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Developing and Managing Products

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Developing and Managing Products Dr. Close New Product Development (1) New Product: different or new in ANY way (Pentium) Various categories of new products New to ... – PowerPoint PPT presentation

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Title: Developing and Managing Products


1
Developing and Managing Products
  • Dr. Close

2
New Product Development (1)
  • New Product different or new in ANY way
    (Pentium)
  • Various categories of new products
  • New to world
  • New to market
  • New to seller
  • New to producer

3
New Product Development (2)
  • New product process includes
  • 1. New Product Strategy (NPD process to match
    objectives)
  • 2. Idea Generation and Sources
  • Customers (Food Lion)
  • Employees
  • Competitors (reverse engineer US Japan autos)
  • Need formal program RD
  • Any source of idea is good

4
New Product Development (3)
  • 3. Idea Screening (what do we have? /-)
  • In pharmacy, 1 of 5,000 new drug ideas is common
  • In autos, 1 of 20 new car concepts is made to
    prototype
  • Point? Brainstorm, then cut via research
  • Short and long run performance
  • Social issues
  • Consumer welfare (Ben and Jerrys)
  • Safety ( Marlboro cigarettes) liability
    (McDonalds hot coffee)

5
New Product Development (4)
  • 4. Business Analysis
  • Examine consumer perceptions (Coors banquet beer)
  • Consider view of retailers and wholesaler (Frito
    Lay)
  • 5. Development (can go hand-in-hand with
    analysis)
  • Product tests (New Coke, movies)
  • Risky (leaks, skewed results)
  • Virtual product development examine without
    construction
  • Prototype product and marketing strategy
  • Longest process (Minute Rice took 18 years!)

6
New Product Development (5)
  • 6. Test Marketing and Commercialization
  • Select Test Cities (Panama City or Dayton Ohio?)
  • Does skipping test marketing save money?
  • Sometimes, line extensions are not tested (Quaker
    Chewy)
  • Commercialization takes a substantial amount of
    (New Coke)
  • Some firms roll out their products gradually
    (movies Pixar)

7
Product Life Cycle (1)
  • Product life cycle (4 stages) for product IDEA,
    not individual firms.
  • Introduction (phones with net access plasma TV)
  • High marketing costs (inform)
  • Slow sales increase
  • Low or no profit (Amazon.com)
  • Low competition
  • Price often high (ex. Calculator)
  • What other products can you think of that are in
    introduction?

8
Advertising is key in the intro stage
9
Product Life Cycle (2)
  • Product life cycle (cont)
  • Growth (solar changing lens)
  • High marketing expense (inform and persuade)
  • Many small competitors market entry (athletic
    apparel)
  • Little price competition
  • Industry profits rise/peak and sales
  • increasing
  • What other products
  • are in growth?

10
Product Life Cycle (3)
  • Maturity (Beer and Auto)
  • Industry sales level off profits down
  • Promotions stop rising moderate marketing
    expense (persuade)
  • Fewer, stronger competitors tough competition in
    general
  • Many consumers view product as homogeneous price
    competition
  • What other products can you think of that are in
    maturity?

11
Budweiser in a mature market
12
Product Life Cycle (4)
  • Decline being replaced (VCR)
  • Decrease in industry sales/profits
  • Low marketing expense small groups remain loyal
  • Dropouts few competitors most gone
  • What other products can you think of that are in
    decline?

13
Are your old toys in decline?
14
Product Life Cycle (5)
  • Criticisms
  • Self fulfilling prophecy (Is beer always going to
    be a mature product?)
  • All do not follow pattern (fads fashion
    scooters comeback)
  • Product may be in different stages by the market
    (BW T.V. Coke)
  • What do you see are the advantages of the PLC?
    Why should m.managers care?

15
Product Life Cycle (6)
  • Factors that may speed products through PLC
  • Ease of trial (supermarkets, no risk, test drive)
  • Ease of use (some assembly required Toys R Us
    (bike) Gateway store)
  • Easy to communicate advantages (Always low price
    cars)
  • Compatible with customer experience (Poland
    free samples)

16
Zara Fashion Changes Quickly
17
Spread of New Products
  • Global and Domestic Perceived as new
  • Diffusion of Innovation
  • Who are you?
  • Early adopter (first 2.5 to adopt)
  • Early majority (next 13.5)
  • Late majority (next 34)
  • Laggard (last 16 to adopt)

18
How to Have New Product Failure
  • New product failure (70-80 of brands 80
    packaged goods)
  • How to fail
  • Offer no unique benefit (Pepsis clear soda vs.
    Secrets clear deodorant)
  • Race to market (Ford Pinto, Ford school bus,
    Netscape)
  • Give little thought to promotion (Chevy NoVa)
  • Give little thought to competition (Wal-marts
    impact)
  • Skip research or conduct sloppy research
  • Try just one new product (top consumer goods
    companies average trying 75 new products a year)

19
Historic product failures
20
Diversify with new products
21
Summary
  • Categories of New Products
  • NPD Process
  • Product life cycle
  • Global/spread of new products
  • Diffusion of Innovations
  • New product failures
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