CHAP#9:NEW PRODUCT

DEVELOPMENT &
PRODUCT LIFE-CYCLE
STRATEGIES
PRESENTATION
BY:saba khan

AWKUM BBA(3RD
A)
NEW PRODUCT DEVELOPMENT
THE NPD MEANS:
THE DEVELOPMENT OF NEW PRODUCTS,
PRODUCT IMPROVEMENST,PRODUCT
MODIFICATIONS, AND NEW BRANDS THROUGH
THE FIRM’S OWN PRODUCT-DEVELOPMENT
EFFORTS.

principles of marketing chap#9 2

THE NPD PROCESS
IDEA CONCEPT
GENERATIO IDEA
DEVELOPMENT
SCREENING
N AND TESTING

PRODUCT BUSINESS MARKETING

DEVELOPMEN ANALYSIS STRATEGY
T DEVELOPMENT

COMMERCIALIZAT
TEST
ION
MARKETING

principles of marketing chap#9 3

NPD PROCESS
1ST STEP: IDEA GENERATION
EMPLOYEES
& FORMAL
RESEARCH

INTERNAL
SOURCES
TO KNOW
STRENGTH &
WEAKNESS

principles of marketing chap#9 4

NPD PROCESS
1ST STEP:IDEA GENERATION
COMPETITORS
CUSTOMERS
EXTERNAL DISTRIBUTERS
SOURCES

TO KNOW THREATS
& OPPORTUNITIES

principles of marketing chap#9 5

NPD PROCESS
2ND STEP: IDEA SCREENING
THE 1ST IDEA REDUCING STAGE.
HELPS SPOT GOOD IDEAS AND DROP POOR
ONES.
CRITERIA:
MARKET SIZE
PRODUCT PRICE
DEVELOPMENT TIME & COST
MANUFACTURING COST
RATE OF RETURN

principles of marketing chap#9 6

NPD PROCESS
3RD STEP:CONCEPT DEVELOP &TESTING
DEVELOP PRODUCT
IDEAS INTO
ALTERNATIVE
PRODUCT CONCEPTS
TEST THE PRODUCT
CONCEPTS WITH GROUPS
OF TARGET CUSTOMERS

CHOOSE THE BEST

ONE

principles of marketing chap#9 7

NPD PROCESS
4TH STEP:MARKETING STRATEGY DEVELOPMENT
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share

Part Two - Short-Term:

Product’s Planned Price
Distribution
Marketing Budget

Part Three - Long-Term:

Sales & Profit Goals
Marketing Mix Strategy

principles of marketing chap#9 8

NPD PROCESS
5TH STEP:BUSINESS ANALYSIS
REVIEW OF THE SALES, COSTS AND
PROFIT PROJECTIONS FOR A NEW
PRODUCT.

principles of marketing chap#9 9

NPD PROCESS
6TH STEP:PRODUCT DEVELOPMENT
DEVELOPING OF
PRODUCT CONCEPT

PHYSICAL
PRODUCT
(PROTOTYPES)

principles of marketing chap#9 10

NPD PROCESS
7TH STEP:TEST MARKETING
PROTOTYPES ARE INTRODUCED INTO MARKET.

GIVES THE MARKETER EXPERIENCE WITH

MARKETING THE PRODUCT BEFORE GOING TO
THE GREAT EXPENSE OF FULL INTRODUCTION.

principles of marketing chap#9 11

NPD PROCESS
8TH STEP:COMMERCIALIZATION
FINAL DECISION IS TAKEN
&
A NEW PRODUCT IS INTRODUCED
INTO THE MARKET.

principles of marketing chap#9 12

MANAGING NEW PRODUCT
DEVELOPMENT
SUCCESSFUL NPD REQUIRES:

1. CUSTOMER-CENTERED NPD.
2. TEAM-BASED NPD &
3. SYSTEMATIC NPD EFFORTS.

principles of marketing chap#9 13

1)CUSTOMER-CENTERED NPD:
•It describes the actions taken by a business to
support its sales & service staff in considering client
needs & satisfying their major priorities.
•It begins and ends with solving customer
problems.

principles of marketing chap#9 14

2)TEAM BASED NEW PRODUCT
DEVELOPMENT:
•An approach to developing new products in which various
company departments work closely together, overlapping
the steps in the product development process to save time
and increase effectiveness.
LIMITATIONS:

TENSION AND CONFUSION.

principles of marketing chap#9 15

3)SYSTEMATIC NEW PRODUCT
DEVELOPMENT:
•An innovation management system is installed by the
company to collect, review & manage new product idea.
FAVORABLE OUTCOMES:
1. It shows that top management supports, encourages &
rewards innovations.
2. Yields a large number of new ideas.

principles of marketing chap#9 16

PRODUCT LIFE CYCLE

principles of marketing chap#9 17

PLC INTRODUCTION STAGE
Sales Low sales

costs High cost per customer

profit negative

customers innovators

competitors few

Marketing
Create product awareness & trial
objectives

product Offer a basic product

price Use cost plus

Build product awareness among
advertising early adopters
principles of marketing chap#9 18
PLC GROWTH STAGE
sales Rapidly rising sales

costs Average cost per customer

profit Rising profits

customers Early adopters

competitors Growing number

Marketing
Maximize market share
objectives
Offer product
product
extensions,service(warranty)
price Price to penetrate market
Build awareness & interest in mass
advertising
principles of marketing chap#9market 19
PLC MATURITY STAGE
sales Peak sales

costs Low cost per customer

profit High profits

customers Middle majority

competitors Stable no beginning to decline

Marketing Maximize profit while

objectives defending market share

product Diversify brand and models

Price to match or beat

price
competitors
Stress brand differences and
advertising
principles of marketing chap#9 benefits 20
PLC DECLINE STAGE
sales Declining sales

costs Low cost per customer

profits Declining profits

customers laggards

competitors Declining number

Marketing Reduce expenditure & milk the

objectives brand

product Phase out weak items

price Cut price

Reduce to level needed to

advertising
retain hard-core loyal
principles of marketing chap#9 21
ADDITIONAL PRODUCT &
SERVICE CONSIDERATIONS
TWO CONSIDERATIONS:

1. PRODUCT DECISIONS & SOCIAL

RESPONSIBILITY.
2. INTERNATIONAL PRODUCT & SERVICES
MARKETING.

principles of marketing chap#9 22

PRODUCT DECISION & SOCIAL
RESPONSIBILITY
1. Companies must be aware of their legal
obligations to their suppliers,dealers &
customers.
2. Companies must obey patent laws when
developing new products.
3. Manufacturers must comply with specific laws
regarding product quality and safety.

principles of marketing chap#9 23

INTERNATIONAL PRODUCT &
SERVICES MARKETING
Figure out product & services
to introduce internationally

How much to standardize

products & services for world
markets.

principles of marketing chap#9 24

principles of marketing chap#9 25