Chapter 11- Developing & Managing ProductsCategories of New Products-New-to-the-world-new product lines-product line additions-improvements of revisions-repositioned products-Lower-priced productsNew Product Development Process-success factors:-long-term commitment-Company-specific approach-capitalize on experience-establish an environment-development process:1. new product strategy2. 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 extensions4. business analysis-considerations: demand, cost, sales, profitability5. development-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 process6. 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 marketing7. Commercialization-productions-inventory build upCommunication Aids the Diffusion ProcessWord of MouthDirect from Marketer-distribution shipments-sales training-trade announcements-customer advertising8. 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-tips: -disperse R&D around the world-keep teams small and empower employees-flatten hierarchy-encourage extensive brainstorming and generation of crazy new ideas-welcome mistakesNew 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: -match between product and market needs-different from substitute products-benefit to large number of people-Global issues:-Development of new product for potential worldwide distribution-modify for unique market requirements-design product to meet regulations and key market requirementsSpread of New Products-Diffusion: the process by which the adoption of an innovation spreads-categories of adopters:-innovators-early adopters-early majority-late majority-laggards-product characteristics & the rate of adoption-complexity-compatibility-relative advantage-observality-trialabilityProduct 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-high marketing and production costs-negative profits with slow increase-promotion focuses on awareness and information-communication challenge is to stimulate primary demand-Growth Stage:-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
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