New Product Development and Product Life Cycle Strategies

New Product Development
and Product Life Cycle

Strategies
Chapter 09
City University of Science and Information Faisal Ghani
Technology
Definition
The development of original products,
product improvements, product
modifications, and new brands through the
firm’s own R&D efforts.
Chapter 09 New Product Development and Product Life Cycle Strategies 2

Technology

Strategies
 One study estimated that as many as 80% of new
consumer packaged products failed in the US.
 Why?
 Overestimation of market size
 Product design problems
 Product incorrectly positioned, priced or
advertised
 Product may have been pushed despite poor
marketing research findings
 Costs of product development
 Competitive actions
Technology
New-Product Development
Strategy
New product success depends on having a:
 Unique superior product (one with higher quality,
features, and value in use), and
 Well-defined product concept (a defined target market,
product requirements, and benefits).
To create successful new products, the company
must:
 understand its customers, markets and competitors
 develop products that deliver superior value to
customers.

Technology
New-Product Development Strategy
Major Stages in New-Product

Development
 Idea Generation
 Idea Screening
 Concept Development and Testing
 Marketing Strategy
 Business Analysis
 Product Development
 Test Marketing
 Commercialization

Technology

Strategy
Stage 1: Idea Generation
The systematic search for new-product
ideas.
 Internal Idea Sources
 R & D
 External Idea Sources

 Customers, Competitors, Distributors,
Suppliers

Technology
New Product Development Strategy
Stage 2: Idea Screening

Screening new-product ideas in order 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
Ideas are evaluated against criteria; most are

eliminated.

Technology

Stage 3: Concept Development and Testing
Product Concept
A detailed version of the new-product idea stated in meaningful
consumer terms
Product Idea
An idea for a possible product to be offered to the market.
Product Image
The way consumers perceive an actual or potential product.
Concept Testing
Testing new-product concepts with a groups of target consumers to
find out if the concepts have strong consumer appeal.

Technology

Strategy
Stage 4: Marketing Strategy
Development
Designing an initial marketing strategy for a
new product based on the product concept.
Strategy statements describe:
1. The target market, product positioning, and
sales, share, and profit goals for the first few
years.
2. Product price, distribution, and marketing
budget for the first year.
3. Long-run sales and profit goals and the
marketing mix strategy.

Technology
Stage 5: Business Analysis

A review of the sales, cost, and profit
projections for the new product to find out
whether these factors satisfy the
company’s objectives.

Technology
Stage 6: Product Development

Developing the product concept into a
physical product in order to ensure that
the product idea can be turned into a
workable product.
 Move to product development.
 Prototype development and testing

Technology
Stage 7: Test Marketing

The stage of new-product development in
which the product and marketing program are
introduced into more realistic market settings.
The company testes its entire marketing

programs i.e. positioning strategy, advertising,
distribution, pricing, branding and packaging
etc.

Technology
Stage 7: Test Marketing

Consumer product companies usually chose
the following three ways of test marketing.
Standard Controlled Simulated

Test Market Test Market Test Market
Full marketing A few stores Test in a

campaign in a that have agreed simulated
small number of to carry new shopping
representative products. environment to
cities. a sample of
consumers.
Technology

Stage 8: Commercialization
Introduction of the new product into the marketplace.
When and To Whom and

Where to How to
Introduce launch a
new product new
at a right time? product?

Technology
Product Life-Cycle Strategies

Product Life Cycle (PLC)
The course of a product’s sales and profits
over its life time. It involves five distinct
stages:
 Introduction
 Growth
 Maturity
 Decline

Technology

Sales and
Profits Rs. Sales
Profits
Time
Product Introduction Growth Maturity Decline
Develop-
ment
Losses/
Investments Rs.

Technology

 Introduction: The product life-cycle stage in which
the new product is first distributed and made
available for purchase.
 Growth: The product life-cycle stage in which a
product’s sales start climbing quickly.
 Maturity: The stage in the product life-cycle in
which sales growth slows or levels off.
 Decline: The product life-cycle stage in which
product’s sales decline.

Technology

 Style: The basic and distinctive mode of
expression.
 Fashion: A currently accepted or popular
style in a given field.
 Fad: A temporary period of usually high sales
driven by consumer enthusiasm and
immediate product or brand popularity.

Technology

Style Fashion Fad

Sales
Sales
Sales
Time Time Time

New Product Development and Product Life Cycle Strategies

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and Product Life Cycle

Chapter 09 New Product Development and Product Life Cycle Strategies 2