save time and increase effectiveness. So instead of passing the new product from department to department the company assembles a team of people from various departments that work on the new product from start to finish. Such teams usually include the marketing, finance, design, manufacturing, legal department and even supplier and customer companies. iii. Systematic New Product Development New product development process should be holistic (all- inclusive) and systematic rather than compartmentalized. A company can install an innovation management system to collect, review, evaluate and manage new product ideas. The company can appoint a respected senior person to be the company’s innovation manager. It can then set up a system and encourage all company stakeholders-employees, suppliers, distributors, dealers to become involved in finding and developing new products. It can assign a cross functional committee to evaluate proposed new product ideas and help bring good ideas to market. It can also create recognition programmes to reward those who contribute the best ideas. Successful new product development requires a 5
whole company commitment. Therefore, companies must create a culture that encourages, supports and rewards innovation. PRODUCT LIFE-CYCLE (PLC) STRATEGIES The Product Life Cycle (PLC) has five distinct stages: 1. Product development begins when the company finds and develops a new product idea. During product development, sales are zero and the company’s investment costs mount. 2. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. 3. Growth is a period of rapid market acceptance and increasing profits. 4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing expenditures to defend the product against competition. 5. Decline is the period when sales fall and profits drop. It is important to note that not all products follow all the five stages of the PLC. Some products are introduced quickly, others stay in the maturity stage for a long time; some enter the decline stage and are then cycled back into the growth through strong promotions and reposition. It seems well managed brand can live forever. Coca-Cola, Gillette, Colgate and American Express are still going strong after 100 years. 1) Introduction stage The introduction stage starts when a new produckt is first launched. It is a PLC stage in which a new product is first distributed and made available for purchase. Introduction takes time and sales growth is said to be slow. In this stage as compared to other stages, profits are negative and low because of the low sales and high distribution and promotion expenses.
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- Spring '19
- Mrs. Priscilla Kunda
- Marketing, new product development