An Overview of Marketing

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Lamb, Hair, McDaniel
CHAPTER 11
Developing and Managing Products
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Categories ofNew Products
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New-ProductDevelopment Process
Ideageneration
Ideascreening
Businessanalysis
Development
Test marketing
Commercialization
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Why New Products Fail

• No discernible benefits
• Poor match between features and customer desires
• Overestimation of market size
• Incorrect positioning
• Price too high or too low
• Inadequate distribution
• Poor promotion
• Inferior product

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Diffusion
Diffusion
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Categories of Adopters
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Product Characteristics and the Rate of
Adoption/Diffusion
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Marketing Implications of the Adoption Process
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Product Life Cycle
ProductLife Cycle
A concept that provides a way to trace the stages
of a products acceptance, from its introduction
(birth) to its decline (death).
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Product Life Cycle
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Product Life Cycles for Styles, Fashions, and
Fads
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Understanding Product Life Cycle
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Diffusion Process and PLC Curve
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Marketing Mix Strategies at Different Stages of
the PLC
INTRODUCTION
GROWTH
MATURITY
DECLINE
Product Strategy
More models. Frequent changes.
Limited models. Frequent changes.
Eliminate unprofitable models.
Large number of models.
Limitedwholesale/retail distributors.
Expanded dealers. Long- term relations.
Phase out unprofitable outlets.
Extensive. Margins drop. Shelf space.
Distribution Strategy
Advertise. Promote heavily.
Phase outpromotion.
Awareness. Stimulate demand. Sampling.
Aggressive ads. Stimulatedemand.
Promotion Strategy
Fall as result of competition and efficient
production.
High to recoupdevelopment costs.
Prices stabilize at low level.
Prices fall (usually).
Pricing Strategy
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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 primary
  demand

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Growth Stage

• Increasing rate of sales
• Entrance of competitors
• Market consolidation
• Initial healthy profits
• Aggressive advertising of the differences 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 of unsold items
• Elimination of all nonessential marketing
  expenses
• Organized abandonment

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Ch 11 Discussion Questions

• What is a new product? Explain the steps in the
  new-product development process.
• Describe the five categories of adopters and
  their implications in marketing.
• Explain how different product characteristics
  affect the adoption/diffusion of a new product.
• What is product life cycle? Explain the marketing
  mix strategies at different stages of the PLC.