Developing and Managing Products

1
Developing and Managing Products
9
Prepared by Deborah Baker Texas Christian
University Revised by Dr. R. Baur Agricultural
Technical Institute
chapter
2
Chapter 8 Review

• 1. Define the term product.
• Classify consumer products.
• Discuss the importance of services
• Identify differences between services goods.
• Why services marketing is important to
  manufacturers
• Define product item, product line, and product
  mix
• Marketing uses of branding
• Marketing use of packaging labeling.
• How why product warranties are important
  marketing tools.

8
chapter
3
Chapter 9 Learning Objectives
1. Explain the importance of developing new
products and describe the six categories of new
products. 2. Explain the steps in the
new-product development process.
9
3. Explain the diffusion process through which
new products are adopted. 4. Explain the
concept of product life cycles.
chapter
4
290
Learning Objective
Explain importance of developing new products
describe 6 categories of new products.
1
New-To-The-World
TV, Computers, Lasers
New Product Lines
Six Categories of New Products
Mayer Turkey Dogs
Product Line Additions
Tide Liquid
Improvements/Revisions
Fuel Injection
Repositioned Products
A product new to the world, the market, the
producer, the seller, or some combination of
these.
Avon Skintastic
Lower-Priced Products
Ink Jet Printers
5
Learning Objective
291
Explain the steps in new-product development
2
New Product Success Factors
Long-Term Commitment to New Product Dev
New Product Strategy Based on Corp Obj
Capitalize on Experience
Establish an EnvironmentFostering New Prod Dev
6
New-Product Development Process
291
Learning Objective
Explain the steps in new-product development
2
A. New-Product Strategy
B. Idea Generation
C. Idea Screening
D. Business Analysis
E. Development
F. Test Marketing
G. Commercialization
H. New Product
7
B. Idea Generation For Products
292
Learning Objective
Explain the steps in new-product development
2
Sources ofNew-ProductIdeas
Customers
Market Research
Employees
Post-It Notes
Distributors
Lunch Boxes
Competitors
Coke in Japan
R D
Corning Glass
Universities
Consultants
Creative Thinking
8
Idea Screening
293
Learning Objective
Explain the steps in new-product development
2
Concept Test
First filter in the product development process,
which eliminates ideas that are inconsistent with
the organizations new-product strategy or are
inappropriate for some other reason.
A test to evaluate a new-product idea, usually
before any prototype has been created.
Pictures Mockup Descriptions
9
D. Business Analysis
294
Learning Objective
Explain the steps in new-product development
2
Preliminary Demand
Considerations Business Analysis Stage
Cost
Sales
Profitability
10
E. Development
294
Learning Objective
Explain the steps in new-product development
2

• Creation of prototype
• Marketing strategy
• Technical production feasibility
• Final government approvals if needed

Simultaneous Product Development
A new team-oriented approach to new-product
development.
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F. Test Marketing
295
Learning Objective
Explain the steps in new-product development
2
The limited introduction of a product and a
marketing program to determine the reactions of
potential customers in a market situation.
NORMAL CHANNELS IN LIMITED AREA
SANDARD TEST MARKET
BUY SPACE FROM SELECTED RETAILERS
CONTROLLED TEST MARKET
SIMULATED TEST MARKET
SELECT FROM MOCK SHELVES
INTERNET TEST MARKET
SELECT FROM MOCK SHELVES
12
Choosing a Test Market
297
Learning Objective
Explain the steps in new-product development
2

• Similar to planned distribution
• Relative isolation and free of influences
• Advertising availability multiple media
• Diversified cross section
• No atypical purchase habits
• Representative population/income
• Not overly used or easily jammed
• Year-round sales stability
• Available research/audit and retailers

13
G. Commercialization
Learning Objective
Explain the steps in new-product development
298
2
Production
FACTORY SPACE MACHINES
Steps in Marketing a New Product
Inventory Buildup
WAREHOUSE SPACE
Distribution Shipments
LOGISTICS
Sales Training
Trade Announcements
B2B
Customer Advertising
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Characteristics of Adopters
Learning Objective
Explain diffusion process through which new
products are adopted
299
3
Innovators 2.5
Eager to try new products, higher incomes, More
outside influences, self-confident
Early Adopters 13.5
Rely more on group norms, orientated to local
community, opinion leaders, respected by others
Early Majority 34
Weighs pro cons, gather more information, delibe
rate, use group information, friends of innovators
Late Majority 34
Rely on group norms, older below ave income
Education, pressure to conform, word of mouth
Laggards 16
Dont rely on group norms, traditional,
lowsocioeconomic status, suspicious of new
products
15
301
Learning Objective
Explain diffusion process through which new
products are adopted
3
Complex
NO NO MIXING, NO ADJ
ProductCharacteristics Predict Rate of Adoption
Compatibility
YES
Relative Advantage
ONE TRIP ACCROSS FIELD
Observability
YES
Trialability
YES
ROUNDUP READY SOYBEANS???
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Marketing Implications of the Adoption Process
301
Learning Objective
Explain diffusion process through which new
products are adopted
3
Word of Mouth
CommunicationAids theDiffusion Process
Direct fromMarketer
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Product Life Cycle
301
Learning Objective
Explain the concept of product life cycles.
4
PLC
A concept that provides a way to trace the stages
of a products acceptance, from its introduction
(birth) to its decline (death).
18
302
Learning Objective
Explain the concept of product life cycles.
4
Introductory Stage
Growth Stage
Maturity Stage
Decline Stage
Product Category Sales
Dollars
0
Product Category Profits
Time
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Introductory Stage
302
Learning Objective
Explain the concept of product life cycles.
4
Full-Scale Launch of New Products

• High failure rates
• Little competition
• Frequent product modification
• Limited distribution
• High marketing and production costs
• Negative profits
• Promotion focuses on awareness information
• Intensive personal selling to channels

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Growth Stage
304
Learning Objective
Explain the concept of product life cycles.
4
Offered in more sizes, flavors, options

• Increasing rate of sales
• Entrance of competitors
• Market consolidation
• Initial healthy profits
• Prices normally fall
• Goal is wider distribution
• Promotion emphasizes brand ads
• Development costs are recovered

21
Maturity Stage
304
Learning Objective
Explain the concept of product life cycles.
4
Many consumer products are in Maturity

• Declining sales growth
• Saturated markets
• Extending product line
• Stylistic product changes
• Niche marketers emerge
• Marginal competitors drop out
• Prices and profits fall
• Heavy promotions to dealers and consumers

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Decline Stage
305
Learning Objective
Explain the concept of product life cycles.
4

• Long-run drop in sales
• Large inventories of unsold items
• Elimination of all nonessential marketing expenses

Extending the PLC

• Change product
• Change product use
• Change product image
• Change product positioning

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Marketing Mix Strategies for PLC
Learning Objective
Explain the concept of product life cycles.
306
4
Limited models Frequent changes
More models Frequent changes.
Large number of models.
Eliminate unprofitable models
LimitedWholesale/retail distributors
Expanded dealers. Long- term relations
Phase out unprofitable outlets
Extensive. Margins drop. Shelf space
Phase outpromotion
Advertise. Promote heavily
Awareness. Stimulate demand.Sampling
Aggressive ads. Stimulatedemand
Fall as result of competition efficient
produc- tion.
Higher/recoupdevelopment costs
Prices fall (usually).
Prices stabilize at low level.
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Diffusion Process and PLC Curve
306
Learning Objective
Explain the concept of product life cycles.
4
Introduction
Growth
Maturity
Decline
Sales
Product life cycle curve
Early majority
Late majority
Early adopters
Innovators
Laggards
Diffusion curve
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Chapter 9 Summary
1. Explain the importance of developing new
products and describe the six categories of new
products. 2. Explain the steps in the
new-product development process.
9
3. Explain the diffusion process through which
new products are adopted. 4. Explain the
concept of product life cycles.
chapter
26
NEXT TOPIC

• CHAPTER 10
• PLACE
• MARKETING CHANNELS AND SUPPLY CHAIN MANAGEMENT