclineFigure8.3Styles,Fashions,andFadsTable8.2(1of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineCharacteristicsBlankBlankBlankBlankSalesLowsalesRapidlyrisingsalesPeaksalesDecliningsalesCostsHighcostpercustomerAveragecostpercustomerLowcostpercustomerLowcostpercustomerProfitsNegativeRisingprofitsHighprofitsDecliningprofitsCustomersInnovatorsEarlyadoptersMiddlemajorityLaggardsCompetitorsFewGrowingnumberStablenumberbeginningtodeclineDecliningnumberMarketing
objectivesBlankBlankBlankBlankBlankCreateproductawarenessandtrialMaximizemarketshareMaximizeprofitwhiledefendingmarketshareReduceexpenditureandmilkthebrandTable8.2(2of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineStrategiesBlankBlankBlankBlankProductOfferabasicproduct
Offerproductextensions,service,andwarrantyDiversifybrandandmodelsPhaseoutweakitemsPriceUsecost-plusPricetopenetratemarketPricetomatchorbeatcompetitorsCutpriceDistributionBuiltselectivedistributionBuildintensivedistributionBuildmoreintensivedistributionGoselective:phaseoutunprofitableoutletsProductLife-CycleStrategiesFads:Dubbedthe“hulahoopofGenZ,”fidgetspinnerstookthepreteenandteenmarketbystorm.However,likemostfads,salesquicklyfizzledasteensmovedontothenextnewthing.Table8.2(3of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineStrategiesBlankBlankBlankBlankAdvertisingBuildproductawarenessamongearlyadoptersanddealersBuildengagementandinterestinthemassmarketStressbranddifferencesandbenefitsReducetolevelneededtoretainhard-coreloyalsSalesPromotionUseheavysalespromotiontoenticetrialReducetotakeadvantageofheavyconsumerdemandIncreasetoencouragebrandswitchingReducetominimallevelSource:BasedonPhilipKotlerandKevinLaneKeller,MarketingManagement,15thed.(UpperSaddleRiver,NJ:PearsonEducation,2016),p.358.©2016.PrintedandElectronicallyreproducedbypermissionofPearsonEducation,Inc.,UpperSaddleRiver,NewJersey.ObjectiveOutline8.3SummaryStagesoftheproductlifecycle:ProductdevelopmentIntroductionstageGrowthstageMaturitystageDeclinestageObjectiveOutline8.4Discusstwoadditionalproductissues:sociallyresponsibleproductdecisionsandinternationalproductandservicesmarketing.ProductDecisionsandSocialResponsibilityConsiderationsforcompaniesPublicpolicyissuesRegulationsregardingacquiringordroppingproductsPatentprotectionProductqualityandsafetyProductwarrantiesInternationalProductandServicesMarketing(1of2)Globalproductadaption:ByadaptingitsmenuandoperationstotheneedsandpreferencesofFrenchconsumersandtheirculture,McDonald’shasturnedFranceintoitssecond-most-profitableworldmarket.InternationalProductandServicesMarketing(2of2)Challengesfacinginternationalmarketers:FindingwhatproductsandservicestointroduceandinwhichcountriesDecidingonho
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