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New Product Development
andProduct Life-Cycle Strategies
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In business and engineering, new productdevelopment (NPD) is the term used todescribe the complete process of bringing anew product or service to market. There aretwo parallel paths involved in the NPD process:
one involves the idea generation,product design, and detail engineering; theother involves market research andmarketing analysis. Companies typically see
new product development as the first stage ingenerating and commercializing new productswithin the overall strategic process ofproduct life cycle management used tomaintain or grow their market share.
New product development
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Product_designhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Product_designhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Business8/14/2019 Plc Spartens
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The product life cycle goes through many phases, involves many professional
disciplines, and requires many skills, tools and processes.
Product life cycle (PLC) has to do with the life of a product in the market with
respect to business/commercial costs and sales measures; whereas product life
cycle management (PLM) has more to do with managing descriptions andproperties of a product through its development and useful life, mainly from a
business/engineering point of
view.
Product lifecycle
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To say that a product has a life cycle is to assert four
things:
1) That products have a limited life.
2) product sales pass through distinct stages, each posing different
challenges, opportunities, and problems to
the seller
3) profits rise and fall at different stages of product life cycle
4) products require different marketing, financial, manufacturing,
purchasing, and human resource strategies in each life cycle stage.
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strategies
Marketing strategy is a process thatcan allow an organization to concentrateits limited resources on the greatest
opportunities to increase sales andachieve a sustainablecompetitive advantage. A marketing
strategy should be centered around thekey concept that customer satisfaction isthe main goal.
http://en.wikipedia.org/wiki/Competitive_advantagehttp://en.wikipedia.org/wiki/Customer_satisfactionhttp://en.wikipedia.org/wiki/Customer_satisfactionhttp://en.wikipedia.org/wiki/Competitive_advantage8/14/2019 Plc Spartens
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New-Product Development
Strategies
New-Product Development
Strategies
OriginalProductsOriginalProducts
Product
Improvements
Product
Improvements
Product
Modifications
Product
Modifications
NewBrandsNew
Brands
AcquiredCompaniesAcquired
Companies
Acquired
Patents
Acquired
Patents
Acquired
Licenses
Acquired
Licenses
Strategies for Obtaining New Product Ideas
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Causes of New Product FailuresCauses of New Product Failures
Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced orAdvertised
Costs of Product Development Competitive Actions
To create successful new products, the
company must: understand its customers, markets and
competitors
develop products that deliver superior value to
customers.
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New Product Development
Process
New Product Development
Process
IdeaGeneration
IdeaScreening
ConceptDevelopment
and Testing
MarketingStrategy
BusinessAnalysis
Product
Development
TestMarketing
Commercialization
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CUSTOMERS
CUST
OMERS
COMPETITOR
S
COMPE
TITOR
S
DISTR
IBUTORS
DISTR
IBUTORS
SUPPLIERS
SUPP
LIERS
New Product Development ProcessStep 1. Idea Generation
New Product Development ProcessStep 1. Idea Generation
Idea Generation is the SystematicSearch for New Product IdeasObtained Internally and From:
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Process to spot good ideas and drop poorones as soon as possible.
Many companies have systems for ratingand screening ideas which estimate:
Market Size
Product Price
Development Time & Costs
Manufacturing Costs Rate of Return
Then, the idea is evaluated against a set ofgeneral company criteria.
New Product Development ProcessStep 2. Idea Screening
New Product Development ProcessStep 2. Idea Screening
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New Product Development ProcessStep 3. Concept Development & Testing
New Product Development ProcessStep 3. Concept Development & Testing
1. Develop Product Ideas intoAlternative
Product Concepts
1. Develop Product Ideas intoAlternative
Product Concepts
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
3. Choose the Best One3. Choose the Best One
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New Product Development ProcessStep 4. Marketing Strategy Development
New Product Development ProcessStep 4. Marketing Strategy Development
Part Two Describes Short-Term:Products Planned Price
DistributionMarketing Budget
Part Two Describes Short-Term:Products Planned Price
DistributionMarketing Budget
Part Three Describes Long-Term:Sales & Profit GoalsMarketing Mix Strategy
Part Three Describes Long-Term:Sales & Profit GoalsMarketing Mix Strategy
Marketing Strategy Statement Formulation
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit Goals
Market Share
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New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,and Profits Projections to See if
They Meet Company Objectives
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If Yes, Move to
Product Development
If No, EliminateProduct ConceptIf No, EliminateProduct Concept
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New Product Development ProcessStep 7. Test Marketing
New Product Development ProcessStep 7. Test Marketing
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
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New Product Development ProcessStep 8. Commercialization
New Product Development ProcessStep 8. Commercialization
When?When? Where?Where?To
Whom?To
Whom? How?How?
Commercialization is theIntroduction of the New Product
into the Marketplace.
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Speeding Up DevelopmentSpeeding Up Development
Step 1Step 1
Step 2Step 2
Step 3Step 3
Step 4Step 4
Step
1
Step
2
Step 3
Step 4
Sequential Simultaneous
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Product Life CycleProduct Life Cycle
Time
ProductDevelop-ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Sales and Profits Over the Products Life From
Introduction to Decline
I t d ti St f th PLC
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Introduction Stage of the PLCIntroduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low salesLow sales
High cost per customerHigh cost per customer
NegativeNegative
Create product awarenessand trial
Create product awarenessand trial
Offer a basic productOffer a basic product
Use cost-plusUse cost-plus
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build product awareness amongearly adopters and dealers
Build product awareness among
early adopters and dealers
G h S f h PLC
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Growth Stage of the PLCGrowth Stage of the PLC
Summary of Characteristics, Objectives, &
Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising salesRapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions,
service, warranty
Offer product extensions,
service, warrantyPrice to penetrate marketPrice to penetrate market
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness and interest inthe mass market
Build awareness and interest in
the mass market
M t it St f th PLC
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Maturity Stage of the PLCMaturity Stage of the PLC
Summary of Characteristics, Objectives, &
Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profits
Maximize profit while defendingmarket share
Maximize profit while defendingmarket share
Diversify brand and modelsDiversify brand and models
Price to match or bestcompetitors
Price to match or bestcompetitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences andbenefits
Stress brand differences and
benefits
D li St f th PLC
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Decline Stage of the PLCDecline Stage of the PLC
Summary of Characteristics, Objectives, &
Strategies
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and milk thebrand
Reduce expenditure and milk thebrand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase outunprofitable outlets
Go selective: phase outunprofitable outlets
AdvertisingAdvertising Reduce to level needed to retainhard-core loyal customers
Reduce to level needed to retain
hard-core loyal customers