Session7-2_PLC_NPD_students

Session7-2_PLC_NPD_students - Session 7-2 NPD & PLC...

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1 Session 7-2 Ch 10. New-Product Development and Product Life-Cycle Strategies Jooseop Lim Assistant Professor Department of Marketing John Molson School of Business Concordia University Comm 224 Marketing Management / Mark 201 Introduction to Marketing
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2 Agenda New-product development Importance of new-products New-product development process Product life-cycle theory The product Life-cycle PLC warnings & limitations
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“If companies can improve their effectiveness at launching new products, they could double their bottom line. It’s one of the few areas left with the greatest potential for improvement” (Wind 1993). Why are new products essential for organizations? For the long-run survival and health of an organization. 52% of companies’ sales (and 46% of profits) result from products that did not exist 5 years ago. New products are becoming more important 1976-1982 mean # of new product intros = 5 1985-1989 median # of new product intros = 12 1991-1995 median # of new product intros = 20 Importance of New-Product Development
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Some Facts Past studies have found that new products fail in the market around 35-40 percent of the time (Hopkins 1980; Crawford 1979; Page 1993; Cooper 1984) Developing new products is costly and time-consuming Ford Edsel: $250 mil; Boeing’s Sonic Cruiser: $10 bil. Gillette Mach 3 Razor: $1 bil. New product failure is costly and common Iridium Satellite Telephone: -$7 b il; Apple Newton PDA: -$400 mil; Federal Express Zap Mail: -$190 mil; RJR Premiere Cigarette: -$325 mil & an additional loss of $125 mil; RCA Videodisk Player: -$450 mil. Cost of Developing a New Product
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Some Causes of New-product Failures Overestimation of market size Product design problems, Product incorrectly positioned, priced, or advertised, Product may have been pushed despite poor marketing research findings, Costs of product development, or Competitive actions. Predicting New-product Success and Failure The Path to Failure The better mousetrap nobody wanted (28%) The ‘me-too’ product with no competitive advantages (24%). The Road to Success
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Session7-2_PLC_NPD_students - Session 7-2 NPD & PLC...

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