L15 Developing new products and services. Product lifecycle.
Terms in this set (21)
Why create new products?
1. Changing consumer needs
2. market saturation
3. managing through diversity
4. fashion cycles
5. improving relationships
Correlates with amount of learning effort required
3 degrees of newness
1. Product line expansion
(different flavours or themes)
2. Brand extension
(men and women products)
3. Significant jump in innovation or technology
2 out of 3
External (market) reasons for new product failures
- Insignificant point of difference
- Incomplete market and product protocol before product development starts
- Not satisfying customer needs on critical factors
- Bad timing
Internal (company) reasons for new product failures
- Not listening to the "Voice" of consumers
- Skipping new-product development stages
- Marketing a product too quickly
New Product Development
Develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization
7 steps of NPD
1. New-product strategy development
2. Idea generation
3. Screening and evolution
4. Business analysis
6. Market testing
New-product strategy development
Defines the role for a new product in terms of the firm's overall objectives
- Concept mapping for new products.
- "what is" > "what if"
- Future solutions and marketing actions.
- Research and Development laboratories (e.g., Apple)
Screening and evolution
Evaluates new-product ideas
- feasibility of a proposed idea
- concept tests: consumer evaluations
- preliminary testing of idea/ what does the public think (e.g., new cookies?).
- Detailed financial projections
- Assessments of the marketing and product synergies related to the company's existing operations.
Idea turns into a prototype
inc, full-scale operation model of the product or service.
Alpha testing and Beta testing
Exposing new product to prospective consumers under realistic purchase conditions to see if they will buy.
- Standard test markets
- Controlled test markets
- Simulated test markets
Launch of new product in full-scale production and sales.
Product life cycle
Stages a new product goes through in the market place
4 stages of product life cycle
Stage 1: Introduction
- Product is introduced to its intended target market.
- Consumer awareness
- Stimulate trial
- Primary demand > Selective demand
- Skimming pricing vs. Penetration pricing
Stage 2: Growth
- Rapid increase in sales and growth
- Repeat purchasers
- More competitors
- New feature
- Broad distribution
Stage 3: Maturity
- Slowing of total industry sales or product class revenue
- Marginal competitors begin to leave the market.
- Industry/product sales slow
- Profit declines
- Product differentiation
- Fewer competitors
Stage 4: Decline
- Sales drop
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