Product Development and Product Life-Cycle Strategies

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New-Product Development and Product Life-Cycle Strategies

Based on: Philip Kotler et al., Principles of Marketing

International Marketing

Prof. Dr. Thomas Laukamm

Objectives

- Understand how companies find and develop newproduct ideas. - Learn the steps in the new-product development process. - Know the stages of the product life cycle. - Understand how marketing strategies change during the product’s life cycle.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

1

Definition

- New Product Development
+ Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

2

New Product Development Strategy

- New products can be obtained via acquisition or development. - New products suffer from high failure rates. - Several reasons account for failure.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

3

New Product Development Strategy

- New Product Development Process: + Stage 1: Idea Generation • Internal idea sources:
R&D

• External idea sources:
Customers, competitors, distributors, suppliers

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

4

New Product Development Strategy

- New Product Development Process:
+ Stage 2: Idea Screening
• Product development costs increase substantially in later stages. • Ideas are evaluated against criteria; most are eliminated.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

5

New Product Development Strategy

- New Product Development Process:
+ Stage 3: Concept Development and Testing
• Product concepts provide detailed versions of new product ideas. • Concept tests ask target consumers to evaluate product concepts.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

6

New Product Development Strategy

- New Product Development Process:
+ Stage 4: Marketing Strategy Development
• Strategy statements describe:
The target market, product positioning, and sales, share, and profit goals for the first few years. Product price, distribution, and marketing budget for the first year. Long-run sales and profit goals and the marketing mix strategy.

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

7

New Product Development Strategy

- New Product Development Process:
+ Stage 5: Business Analysis
• Sales, cost, and profit projections

+ Stage 6: Product Development
• Prototype development and testing

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

8

New Product Development Strategy

- New Product Development Process:
+ Stage 7: Test Marketing
• Standard test markets • Controlled test markets • Simulated test markets

+ Stage 8: Commercialization

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

9

Product Life-Cycle Strategies

- The Typical Product Life Cycle (PLC) Has Five Stages
+ Product Development, Introduction, Growth, Maturity, Decline + Not all products follow this cycle: • Fads • Styles • Fashions

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

10

Product Life-Cycle Strategies

- The product life cycle concept can be applied to a:
+ Product class (soft drinks) + Product form (diet colas) + Brand (Diet Dr. Pepper) • Using the PLC to forecast brand performance or to develop marketing strategies is problematic

Fach, Dozent, Semester International Marketing

Prof. Dr. Thomas Laukamm

11

Product Life-Cycle Strategies

PLC Stages
Product development Introduction Growth Maturity Decline

- Begins when the company develops a new-product idea - Sales are zero - Investment costs are high - Profits are negative

Fach, Dozent, Semester International Marketing...
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