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Course: BUAD 3010, Fall 2010School: Toledo
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Explainhowcompaniesfindanddevelopnew productideas 2. Chapter8 NewProduct Developmentand ProductLifeCycle Strategies LearningGoals 1. Listanddefinethestepsinthenewproduct developmentprocess 3. Describethestagesoftheproductlifecycle 4. Describehowmarketingstrategieschange duringtheproductslifecycle 92 NewProduct DevelopmentStrategy NewProduct (original,improvements,modifications,new brands)...
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Explainhowcompaniesfindanddevelopnew
productideas
2. Chapter8
NewProduct
Developmentand
ProductLifeCycle
Strategies
LearningGoals
1. Listanddefinethestepsinthenewproduct
developmentprocess
3. Describethestagesoftheproductlifecycle
4. Describehowmarketingstrategieschange
duringtheproductslifecycle
92
NewProduct
DevelopmentStrategy
NewProduct
(original,improvements,modifications,new
brands)
Newproductscanbeobtainedvia
acquisitionordevelopment.
93
Marketing in Action
ModifyingtheProduct
GillettesFusionrazor
combinesaprecision
trimmerblade(onback)
withafivebladeshaving
surface(onfront).The
flexiblecomfortguardand
EnhancedIndicator
Lubrastrip(containing
vitaminEandaloe)
enhanceshavingcomfort.
http://www.gillette.com/homepage.asp
Copyright 2007,
Prentice-Hall Inc.
8-4
NikeacquiredConversein2003
for$305million
Marketing in Action
95
P&G Acquires Gillette
Largest acquisition in companys
history
CINCINNATI -- The Procter & Gamble Co. has signed a deal to acquire
100% of The Gillette Co. Gillette, founded in 1901 and headquartered in
Boston, markets a number of category-leading consumer products such
as Gillette
razors and blades including the Mach3 and
Venus brands, Duracell CopperTop batteries, Oral-B
manual and power toothbrushes and Braun shavers and small
appliances.
The transaction is valued at approximately $57 billion, making it the
largest acquisition in P&G history.
Source: CSP Daily News, January 31, 2005
Marketing in Action
9
96
NewProduct
DevelopmentStrategy
Newproductssufferfromhigh
failurerates.
Only10%ofnewconsumerproducts
arestillonthemarketandprofitable
after3years.
Industrialproductsfailurerateashigh
as30%.
Whydosomanyproductsfail?
Crystal Pepsi Commercial
97
jumbo bathtubs.
Wouldyoudineinthisplace?
Marketing in Action
9
98
LearningGoals
1. Explainhowcompaniesfindanddevelopnew
productideas
2. Listanddefinethestepsinthenewproduct
developmentprocess
3. Describethestagesoftheproductlifecycle
4. Describehowmarketingstrategieschange
duringtheproductslifecycle
99
StagesoftheNewProduct
DevelopmentProcess
910
StagesoftheNewProduct
DevelopmentProcess
Stage1:IdeaGeneration
Internalideasources:
R&D,anyemployee
Externalideasources:
Customers,competitors,distributors,
suppliers
911
StagesoftheNewProduct
DevelopmentProcess
Stage2:IdeaScreening
Productdevelopmentcostsincrease
substantiallyinlaterstagessopoor
ideasmustbedropped
Ideasareevaluatedagainstcriteria;
mostareeliminated
912
StagesoftheNewProduct
DevelopmentProcess
Stage3:ConceptDevelopmentand
Testing
Conceptdevelopmentcreatesa
detailedversionoftheideastatedin
meaningfulconsumerterms.
Aconceptisawrittendescriptionof
theproduct
Concepttestingaskstarget
consumerstoevaluateproduct
concepts.
913
StagesoftheNewProduct
DevelopmentProcess
Stage4:MarketingStrategy
Development
Thetargetmarket,productpositioning,
andsales,share,andprofitgoalsforthe
firstfewyears.
Productprice,distribution,andmarketing
budgetforthefirstyear.
Longrunsalesandprofitgoalsandthe
marketingmixstrategy.
914
Marketing in Action
MarketingStrategyStatement
foraFuelCell=PoweredCar
Thetargetmarketisyounger,welleducated,
moderatetohighincomeindividuals,couples,or
smallfamiliesseekingpractical,environmentally
responsibletransportation.
Thecarwillbepositionedasmoreeconomicalto
operate,morefuntodrive,andlesspollutingthan
todaysinternalcombustionengineorhybridcars.It
isalsolessrestrictingthanbatterpoweredelectric
cars,whichmustberechargedregularly.
Thecompanywillaimtosell100,000carsinthefirst
year,atalossofnotmorethan$15million.Inthe
secondyear,thecompanywillaimforsalesof120,000
carsandaprofitof$25million.
815
StagesoftheNewProduct
DevelopmentProcess
Stage5:BusinessAnalysis
Sales,cost,andprofitprojections
againstcompanygoals
Stage6:ProductDevelopment
Prototypedevelopmentandtesting
Video Snippet
eGo bikes developed
prototypes which were
subjected to product
testing by consumers.
916
StagesoftheNewProduct
DevelopmentProcess
Stage7:TestMarketing
Standardtestmarkets
Controlledtestmarkets
Simulatedtestmarkets
After test marketing the Go Active
meal (an adult happy meal) in 150
markets in Indiana, McDonalds
decided to sell it across the U.S.
Stage8:Commercialization
Dodge Commercial
917
ProductLaunch
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
LearningGoals
1. Explainhowcompaniesfindanddevelopnew
productideas
2. Describethestagesoftheproductlifecycle
4. Listanddefinethestepsinthenewproduct
developmentprocess
3. Describehowmarketingstrategieschange
duringtheproductslifecycle
919
StagesofthePLC
920
ProductLifeCycleStrategies
Theproductlifecycleconceptcan
beappliedtoa:
Productclass(softdrinks)
Productform(dietcolas)
Brand(DietDr.Pepper)
UsingthePLCtoforecastbrand
performanceortodevelopmarketing
strategiesisproblematic
921
AlternativeProduct
LifeCycles
9
922
LearningGoals
1. Explainhowcompaniesfindanddevelopnew
productideas
2. Listanddefinethestepsinthenewproduct
developmentprocess
3. Describethestagesoftheproductlifecycle
4. Describehowmarketingstrategieschange
duringtheproductslifecycle
923
StagesofthePLC
924
ProductLifeCycleStrategies
PLCStages
Productdevelopment
Introduction
Growth
Maturity
Decline
Beginswhenthe
companydevelopsa
newproductidea
Salesarezero
Investmentcostsare
high
Profitsarenegative
925
ProductLifeCycleStrategies
PLCStages
Productdevelopment
Introduction
Growth
Maturity
Decline
Lowsales
Highcostper
customeracquired
Negativeprofits
Innovatorsare
targeted
Littlecompetition
926
MarketingStrategies:
IntroductionStage
ProductOfferabasicproduct
PriceUsecostplusbasistosetprice
DistributionBuildselectivedistribution
AdvertisingBuildawarenessamong
earlyadoptersanddealers/resellers
SalesPromotionHeavyexpendituresto
createtrial
927
StagesofthePLC
Figure9.2
928
ProductLifeCycleStrategies
PLCStages
Productdevelopment
Introduction
Growth
Maturity
Decline
Rapidlyrisingsales
Averagecostper
customer
Risingprofits
Earlyadoptersare
targeted
Growing
competition
929
MarketingStrategies:
GrowthStage
ProductOfferproductextensions,service,
warranty,improveproductquality
PricePenetrationpricing
DistributionBuildintensivedistribution
AdvertisingBuildawarenessandinterestin
themassmarket
SalesPromotionReduceexpenditurestotake
advantageofconsumerdemand
930
StagesofthePLC
931
ProductLifeCycleStrategies
PLCStages
Productdevelopment
Introduction
Growth
Maturity
Decline
Salespeak
Lowcostper
customer
Highprofits
Middlemajorityare
targeted
Competitionbegins
todecline
932
MarketingStrategies:
MaturityStage
ProductDiversifybrandandmodels
PriceSettomatchorbeatcompetition
DistributionBuildmoreintensivedistribution
AdvertisingStressbranddifferencesand
benefits
SalesPromotionIncreasetoencouragebrand
switching
933
MaturityStageofPLC
Modifyingthe
MarketingMix:
Improvingsalesby
changingoneor
moremarketing
mixelements.
How?
Onemethodisto
launchaggressive
salespromotion
programs,suchas
rebates.
Copyright 2007,
Prentice-Hall Inc.
8-34
StagesofthePLC
935
ProductLifeCycleStrategies
PLCStages
Productdevelopment
Introduction
Growth
Maturity
Decline
Decliningsales
Lowcostper
customer
Decliningprofits
Laggardsare
targeted
Declining
competition
936
MarketingStrategies:
DeclineStage
ProductPhaseoutweakitems
PriceCutprice
DistributionUseselectivedistribution:phase
outunprofitableoutlets
AdvertisingReducetolevelneededtoretain
hardcoreloyalists
SalesPromotionReducetominimallevel
937
StagesofthePLC
Figure9.2
938
ThematuritystageofthePLC
LowdoseAspirinAd
BabyAspirinhas
beeninthedecline
stageforover10
yearsafter
discoverythatit
mayhave
dangerousside
effectsforchildren.
Recentlyithasbeen
discoveredit
helpingtoprevent
heartattacksin
adultsandisnow
marketedtothis
newtarget.
Marketing in Action
Click on screenshot for
website with products
940
Whichstageof
thePLC?
Howdoyou
know?
Product
development
Introduction
Growth
Maturity
Decline
Marketing in Action
941
Whichstageof
thePLC?
Howdoyou
know?
Product
development
Introduction
Growth
Maturity
Decline
Marketing in Action
942
Whichstageof
thePLC?
Howdoyou
know?
Product
development
Introduction
Growth
Maturity
Decline
Marketing in Action
943
Howcan
marketershelp
productsbounce
backfromthe
declinestage?
944
MarketingStrategyinAction
Fordhasbeencreativeinrestylingthe2005Mustangwith
retrostylingcuestokeepthemodelviabledespite
decreasinginterestinmusclecars.
745
LearningGoals
1. Explainhowcompaniesfindanddevelopnew
productideas
2. Listanddefinethestepsinthenewproduct
developmentprocess
3. Describethestagesoftheproductlifecycle
4. Describehowmarketingstrategieschange
duringtheproductslifecycle
946
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LECTURE 13GAUSSIAN ELIMINATION PART 1Any augmented matrix may be reduced to echelon form via the elementary rowoperationsRi = Ri RjandRi RjOnce in echelon form the system may be solved via back-substitution.We will now develop an extremely eective
UNSW - MATH1151 - 1151
LECTURE 14GAUSSIAN ELIMINATION PART 2Any Augmented matrix may be reduced to echelon form via the row operationsRi = Ri RjandWe can pivot o above to killRi Rjbelow by using Ri = Ri Rj .Once in echelon form the system may be solved via back-substitu
UNSW - MATH1151 - 1151
LECTURE 15GAUSSIAN ELIMINATION PART 3 (INFINITE SOLUTIONS)An inconsistent equation at any stage of reduction indicates that there is nosolution and you may stop. ElseIf every column on the LHS is a leading column then the solution is unique. ElseThe
UNSW - MATH1151 - 1151
LECTURE 16GAUSSIAN ELIMINATION APPLICATIONSWhen setting up a modeling Gaussian Elimination question make sure that allyour variables are declared.Remember that systems are most likely to have unique solutions but can also haveno solution (inconsisten