Chapter 11 Developing Managing Products Categories of New Products New to the world new product lines product line additions improvements of revisions repositioned products Lower priced products New Product Development Process success factors long term commitment Company specific approach capitalize on experience establish an environment development process 1 new product strategy 2 idea generation sources customers employees distributers competitors vendors R D consultants 3 idea screening First filter in product dev Process eliminate ideas inconsistent with organizations new product strategy concept test test to evaluate a new product idea usually before any prototype has been created Often successful for line extensions 4 business analysis 5 development considerations demand cost sales profitability creation of prototype marketing strategy packaging branding labeling promotion price and distribution strategy manufacturing feasibility final government approvals if needed simultaneous product development a new team oriented approach to a new product to a new product development where all relevant functional areas and outside suppliers participate in the development process 6 test marketing the limited introduction of a product and marketing program to determine the reactions of potential customers in a market situation alternatives single source research using supermarket scanner data simulated laboratory market testing online test marketing 7 Commercialization productions inventory build up distribution shipments sales training trade announcements customer advertising 8 new product success factors listening to customers producing the best product vision of future market strong leadership commitment to new product development project based team approach getting every aspect right disperse R D around the world keep teams small and empower employees flatten hierarchy encourage extensive brainstorming and generation of crazy new ideas welcome mistakes tips New Products why they fail no discenrable benefits poor match between features and customer desires overestimation of market size incorrect positioning price too high price too low inadequate distribution poor promotion inferior product success factors Global issues match between product and market needs different from substitute products benefit to large number of people Development of new product for potential worldwide distribution modify for unique market requirements design product to meet regulations and key market requirements Spread of New Products Diffusion the process by which the adoption of an innovation spreads categories of adopters product characteristics the rate of adoption innovators early adopters early majority late majority laggards complexity compatibility relative advantage observality trialability Communication Aids the Diffusion Process Word of Mouth Direct from Marketer Product Life Cycle a concept that provides a way to trace the stages of a product s acceptance from its introduction birth to its decline death Introductory Stage high failure rates little competition frequent product modification limited distribution Growth Stage high marketing and production costs negative profits with slow increase promotion focuses on awareness and information communication challenge is to stimulate primary demand increasing rate of sales entrance of competitors market consolidation initial healthy profits aggressive advertising of the difference between brands wider distribution Maturity Stage sales increase at a decreasing rate saturated markets annual models appear lengthened product lines service repair assume important roles heavy promotions to consumers and dealers marginal competitors drop out niche marketers appear Decline Stage long run drop in sales large inventories of unsold items elimination of all unessential marketing expenses organized abandonment
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