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marketing chapter 31 - Chapter 8 New-Product Development...

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Chapter 8 New-Product Development and Product Life-Cycle Strategies Previewing the Concepts: Chapter Objectives 1. Explain how companies find and develop new-product ideas. 2. List and define the steps in the new-product development process. 3. Describe the stages of the product life cycle. 4. Describe how marketing strategies change during the product’s life cycle. J UST THE B ASICS Chapter Overview For companies to succeed, they must be constantly developing new products and services. Even a company as well-known in the marketplace as Apple Computer must constantly innovate. Firms can either acquire new products through buying a whole company, a patent, or a license to produce a product, or through internal development in their own research and development department. New-product development should be a systematic process; this can lessen the probability of failure. New products fail at an alarming rate. It is estimated that 95% of all new products fail. To avoid that fate, companies follow a new product development process, which includes idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization. As each step is accomplished, a firm go/no go decision is made as to whether to continue. This is done because as each successive stage is passed, new product development costs increase. Therefore, it makes sense to cut the product development process short if it appears the product will not be a success in the marketplace. All products follow a life cycle. Some go through the cycle quickly, others can take many years. The standard product life cycle (PLC) includes the phases of introduction, growth, maturity, and decline. The PLC concept can describe a product class, a product form, or a brand. Most products are in the mature stage of the PLC. Chapter Outline 1. Introduction a. Apple Computer, an early product innovator, got off to a fast start, but only a decade later, as its creative fires cooled, Apple was on the brink of 181
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extinction. This set the stage for one of the most remarkable turnarounds in corporate history. b. By the mid- to late-nineties, Apple’s sales had plunged 50 percent, yet by 2005 Apple had engineered a turnaround. Apple rediscovered the magic that had made the company so successful in the first place: dazzling creativity and customer-driven innovation. c. The first task was to revitalize Apple’s computer business by launching the iMac, which won raves for design and lured buyers in droves. The Mac OS X was unleashed, a ground-breaking new operating system which served as the launching pad for a new generation of Apple computers and software products. d. Then Apple introduced the iPod, a tiny computer with an amazing capacity to store digital music, one of the greatest consumer electronics hits of all time. By January 2005, Apple had sold 10 million iPods. As the Apple story suggests, a company has to be good at developing and managing new products. Every product goes through a product life cycle.
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