Chap4_SMM - The Environmental Influence and its Management 4 PRODUCT PLANNING AND SCREENING Copyright World Education Council 211 212 Managing Strategic

Chap4_SMM - The Environmental Influence and its Management...

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211 The Environmental Influence and its Management Copyright World Education Council 4 PRODUCT PLANNING AND SCREENING
212 Managing Strategic Marketing (Master of Business Administration) All rights reserved; no part of this text may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is in the text without the prior consent. OBJECTIVES Upon completion of this section, you will be able to: describe the product development process and strategies that can be used by an organisation. illustrate the role product life cycle plays in an organisation. understand the strategy applied in each stage of a product life cycle. analyse the product life cycle and plan strategies.
213 The Environmental Influence and its Management Copyright World Education Council 4.0 INTRODUCTION Peter Drucker said that businesses survive due to innovations and marketing. Accordingly, companies must develop new products in order to remain competitive. New product planning is an essential part of marketing. A new product is one that is new in any way for the company producing it. Marketers must consider ethical issues when developing new products and phasing out old ones. Some firms hold back on important new product innovations until patents run out on existing products. Other companies plan obsolescence into their products to stimulate sales with “improved” new versions. Managers should be aware that although these strategies are not technically illegal, they may be considered unethical and could cause a negative consumer backlash especially if they were products could save lives. New product development is very costly in terms of time, money, and resources. Consumer packaged-goods companies spend an estimated $20 million to develop and introduce a new product. In 1997, there were about 25,000 new consumer packaged goods in the United States. However, many of these failed – about 80%. Products fail for a variety of reasons. Companies often do not offer a unique benefit, or they underestimate the competition. Sometimes a product costs more to develop than expected. Moreover, a product is sometimes rushed onto the market without a proper marketing plan. A product development strategy provides the framework to orient a company’s development projects as well as its development process. There is no one right strategy for a company. The strategy takes into account the company’s capabilities (strengths, weaknesses and core competencies), the competition’s capabilities (strengths, weaknesses, core competencies and strategy), market needs and opportunities, goals, and financial resources.
214 Managing Strategic Marketing (Master of Business Administration)

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