EXAM PREPARATION 4

STRATEGIC MARKETING MANAGEMENT

QUESTION 1

State the salient features of new product development and introduction

stage. The dos and don’ts for strategies for new product development at
introduction stage.
New Product Development

New product development is the process of converting an idea into a workable software
product. The New Product Development (NPD) process is about grabbing the market
opportunity that revolves around customer needs, checking the idea’s feasibility, and
delivering working software. The seven stages of the New Product Development process
include;

1. Idea generation (Idea formulation)

2. Idea screening

3. Concept development and testing

4. Business analysis

5. Product development

6. Market testing

7. Market commercialization.

There are various marketing strategies that can be used for introducing a new product to
the market. Two pricing strategies are available. The choice between the two strategies
depends on the nature of the product and the level of competition:

 Price skimming involves charging a high initial price, before reducing the price
gradually to “skim” each potential target group in the market as the market grows.
  Price penetration involves setting a low price to enter the market quickly and
capturing market share, before adjusting the price to increase profits once the market
has grown.

Characteristics of new product development/ Introduction stage

The introduction stage of product life cycle or the new product development process
consists of the following characteristics;

 Low sales due to lack of awareness: In the introduction stage, the product is new and
untested, which implicates that potential customers may be unwilling or reluctant to
purchase it.

 Low profitability: At the introduction stage, the company is unlikely to be making

full use of its production capacity, which minimises the profitability of the firm.

 High promotional expenditure: In the introduction stage high level of advertisement

expenses are required for creating awareness about the product in the mind of
customers.

 Financial Losses: Company may suffer financial losses due to lack of experience in
the marketing of the product.

 Innovative customer: In the introduction stage, the customer is a new customer, he

or she wants innovation in these products.

 Few competitors: The competitors in the introduction stage is few because the
company is a new one and not famous.

QUESTION 2
State the significance of timing of entry and exit in product marketing and explain the
effects of PLC on strategy.