Marketing management Essay

Custom Student Mr. Teacher ENG 1001-04 6 April 2016

Marketing management

Slide 9.1

it’s good and
good for you

Chapter 9a
Developing new products and managing the product life cycle

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.2

New product development and
product life-cycle strategies
Topic outline





New product development strategy
New product development process
Managing new product development
Product life-cycle strategies
Additional product and service
considerations

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.3

New product development strategy
Two ways to obtain new products
Acquisition refers to the buying of a whole company, a patent or a license to produce someone else’s product.

New product development refers to the development of original products, product improvements, product modifications and new brands through the firm’s own product development efforts.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.4

New product development
process Major stages in new product development

Figure 9.1

Major stages in new-product development

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.5

New product development
process (Continued)
Idea generation

Idea generation is the systematic search for
new product ideas.
Sources of new product ideas
• Internal
• External

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.6

New product development
process (Continued)
Idea generation

Internal sources refer to the company’s own formal research and development, management and staff,
and intrapreneurial programs.
External sources refer to sources outside the company such as customers, competitors, distributors, suppliers and outside design firms.
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.7

New product development process
(Continued)
Crowdsourcing

Inviting broad communities of people— customers, employees, independent scientists and researchers and even the
public at large—into the new product innovation process.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.8

New product development process
(Continued)
Idea screening

• Identify good ideas and drop poor ideas.
• R-W-W screening framework:
– Is it real?
– Can we win?
– Is it worth doing?

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.9

New product development process
(Continued)
Concept development and testing

Product idea is an idea for a possible product that the company can see itself offering to
the market. Product concept is a detailed version of the idea stated in meaningful consumer terms. Product image is the way consumers perceive an actual or potential product.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education
Limited 2013

Slide 9.10

New product development process
(Continued)
Concept development and testing

Concept testing refers to testing new product
concepts with a group of target consumers
to find out if the concepts have strong
consumer appeal.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.11

New product development process
(Continued)
Marketing strategy development

• Marketing strategy development involves
designing an initial marketing strategy for a
new product based on the product
concept.
• Marketing strategy statement includes:
– Description of the target market
– Value proposition
– Sales and profit goals.
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.12

New product development process
(Continued)
Marketing strategy development

Business analysis involves a review of the
sales, costs and profit projections to find
out whether they satisfy the company’s
objectives.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.13

New product development process
(Continued)
Marketing strategy development
Product development


Involves the creation and testing of one or
more physical versions by the R&D or
engineering departments.
Requires an increase in investment.
Shows whether the product idea can be
turned into a workable product.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.14

New product development process
(Continued)
Marketing strategy development

Test marketing is the stage at which the
product and marketing program are
introduced into more realistic marketing
settings.

Provides the marketer with experience in
testing the product and entire marketing
program before full introduction.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.15

New product development process
(Continued)
Types of test markets

Standard test markets
Controlled test markets

Simulated test markets

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.16

New product development process
(Continued)
Marketing strategy development

• Advantages of simulated test markets
– Less expensive than other test methods
– Faster
– Restricts access by competitors.

• Disadvantages
– Not considered as reliable and accurate due
to the controlled setting.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.17

New product development process
(Continued)
Marketing strategy development
When firms test
market

• New product
with large
investment
• Uncertainty
about product
or marketing
program

When firms may
not test market

• Simple line
extension
• Copy of
competitor
product
• Low costs
• Management
confidence
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.18

New product development process
(Continued)
Marketing strategy development
Commercialisation is the introduction of the
new product
• When to launch
• Where to launch
• Planned market rollout

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.19

Managing new product
development
Successful new product development should
be:
• customer-centred
• team-based
• systematic.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.20

Managing new product
development (Continued)
New product development strategies

Customer-centred new product development:
new ways to solve customer problems and
create more customer satisfying experiences.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.21

Managing new product
development (Continued)
New product development strategies

Sequential new product development: company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage.
• Increased control in risky or complex
projects but may be slow.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.22

Managing new product
development (Continued)
New product development strategies

Team-based new product development:
Various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.23

Managing new product
development (Continued)
New product development strategies

Systematic new product development:
innovative development approach that collects,
reviews, evaluates and manages new product
ideas.
• Creates an innovation-oriented culture.
• Yields a large number of new product ideas.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.24

Product life-cycle strategies
Product life cycle

Figure 9.2

Sales and profits over the product’s life from inception to decline Kotler et
al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.25

Product life-cycle strategies
(Continued)
• Product development
– Sales are zero and investment costs mount.

• Introduction
– Slow sales growth and profits are nonexistent.

• Growth
– Rapid market acceptance and increasing profits.

• Maturity
– Slowdown in sales growth and profits level off or
decline.

• Decline
– Sales fall off and profits drop.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.26

Product life-cycle strategies
(Continued)

Figure 9.3

Styles, fashions and fads

Kotler et al., Principles of Marketing, 6th edition © Pearson Education
Limited 2013

Slide 9.27

Product life-cycle strategies
(Continued)
Fads are temporary periods of unusually
high sales driven by consumer
enthusiasm and immediate product or
brand popularity.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.28

Product life-cycle strategies
(Continued)
Introduction stage

• Slow sales growth
• Little or no profit
• High distribution and promotion expense.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.29

Product life-cycle strategies
(Continued)
Growth stage





Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain
economies of scale.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.30

Product life-cycle strategies
(Continued)
Maturity stage





Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to competition
Increased promotion and R&D to
support sales and profits.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education
Limited 2013

Slide 9.31

Product life-cycle strategies
(Continued)
Maturity stage modifying strategies

• Market modifying
• Product modifying
• Marketing mix modifying

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.32

Product life-cycle strategies
(Continued)
Decline stage

• Maintain the product
• Harvest the product
• Drop the product

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.33

Additional product and service
considerations
Product decisions and social
responsibility

Public policy and regulations regarding
developing and dropping products,
patents, quality and safety.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

Slide 9.34

Additional product and service
considerations (Continued)
International product and
service marketing—challenges
• Determining what products and services to
introduce in which countries
• Standardisation versus customisation
• Packaging and labelling
• Customs, values and laws.

Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013

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