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Conceiving, developing, and managing new products
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New product
• A modification of an existing product or an innovation the consumer perceives as meaningful
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Types of New products
• Modifications
• Minor innovations
• Major innovations
• Significantly different
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Product life cycle
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Product Innovation
• Importance– New products cause old products to become
obsolete– Consumer tastes and preferences change– Competition copies– All products are mortal– High failure rate
• Reasons for high failure rate• Classifications of failure
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Stages in the new product development process
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Managing products throughout the product life cycle
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The Introduction Stage
• Also called “pioneering” stage• Most expensive and risky• Truly innovative – build primary demand• Product strategies
– JUMP IN! Pioneer advantage– Wait until growth stage
• Pricing strategies– Market skimming – Market penetration
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Growth Stage
• Sales and profits rise
• Product is adopted by individual consumers– Factors Influencing adoption
• Diffusion is the process by which an innovation is spread through a social system
• Competition enters the market
• Profits peak
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The diffusion process
• Innovators (2.5-3%)
• Early adopters (13%)
• Early majority (34%)
• Late majority (34%)
• Laggards (16%)
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Maturity
• Sales continue to grow, but at a declining rate
• Benefits of having a product at the maturity stage
• Marketing strategies to extend the maturity stage of the product life cycle
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Decline
• Reasons
• Strategies– Delete a product– Ensure efficiency in marketing and
production– Prune unprofitable sizes and models– “Run out” the product
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Obsolescence
• Functional
• Style
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Evaluating the product life-cycle concept
• Stages, time span and shape of the product life cycle vary by product
• Economy, inflation, and consumer lifestyles may shorten or lengthen a product’s life cycle
• A firm may do worse than the average product in the market
• A firm may be able to manage the life cycle, or extend it or reverse decline
• Firms may engage in a self-fulfilling prophecy