Principles of Marketing

Kotler and Armstrong

Chapter 9:
New Product
Development
Insert

Textbook

Cover Image
and Product Life-
Cycle Strategies

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New Product Development

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 New Product Development

Learning Objectives

Objective 1: Explain how companies find

and develop new product ideas.

Objective 2: List and define the steps in the

new product development process and the
major considerations in managing this
process.

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 New Product Development

Learning Objectives

Objective 3: Describe the stages of the

product life cycle and how marketing
strategies change during a products life
cycle.

Objective 4: Discuss two additional product

issues: socially responsible product decisions
and international product and services
marketing.
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 New Product Development

Learning Objective 1

Explain how companies find and develop

new product ideas.

New Product Development Strategy

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 New Product Development Strategy

Ways to Obtain New Products

Acquisition refers to the buying of a whole
company, a patent, or a license to
produce someone elses product.

New product development refers to

original products, product improvements,
product modifications, and new brands
developed from the firms own research
and development.
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 New Product Development

Learning Objective 1

Explain how companies find and develop

new product ideas.

New Product Development Strategy

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 New Product Development

Learning Objective 2

List and define the steps in the new product

development process and the major
considerations in managing this process.

New Product Development Process

Managing New Product Development

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 Process
Major Stages in New Product Development

Product Ideas

ent
Developm
FIGURE | 9.1

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 Process
Idea
Generation

Idea generation
is the
systematic
search for new
product ideas.

Sources of new
product ideas
Internal
External Copyright 2016 Pearson Education, 9-10
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 Process
Idea
Generation

Internal sources refer to the companys 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.

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 Process
Idea
Generation

Crowdsourcing involves inviting broad

communities of peoplecustomers,
employees, independent scientists and
researchers, and even the public at large
into the new product innovation process.

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Process

Idea Screening

Identify good ideas and drop

poor ideas
R-W-W screening framework:
Is it real?
Can we win?
Is it worth doing?

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 Process

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 Copyright
actual orPearson
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Education, product. 9-14
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 Process

Concept Development and Testing

Concept testing
refers to testing
new product
concepts with
groups of target
consumers.

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 Process
Marketing Strategy
Development

Marketing strategy development is

designing an initial marketing strategy for
a new product based on the product
concept.

Marketing strategy statement consists

of:
Target market description
Value proposition planned
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 Process

Business Analysis

Business analysis is a review of the

sales, costs, and profit projections for a
new product to find out whether these
factors satisfy the companys objectives.

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 Process

Product Development

Product
development is
developing the
product concept
into a physical
product to ensure
that the product
idea can be turned
into a workable
market offering.
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9-18
 Process

Test Marketing

Test marketing is
the stage of new
product
development in
which the product
and its proposed
marketing program
are tested in
realistic market
settings.
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Process

Test Marketing
Marketing Strategy Development

When test When test

marketing is marketing is
likely unlikely
New product Simple line
with large extension
investment Copy of
Uncertainty competitor
about product product
or marketing Low costs
program Management
confidence

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 Process

Commercialization

Commercialization involves introducing

a new product into the market.
When to launch?
Where to launch?
Planned market rollout?

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 Managing New Product Development

Successful new product development should

be:
Customer centered
Team based
Systematic

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 Managing New Product Development
Customer-Centered New Product
Development

Customer-centered
new product
development focuses
on finding new ways to
solve customer
problems and creating
more customer-
satisfying experiences.

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 Managing New Product Development
Team-Based New Product
Development

Team-based new product development

involves various company departments
working closely together, overlapping the
steps in the product development process
to save time and increase effectiveness.

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 Managing New Product Development

Systematic New Product

Development
Innovation management system
Creates an innovation-oriented company
culture
Yields a large number of new product ideas
New Product Development in
Turbulent Times
Tempted to reduce spending
May become less competitive
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9-25
 New Product Development

Learning Objective 2

List and define the steps in the new product

development process and the major
considerations in managing this process.

New Product Development Process

Managing New Product Development

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 New Product Development

Learning Objective 3

Describe the stages of the product life cycle

and how marketing strategies change during
a products life cycle.

Product Life-Cycle Strategies

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 Product Life-Cycle Strategies

FIGURE | 9.2

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 Product Life-Cycle Strategies

Product development
Zero sales and increasing investment
costs
Introduction
Slow sales and nonexistent profits
Growth
Rapid market acceptance and increasing
profits
Maturity
Slow sales growth and profits level off or
decline
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 Product Life-Cycle Strategies

FIGURE | 9.3

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 Product Life-Cycle Strategies

Introduction Stage

Slow sales growth

Little or no profit
High distribution and promotion
expenses

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Product Life-Cycle Strategies

Growth Stage

Sales increase
New competitors enter the market
Profits increase
Economies of scale
Consumer education
Lowering prices to attract more
buyers

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Product Life-Cycle Strategies

Maturity Stage

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

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 Product Life-Cycle Strategies

Maturity Stage
Modification Strategies

Modify the market

Modify the product
Modify the
marketing mix

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Product Life-Cycle Strategies

Decline Stage

Maintain the product

Harvest the product
Drop the product

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 Product Life-Cycle Strategies

Table 9.2 Part 1

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 Product Life-Cycle Strategies

Table 9.2 Part 2

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 New Product Development
Learning Objective 3

Describe the stages of the product life cycle

and how marketing strategies change during
a products life cycle.
Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
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 New Product Development

Learning Objective 4

Discuss two additional product issues:

socially responsible product decisions and
international product and services marketing.

Additional Product and Service

Considerations

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Additional Product and Service Considerations
Product Decisions and Social
Responsibility

Public policy and regulations

regarding developing and dropping
products, patents, quality, safety,
and product warranties should be
considered carefully.

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Additional Product and Service Considerations
International Product and Service
Marketing

Determining
what products
and services to
introduce in
which countries
Standardization
versus
customization
Packaging and
labeling Copyright 2016 Pearson Education, 9-41
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 New Product Development

Learning Objective 4

Discuss two additional product issues:

socially responsible product decisions and
international product and services marketing.
Additional Product and Service
Considerations
Product Decisions
Public policy and regulations
Social responsibility
Products and services
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Principles of Marketing

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