9-Principles of marketing.ppt (721Kb)
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Chapter
9
Chapter9 New Product Development and Product Life-Cycle Strategies PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong
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New-Product Development Strategies New-Product Development Strategies
Original Products Original Products Product Improvements Product Improvements Product Modifications Product Modifications New Brands New Brands Acquired Companies Acquired Companies Acquired Patents Acquired Patents Acquired Licenses Acquired Licenses Strategies for Obtaining New Product Ideas
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Causes of New Product Failures
Causes of New Product Failures
- Overestimation of Market Size
- Product Design Problems
- Product Incorrectly Positioned, Priced or Advertised
- Costs of Product Development
- Competitive Actions
- To create successful new products, the company must:
- – understand it’s customers, markets and competitors
- –
develop products that deliver superior value to
customers.
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New Product Development Process New Product Development Process
Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization
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New Product Development Process
C U S T O M E R S C U S T O M E R S C O M P E T
I T O R S C O M P E T
I T O R S D
I S T R
I B U T O R S D
I S T R
I B U T O R S S U P P L
I E R S S U P P L
I E R S
New Product Development Process Step 1. Idea Generation
Idea Generation is the Systematic Search for New Product Ideas
Obtained Internally and From:
New Product Development Process Step 2. Idea Screening
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New Product Development Process
Process to spot good ideas and drop poor
ones as soon as possible.- Many companies have systems for rating and screening ideas which estimate:
- – Market Size
- – Product Price
- – Development Time & Costs
- – Manufacturing Costs
- – Rate of Return
Then, the idea is evaluated against a set of
general company criteria.
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New Product Development Process Step 3. Concept Development & Testing
New Product Development Process
1. Develop Product Ideas into Alternative Product Concepts
1. Develop Product Ideas into Alternative Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One
3. Choose the Best One
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New Product Development Process Step 4. Marketing Strategy Development
New Product Development Process
Part Two Describes Short-Term:
Marketing Strategy Statement Formulation
Product’s Planned Price
Distribution
Marketing Budget
Part Two Describes Short-Term:
Product’s Planned Price Distribution Marketing Budget
Part Three Describes Long-Term:
Sales & Profit Goals
Marketing Mix Strategy
Part Three Describes Long-Term:
Sales & Profit Goals
Marketing Mix Strategy
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part One Describes Overall:
Target Market Planned Product Positioning Sales & Profit Goals Market Share
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New Product Development Process Step 5. Business Analysis Step 6. Product Development
New Product Development Process Step 6. Product Development
Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If Yes, Move to Product Development If Yes, Move to Product Development If No, Eliminate Product Concept If No, Eliminate Product Concept
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New Product Development Process Step 7. Test Marketing
New Product Development Process Step 7. Test Marketing
Standard Test Market Full marketing campaign in a small number of representative cities. Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Controlled Test Market A few stores that have agreed to carry new products for a fee. Controlled Test Market A few stores that have agreed to carry new products for a fee.
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New Product Development Process Step 8. Commercialization
New Product Development Process Step 8. Commercialization
When? When? Where? Where? To Whom? To Whom? How? How? Commercialization is the Introduction of the New Product into the Marketplace.
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Speeding Up Development Speeding Up Development
S te p
1 S te p
2 Step 3 Step 4 Sequential
Simultaneous
Step 1 Step 1 Step 2 Step 2 Step 3 Step 3 Step 4 Step 4
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Product Life Cycle Product Life Cycle
Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) Sales and Profits Over the Product’s Life From
Introduction to Decline
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Introduction Stage of the PLC Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Low sales Low sales High cost per customer High cost per customer Negative Negative Create product awareness and trial Create product awareness and trial Offer a basic product Offer a basic product Use cost-plus Use cost-plus
Sales Sales Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price
Build selective distribution Build selective distribution
Distribution Distribution
Advertising Advertising
Build product awareness among early adopters and dealers Build product awareness among early adopters and dealers
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Growth Stage of the PLC Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Rapidly rising sales Rapidly rising sales Average cost per customer Average cost per customer Rising profits Rising profits Maximize market share Maximize market share Offer product extensions, service, warranty Offer product extensions, service, warranty Price to penetrate market Price to penetrate market
Sales Sales Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price
Build intensive distribution Build intensive distribution
Distribution Distribution
Advertising Advertising
Build awareness and interest in the mass market Build awareness and interest in the mass market
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Maturity Stage of the PLC Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Peak sales Peak sales Low cost per customer Low cost per customer High profits High profits Maximize profit while defending market share Maximize profit while defending market share Diversify brand and models Diversify brand and models Price to match or best competitors Price to match or best competitors
Sales Sales Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price
Build more intensive distribution Build more intensive distribution
Distribution Distribution
Advertising Advertising
Stress brand differences and benefits Stress brand differences and benefits
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Decline Stage of the PLC Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Declining sales
Sales
Declining sales
Sales
Low cost per customer
Costs
Low cost per customer
Costs
Declining profits
Profits
Declining profits
Profits
Reduce expenditure and milk the Reduce expenditure and milk the
Marketing Objectives Marketing Objectives
brand brand
Product
Phase out weak items
Product
Phase out weak items Cut price
Price
Cut price
Price
Go selective: phase out Go selective: phase out
Distribution Distribution
unprofitable outlets unprofitable outlets Reduce to level needed to retain Reduce to level needed to retain
Advertising Advertising
hard-core loyal customers hard-core loyal customers