New-Product Development and Product Life-Cycle Strategies
Previewing the Concepts: Chapter Objectives
Explain how companies find and develop new-product ideas.
List and define the steps in the new-product development process.
Describe the stages of the product life cycle.
Describe how marketing strategies change during the product’s life cycle.
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
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.
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