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211The Environmental Influence and its ManagementCopyright World Education Council4PRODUCT PLANNINGAND SCREENING
212Managing 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, orotherwise 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 whichit is in the text without the prior consent.OBJECTIVESUpon completion of this section, you will be able to:●describe the product development process andstrategies that can be used by an organisation.●illustrate the role product life cycle plays in anorganisation.●understand the strategy applied in each stage of aproduct life cycle.●analyse the product life cycle and plan strategies.
213The Environmental Influence and its ManagementCopyright World Education Council4.0INTRODUCTIONPeter Drucker said that businesses survive due to innovationsand marketing. Accordingly, companies must develop newproducts in order to remain competitive. New product planningis an essential part of marketing. A new product is one that isnew in any way for the company producing it. Marketers mustconsider ethical issues when developing new products andphasing out old ones. Some firms hold back on important newproduct innovations until patents run out on existing products.Other companies plan obsolescence into their products tostimulate sales with “improved” new versions. Managers shouldbe aware that although these strategies are not technically illegal,they may be considered unethical and could cause a negativeconsumer backlash especially if they were products could savelives.New product development is very costly in terms of time, money,and resources. Consumer packaged-goods companies spend anestimated $20 million to develop and introduce a new product.In 1997, there were about 25,000 new consumer packaged goodsin the United States. However, many of these failed – about 80%.Products fail for a variety of reasons. Companies often do notoffer 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 withouta proper marketing plan.A product development strategy provides the framework to orienta company’s development projects as well as its developmentprocess. There is no one right strategy for a company. The strategytakes into account the company’s capabilities (strengths,weaknesses and core competencies), the competition’s capabilities(strengths, weaknesses, core competencies and strategy), marketneeds and opportunities, goals, and financial resources.
214Managing Strategic Marketing (Master of Business Administration)