In this chapter you will: Understand how product life cycles affect strategic planning, know what is involved in designing new products and what new products really are, understand the new-product development process, see why product liability must be considered in screening new products.
Chapter 10: Product Management and New-Product Development For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 10 Objectives When you finish this chapter, you should 1. Understand how product life cycles affect strategy planning 2. Understand what is involved in designing new products and what “new products” really are 3. Understand the newproduct development process 102 4. See why product liability must be considered in screening new products 5. Understand the need for product or brand managers 6. Understand the important new terms For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Product Life Cycle Market Introduction Market Growth Market Maturity Sales Decline Total Industry Sales + $0 – Total Industry Profit Tim e Exhibit 101 103 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Planning for Life Cycle Stages Introducing New Products Focus: Managing Mature Products Focus: Future Adaptation New Markets Dying Products 104 Budget / Rate of Growth Persuasion / Less Profit Focus: New or Improve? Focus: New Strategies Focus: Phase Out For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill New-Product Development Process Idea Generation Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Screening Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Idea Evaluation Concept testing Customer reactions Rough estimates of cost, sales, profits Development R&D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Commercial -ization Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate Exhibit 104 105 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Types of New Product Opportunities Immediate Satisfaction High High Long-Run Consumer Welfare Low 106 Low Desirable Products Salutary Products Pleasing Products Deficient Products For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill New-Product Development Management Top Level Support Authority Key Issues Market-Guided R&D Integration & Coordination 107 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Product Life Cycle Market Introduction Market Growth Market Maturity Sales Decline Fashion Fad New Product FTC Consumer Product Safety Act Product Liability Concept Testing Product Managers Brand Managers 108 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill ... product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate Exhibit 10 4 10 5 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies,... Introduction Market Growth Market Maturity Sales Decline Total Industry Sales + $0 – Total Industry Profit Tim e Exhibit 10 1 10 3 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies,... Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill New-Product Development Management Top Level Support Authority Key Issues Market-Guided R&D Integration