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Chapter 11: Developing and ManagingProducts
Designed & Prepared by Laura Rush
B-books, Ltd.
Introductionto
2
Learning Outcomes
Explain the importance of developing newproducts and describe the six categoriesof new products
Explain the steps in the new-productdevelopment process
Explain why some products succeedand others fail
Discuss global issues in new-productdevelopment
Explain the diffusion process through which newproducts are adopted
Explain the concept of product life cycles
LO1
LO2
LO3
LO4
LO5
LO6
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New Product Advantages
Being first on the market has numerousadvantages:
•Increased sales through longer sales life
•Increased margins
•Increased product loyalty
•More resale opportunities
•Greater market responsiveness
•A sustained leadership position
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Categories of New Products
New-to-the-World
New-to-the-World
New Product Lines
New Product Lines
Product Line Additions
Product Line Additions
Improvements or Revisions
Improvements or Revisions
Repositioned Products
Repositioned Products
Lower-Priced Products
Lower-Priced Products
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The New-Product DevelopmentProcess
Long-term commitment
Long-term commitment
Company-specific approach
Company-specific approach
Capitalize on experience
Capitalize on experience
Establish an environment
Establish an environment
New Product Success Factors
New Product Success Factors
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New-Product DevelopmentProcess
1.New-Product Strategy
2.Idea Generation
3.Idea Screening
4.Business Analysis
5.Development
6.Test Marketing
7.Commercialization
8.New Product
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Why New Products Fail
•No discernible benefits
•Poor match between features and customerdesires
•Overestimation of market size
•Incorrect positioning
•Price too high or too low
•Inadequate distribution
•Poor promotion
•Inferior product
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Success Factors
Match between product and market needs
Different from substitute products
Factors in SuccessfulNew ProductsFactors in SuccessfulNew Products
Benefit to large number of people
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Success Factors
Listening to customers
Producing the bestproduct
Vision of future market
Strong leadership
Commitment to new-product development
Project-based teamapproach
Getting every aspect right
Willingness to failoccasionally
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Global Issues
Develop product for potential worldwidedistribution
Build in unique marketrequirements
Design products to meet regulations andkey market requirements
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Diffusion
The process by
which the adoption of an
innovation spreads.
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Categories of Adopters
Laggards
Laggards
Late Majority
Late Majority
Early Majority
Early Majority
Early Adopters
Early Adopters
Innovators
Innovators
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Product Characteristics andthe Rate of Adoption
Trialability
Trialability
Observability
Observability
Relative Advantage
Relative Advantage
Compatibility
Compatibility
Complexity
Complexity
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Marketing Implicationsof the Adoption Process
Direct fromMarketer
Direct fromMarketer
Word of Mouth
Word of Mouth
CommunicationAids theDiffusion Process
CommunicationAids theDiffusion Process
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Product Life Cycle
A biological metaphor that
traces the stages of a product’s
acceptance, from its
introduction (birth) to
its decline (death).
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U.S. Sales of Widgets
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Introductory Stage
•High failure rates
•Little competition
•Frequent product modification
•Limited distribution
•High marketing and production costs
•Negative profits with slow sales increases
•Promotion focuses on awareness and information
•Communication challenge is to stimulate primarydemand
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Growth Stage
•Increasing rate of sales
•Entrance of competitors
•Market consolidation
•Initial healthy profits
•Aggressive advertising of thedifferences between brands
•Wider distribution
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Maturity Stage
•Sales increase at a decreasing rate
•Saturated markets
•Annual models appear
•Lengthened product lines
•Service and repair assume important roles
•Heavy promotions to consumers and dealers
•Marginal competitors drop out
•Niche marketers emerge
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Decline Stage
•Long-run drop in sales
•Large inventories ofunsold items
•Elimination of all nonessentialmarketing expenses
•“Organized abandonment”
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