PowerPoint Presentation by Sixit Bhatta

PowerPoint Presentation by Sixit Bhatta

Product Development and Product Life CycleProduct Development and Product Life Cycle

Session -6

NokiaNokia

Why Product Development?Why Product Development?

Increase sales, Revenue, Competitive advantage.

What is Product DevelopmentWhat is Product Development

• Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.

New Product Development StrategyNew Product Development Strategy

• New products can be obtained via acquisition or development.

• New products suffer from high failure rates.

• Several reasons account for failure.

Stages in New Product DevelopmentStages in New Product Development

Stage 1: Idea Generation Internal idea sources:

R & D External idea sources:

Customers, competitors, distributors, suppliers

Stage 2: Idea Screening Product development costs increase

substantially in later stages so poor ideas must be dropped

Ideas are evaluated against criteria; most are eliminated

Stage 3: Concept Development and Testing Concept development creates a

detailed version of the idea stated in meaningful consumer terms.

Concept testing asks target consumers to evaluate product concepts.

Stage 4: Marketing Strategy Development

The target market, product positioning, and sales, share, and profit goals for the first few years.

Product price, distribution, and marketing budget for the first year.

Long-run sales and profit goals and the marketing mix strategy.

Stage 5: Business Analysis Sales, cost, and profit projections

Stage 6: Product Development Prototype development and testing

Stage 7: Test Marketing Standard test markets Controlled test markets Simulated test markets

Stage 8: Commercialization

Product Life CycleProduct Life Cycle

Time

ProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments (Rs)

Sales andProfits (Rs)

Product Life Cycle StrategiesProduct Life Cycle Strategies

To say that a product has a life cycle asserts four things

1. Products have a limited life.2. Product sales pass through distance

stages, each posing different challenges, opportunities, and problems to the seller.

3. Profits rise and fall at different stages of the product life cycle.

4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

Product Life-Cycle Patterns

Style, Fashion, and Fad Life Cycles

Marketing Strategies: Introduction Stage– The Pioneer Advantage

• Inventor• Product pioneer• Market pioneer

Marketing Strategies: Growth Stage– Improve product quality and add new product

features and improved styling– Add new models and flanker products– Enter new market segments– Increase distribution coverage and enter new

distribution channels– Shift from product-awareness advertising to

product-preference advertising– Lower prices to attract next layer of price-sensitive

buyers

Marketing Strategies: Maturity Stage– Market Modification

• Expand number of brand users by:1. Converting nonusers2. Entering new market segments3. Winning competitors’ customers

• Convince current users to increase usage by:1. Using the product on more occasions2. Using more of the product on each occasion3. Using the product in new ways

– Product modification• Quality improvement• Feature improvement

– Marketing-Mix Modification• Prices• Distribution• Advertising• Sales promotion• Personal selling• Services

Marketing Strategies: Decline Stage1. Increase firm’s investment (to dominate the

market and strengthen its competitive position)

2. Maintain the firm’s investment level until the uncertainties about the industry are resolved.

3. Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches

4. Harvesting (“milking”) the firm’s investment to recover cash quickly

5. Divesting the business quickly by disposing of its assets as advantageously as possible.