PRODUCT

• PRODUCT VARIETY • PACKAGING

• QUALITY • SIZE & FORM

• DESIGN • SERVICES

• FEATURES • WARRANTIES

• BRAND NAME • RETURNS

 Product Life Cycle

Sales

Profits

Development Introduction Growth Maturity Decline

Time

Sales and Profits Over the Product’s Life From

Development to Decline
Product Life Cycle

• Demand / Technology life Cycle

• Product Form Life Cycle

• Brand Life Cycle

 Product Life Cycle
Introductory Growth Maturity Decline
stage stage stage stage
Product
category

sales

Product
category
profits

Time
 The Shape of the Sales
Curve May Vary...
TRADITIONAL
FAD
Sales

Sales
Time Time
SEASONAL (CYCLICAL) REVIVAL or NOSTALGIA

Sales
Sales

Time Time
Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE

Product Limited models More models Large number Eliminate

Strategy Frequent Frequent of models. unprofitable
changes changes. models

Distribution Limited Expanded Extensive. Phase out

Strategy Wholesale/ dealers. Long- Margins drop. unprofitable
retail distributors term relations Shelf space outlets

Awareness. Aggressive ads. Advertise. Phase out

Promotion Stimulate Stimulate Promote heavily promotion
Strategy demand.Sampling demand
Higher/recoup Fall as result of Prices fall Prices
Pricing development competition & (usually). stabilize at
Strategy costs efficient produc- low level.
tion.
 Introduction stage

Sales
Sales Low
Lowsales
sales

Costs
Costs High
Highcost
costper
per customer
customer

Profits
Profits Negative
Negativeor
or low
low

Marketing
Marketing Objectives
Objectives Create
Createproduct
productawareness
awarenessand
andtrial
trial

Product
Product Offer
Offer aa basic
basicproduct
product

Price
Price Usually
Usually is
ishigh;
high;use
use cost-plus
cost-plusformula
formula

Distribution
Distribution High
Highdistribution
distributionexpenses
expenses

Advertising Build
Buildproduct
productawareness
awarenessamong
amongearly
early
Advertising adopters and dealers
adopters and dealers
 Growth Stage

Sales
Sales Rapidly
Rapidlyrising
risingsales
sales

Costs
Costs Average
Averagecost
costper
per customer
customer

Profits
Profits Rising
Risingprofits
profits

Marketing
Marketing Objectives
Objectives Maximize
Maximizemarket
marketshare
share
Offer
Offer new
newproduct
productfeatures,
features,extensions,
extensions,
Product
Product service, and warranty
service, and warranty
Price
Price Price
Priceto
topenetrate
penetrate market
market

Distribution
Distribution Increase
Increasenumber
number of
ofdistribution
distributionoutlets
outlets

Advertising Build
Buildawareness
awarenessand
andinterest
interestin
inthe
the mass
mass
Advertising market
market
 Maturity stage

Sales
Sales Peak
Peaksales
sales

Costs
Costs Low
Lowcost
costper
per customer
customer

Profits
Profits High
Highprofits,
profits, then
thenlower
lower profits
profits
Maximize
Maximizeprofits
profitswhile
whiledefending
defendingmarket
market
Marketing
Marketing Objectives
Objectives share
share
Product
Product Diversify
Diversifybrand
brandand
andmodels
models

Price
Price Price
Priceto
tomatch
matchor
or best
bestcompetitors
competitors

Distribution
Distribution Build
Buildmore
moreintensive
intensive distribution
distribution

Advertising
Advertising Stress
Stress brand
branddifferences
differencesand
andbenefits
benefits
 Maturity stage

Market
Market Product
Product
Modification
Modification Modification
Modification

Marketing
Marketing
Mix
Mix
Modification
Modification

Maturity Stage Product Defense

Strategies
 Decline stage

Sales
Sales Declining
Decliningsales
sales

Costs
Costs Low
Lowcost
costper
per customer
customer

Profits
Profits Declining
Decliningprofits
profits
Reduce
Reduceexpenditure
expenditureand
andmaintain,
maintain,reposition,
reposition,
Marketing
Marketing Objectives
Objectives harvest
harvestor
or drop
dropthe
the product
product
Product
Product Phase
Phaseout
outweak
weakitems
items

Price
Price Cut
Cutprice
price

Distribution
Distribution Go
Goselective:
selective:phase
phaseout
outunprofitable
unprofitableoutlets
outlets

Advertising Reduce
Reducetotolevel
levelneeded
neededtotoretain
retain
Advertising hard-core loyal customers
hard-core loyal customers
NEW PRODUCT DEVELOPMENT
 Objectives

• Challenges in New Product Development

(NPD)
• Organizational Structure & NPD
• Stages & Management of NPD
• Diffusion & Adoption of New Products
• Look at the Product lifecycle
• Fads, style, etc
 What is new product

• Original products, product improvements,

product modifications and new brands that the
company develops through its own research and
development.
 Categories of New
Products
New-To-The-World
New-To-The-World

New
New Product
Product Lines
Lines
Six
Six
Categories
Categories Product
Product Line
Line Additions
Additions
of
of
New
New Improvements/Revisions
Improvements/Revisions
Products
Products
Repositioned
Repositioned Products
Products

Lower-Priced
Lower-Priced Products
Products
 Causes of new product
Failure
• Not introducing a “superior” product
• Overestimation of Market Size
• Product Incorrectly Positioned, Priced or
Advertised
• Blow out in costs of Product Development
• Competitive Actions - price wars etc
• Disharmony between marketing and R&D
 Causes of new product
Failure
To create successful new products, the
company must:

• understand its customers,

markets and competitors,
• develop products that deliver
superior value to customers.
 New Product Development
Process
Marketing Business
Strategy Analysis
Development
Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
 New product
development strategies
Strategies for Obtaining New Product Ideas

Acquired
Acquired Original
Original
Companies
Companies Products
Products

Acquired
Acquired Product
Product
Patents
Patents Improvements
Improvements

Acquired
Acquired Product
Product
Licenses
Licenses Modifications
Modifications

New
New
Brands
Brands
 Step 1: Idea Generation

Customers
Customers
Employees
Employees
Distributors
Distributors
Competitors
Competitors
R
R&&D
D
Sources
Sources of
of
New-Product
New-Product Consultants
Consultants
Ideas
Ideas
Creative
Creative Thinking
Thinking
Attribute Listing

The process of listing down

major attributes of existing
products & modifying each
attribute for an improved
product
Forced Relationships

In this process several

objects are considered in
relationships with each
other to create a new
product.
Morphological Analysis

This method calls for

identifying structural
dimensions of a problem and
exmining the relationship
amongst them.
Need /problem
identification

This method calls for

identifying needs, problems
& even asking for ideas.
Brainstorming

The process of getting a

group to think of unlimited
ways to vary a product or
solve a problem.
 Step 2: Idea Screening
• Process to spot good ideas and drop poor
ones as soon as possible.
• Many companies have systems for rating
and screening ideas which estimate:
• Market Size
• Product Price
• Development Time & Costs
• Manufacturing Costs
• Rate of Return
• Then, the idea is evaluated against a set of
general company criteria.
 Step 3: Concept
Development & Testing

1.
1. Develop
DevelopNewNewProduct
ProductIdeas
Ideas
into
intoAlternative
AlternativeDetailed
Detailed
Product
ProductConcepts
Concepts

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
New
NewProduct
ProductConcepts
Conceptswith
with
Groups of Target Customers
Groups of Target Customers

3.
3. Choose
Choosethe
theOne
OneThat
ThatHas
Hasthe
the
Strongest
StrongestAppeal
Appealto
toTarget
Target
Customers
Customers
 Step 4: Market Strategy
Development
Marketing Strategy Statement Formulation

Part
Part One
One Describes
Describes Overall:
Overall:
Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales
Sales &
& Profit
Profit Goals
Goals
Market
Market Share
Share
Part
Part Two
Two Describes
Describes Short-Term:
Short-Term:
Product’s
Product’s Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three Describes
Describes Long-Term:
Long-Term:
Sales
Sales &
& Profit
Profit Goals
Goals
 Step 5: Business Analysis
Step 6: Product development

Business
Business Analysis
Analysis
Review
Review of
of Product
Product Sales,
Sales, Costs,
Costs,
and
and Profits
Profits Projections
Projections to
to See
See ifif
They
They Meet
Meet Company
Company Objectives
Objectives

IfIf No,
No, Eliminate
Eliminate
Product
Product Concept
Concept

IfIf Yes,
Yes, Move
Move to
to
Product
Product Development
Development
 Step 7: Test Marketing
Test Marketing is the Stage Where the Product and
Marketing Program are Introduced into More Realistic
Market Settings.
Budget
Budget Levels
Levels Product
Product

Positioning
Positioning
Packaging
Packaging Elements that Strategy
Strategy
May be Test
Marketed by a
Company
Branding
Branding Advertising
Advertising

Pricing
Pricing Distribution
Distribution
 Step 8: Commercialization

Commercialization is the Introduction of the

New Product into the Marketplace.

When?
When? Where?
Where?
 Step 8: Commercialization

Production
Production

Inventory
Inventory Buildup
Buildup

Distribution
Distribution Shipments
Shipments

Sales
Sales Training
Training
Steps
Steps in
in
Marketing
Marketing aa Trade
Trade Announcements
Announcements
New
New Product
Product
Customer
Customer Advertising
Advertising
 Diffusion

The process by which the adoption

of an innovation spreads.
Categories of adopters
in Diffusion process

• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
 Categories of Adopters
Percentage of Adopters

Early Early Late

Innovators Adopters Majority Majority Laggards
2.5% 13.5% 34% 34% 16%

Time
 Diffusion process and
product life cycle curve

Introduction Growth Maturity Decline

Product
life cycle
curve
Sales

Early majority
Late majority
Early adopters
Innovators
Laggards
Diffusion
curve
Product characteristics
and the rate of adoption

• Complexity
• Compatibility
• Relative advantage
• Observability
• Triability
Marketing implications of
the adoption process

Communication aids the diffusion process

• Word-of-mouth
• Direct from marketer