The Product Lifecycle and New Product Development

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The Product Lifecycle and New Product Development

• Chapter 10

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New Product Development

• Definition - the development of original
  products, product improvements, product
  modifications, and new brands through the firms
  own RD efforts.
• New products can also come from acquisition of
  other companies, patents, or licenses e.g.
  trap-ease .

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Consumers perspectives on Newness (Exhibit 10-1)
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New Product Development

• Importance of New Product Development
• Follow changing market demands
• To remain competitive
• Keep up with changing technology
• Replace dying/old products
• Diversify product offerings to reduce risks

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Characteristics of Successful New Products and
Services

• Relative Advantage
• Compatibility with existing consumption patterns
• Trialability The Opportunity for buyer testing
• Observability The Chance to see the newness
• Simplicity of Usage

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Exercise

• Form groups of 3-4 students. Pick a new product
  that is less than a 1 year old. How has it
  become successful/unsuccessful? What was its
  marketing approach?

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New Product Development

• Successful new products
• Offer a unique superior product, such as higher
  quality, new features, or higher value in use
• Have a well-defined (and tested) product concept,
  before development investment is made

• New products fail at a high rate due to
• Market size may have been overestimated
• Poor quality or design
• Incorrect positioning, pricing, or promotion
  (i.e., trap-ease)

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New Product Development

• Generally a five step process
• 1. Idea generation
• 2. Screening of ideas
• 3. Business analysis
• 4. Prototype development
• 5. Commercialization

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The Product Lifecycle
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Understanding the Product Lifecycle

• Product life cycle (PLC) the course of a
  products sales and profits over its lifetime
• Interesting idea, developed in the 1950s, still
  here!
• The product lifecycle has four stages
• Introduction
• Growth
• Maturity
• Decline

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Product Life-Cycle Strategies

• Introduction slow sales growth, profits still
  negative due to high costs of development and
  product launch
• Growth rapid sales growth and profits
• Maturity sales slow down, profits decline due to
  competition
• Decline sales and profits fall as product is
  replaced by new alternatives

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Product Life-Cycle - Illustrated
Tide Detergent
Sales Profit ()
Sales
VCRs
Video Phones
Hybrid Vehicles
Profits
Loss ()
Development
Introduction
Growth
Maturity
Decline
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Maturity Stage Strategy

• Modifying the product.
• Changing characteristics such as quality,
  features or style to attract new users and to
  inspire more usage.
• How?
• Improve durability, reliability, speed, taste.
• Improve styling and attractiveness.
• Add new features.
• Expand usefulness, safety, convenience.

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Maturity Stage Strategy

• Modifying the market.
• Increase the consumption of the current product.
• How?
• Look for new users and market segments.
• Reposition the brand to appeal to larger or
  faster-growing segment.
• Look for ways to increase usage among present
  customers.

• Modifying the marketing mix.
• Improving sales by changing one or more marketing
  mix elements.
• How?
• Cut prices.
• Launch a better ad campaign.
• Move into larger market channels (distribution).
• Offer new or improved services to buyers.

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Discussion Question page 282, Question 2
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Special Life Cycles

• Styles
• Basic and distinctive mode of expression
• Once accepted, popularity will vary over time
• Fashion
• A currently accepted or popular style
• Gains acceptance, peaks, then declines
• Tend to go in cycles with generations
• Fads
• Gain rapid acceptance, peak early, and decline
  quickly
• Tend to attract limited market
• Products that are novel and do not address basic
  needs

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Length of the Product Life Cycle

• Ranges from a few weeks to decades.
• Length of individual stages varies from one
  product category to the next (Hershey chocolate).
• Stages of any given life cycle usually last for
  different periods.
• Some products make several different entrances
  and exits through the Product Life Cycle
  examples?.

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Adoption processes

• Awareness
• Interest
• Evaluation
• Trial
• Adoption

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The Diffusion Process (Exhibit 10-7)
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Expansion Strategies

• Product line extension
• Item added to an existing product line
• Product category extension
• New item or new line of items in a product
  category
• Cannibalize
• To eat into the sales revenues of another product
  item in the same line