Marketing 2-27-18.docx - New Product Development and the PLC How do companies develop new products How can companies • What happens with a new product

Marketing 2-27-18.docx - New Product Development and the...

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New Product Development and the PLC How do companies develop new products? How can companies • What happens with a new product once it has been launched? • The diffusion of innovation model • The product life cycle model The Strategic Opportunity Matrix Existing Products New Products Existing customers/ markets Market Penetration Product Development New customers/ markets Market Development Diversification Types of New Products “New to the World” products New product lines Additions to existing product lines New brands Changes to existing products Repositioned products The higher up in the hierarchy the more risk. New Product Development Process Idea generation Idea screening Business analysis Development Test marketing Commercialization New product launch Better ideas Ideas Ideas Idea Ideas Generation R&D Employees Consultants Distributors (sell our products) Competitors (develop similar products) Customers What Happens with Ideas? • Idea screening – goal: reducing the number of ideas (first step) • Which ideas do consumers like and fit our company?
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• Concept test - consumer reactions to descriptions of the product idea ( Cheaper than making actual products) • When may concept tests be less meaningful? Limitation: Are consumers able to understand the product just by reading about it. Works with more in line with our reality products not innovative idea. Business Analysis Will it be profitable to make and sell the product? o What is the total size of the market? o What’s the likely market share? o What’s the manufacturing cost and unit contribution? o How much do we need to spend on the marketing launch? o Potential loss of revenue due to cannibalization? Development • Develop a Prototype of the actual product • Develop packaging, labeling, etc. • Planning other elements of the marketing mix • Advertising • Pricing • What channels to use? • Simultaneous product development more efficient Like A relay and downside is that it would take more time.
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