Genesis Management Services Pty Ltd gmservices.com.au
genesis
SERVICES
EXPERIENCE
NEW PRODUCT
DEVELOPMENT & PRODUCT LIFECYCLE STRATEGIES
1. Introduction
Two major challenges over lifecycle
find new products to replace those that are in the decline stage (new product development)
know how to manage products optimally in each stage (lifecycle strategies).
2. New Product Development Strategy
Obtain new products in two ways
acquisition (buying a company, patent or licence)
new-product development
New products mean original products, product improvements, product modifications & new brands.
Many product failures (failure rate varies from 20-80%)
Successful new product development difficult to achieve
Shortage of ideas
Fragmented markets
Social & governmental constraints
Cost of new-product development process
Capital shortage
Shorter life spans (competitors are quick to introduce similar products).
Reasons for failure
Subjectivity
Market size is overestimated
Poor design
Incorrectly positioned
Not advertised effectively
Overpriced.
Costs of product development higher than expected.
3. Idea Generation
Search should be systematic
Top management should define business domain, objectives, strategies
Sources of new product ideas (customers, scientists, competitor's products, company sales force & dealers, inventors, consultants & laboratories).
Use creativity techniques
Customer problem analysis (interviewing)
Product modification analysis (think about opportunities to modify, magnify, substitute, rearrange, combine one or more features).
Brainstorming.
4. Idea Screening
DROP-error (dismiss good idea because of lack of vision)
GO-error (poor idea proceeds to development & commercialisation).
Often use a rating form.
5. Concept Development & Testing
Concept development (product idea described in objective & functional terms).
Concept testing (taking these concepts to an appropriate group of target customers & getting their reactions). Symbolically or physically.
6. Marketing Strategy Development
Size, structure & behaviour of the target market.
Intended positioning
Sales, market share & profit goals sought
Intended price, distribution strategy marketing budget
Long-run, profit goals & marketing-mix strategy over time.
7. Business Analysis
Estimating sales, costs and profits.
8. Product Development
When prototype is ready, then functional & consumer tests.
9. Market Testing
Product & marketing programme introduced to learn how consumers & dealers react.
Several possible methods of market testing.
10. Commercialisation
When (timing)
Where (geographical strategy)
To whom (target market prospects)
How (introductory marketing strategy).
11. Product Lifecycle Strategies
Introduction Stage
Profits are negative or low
Few competitors
Growth Stage
Sales start climbing
New competitors enter
Prices tend to remain
Profit margins peak
Sustain growth by manipulating marketing-mix.
Maturity Stage
Poses most challenges to marketing management.
Possible strategies are:
(a) Market modification (find new buyers for the product)
(b) Product modification (change product characteristics such as quality, features & style to attract new users or more usage)
(c) Marketing-mix modification (altering one or more elements of the marketing mix).
Decline Stage
Identify weak products
Determining marketing strategies (abandon the market or utilise a continuation, concentration or harvesting strategy if it decides to stay).
Drop decision (product could be sold, dropped).
