CHAPTER 08

NEW PRODUCT
DEVELOPMENT

© 2021 McGraw-Hill Education Limited Prepared by: Maria Vincenten, Red River College

Learning Objectives
1. Explain the concept of the product life cycle and
elements involved in each stage
2. Describe the ways that product life cycles can be
extended
3. Differentiate between different types of new
products
4. Describe the adoption curve of new products
5. Detail each step in the new product development
process

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 True Büch Kombucha
• Launched a whole new
product category and
continues to be innovators

“We’re constantly monitoring the trends on health foods

and botanicals that are gaining popularity to create new
flavours for consumers.”
J.R. Brooks , co-owner, True Büch Kombucha
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The Product Life Cycle

• Product Life Cycle –

describes the stages
that a new product
goes through

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 The Product Life Cycle (continued)

rapid growth and

profit increases
competition becomes
minimal sales, profits, more severe; sales
and competition and profits flatten out
marketers try to
manage products so
that they extend the
time until the decline

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The Product Life Cycle (continued)

Managing the stages of the product life cycle

Stage in PLC Introduction Growth Maturity Decline

Competition Few competitors More Many Reduced
exist competitors enter competitors in competition, with
the market the market some
competitors
leaving the
market
General Awareness Product Brand loyalty Product
Marketing differentiation rationalization
Objective
Product Focus on a new Introduce more Ensure full Retain only best
product or brand features product line is sellers or
available and discontinue
innovative with
new ideas

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 The Product Life Cycle (continued)
Figure 8-3 Managing the stages of the product life cycle
(continued)

Stage in PLC Introduction Growth Maturity Decline

Price Use a skimming Prices are slowly Price discounts Very low prices
or penetration reduced are used
strategy frequently
Place Limited Distribution is Full distribution is Distribution is
distribution increased achieved reduced
Promotion Focus on building Emphasize points Focus on pricing Only minimal
awareness with of difference and sales promotion, if any
advertising versus the promotion
competition
Profit Minimal profits, if Increased profits Maximized profits Decreasing and
any that reach their that level off minimal profits
maximum

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Length of the Product Life Cycle

• Varies according to the industry, competition, technological

innovation, and approaches to marketing the product
• In general:
– Consumer products have short life cycles
– Availability of mass communication vehicles shortens life
cycles
– Technological change shortens life cycles
– Marketing approaches to keep product relevant lengthens
life cycles

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 Shape of the
Product Life Cycle
consumer education is required;
extended introductory period

little consumer education is required;

short introductory stage for the product

short and cyclical, from introduction to decline within Novelty products with very short
several years, resurface again a few years later product life cycles that experience
immediate rapid growth, followed by
an equally rapid decline

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Product Life Cycle Strategies

Product life cycles can be extended:

1) Modifying the product
2) Modifying the market
3) Repositioning a product
4) Introducing a new product

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 Product Life Cycle Strategies
(continued)

1) Modifying the product

– Product improvements
– Line extensions - addition of a new item to an
already existing product line

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Product Life Cycle Strategies

(continued)

2) Modifying the market

– Finding new customers
– Increasing a product’s use
– Creating a new situation

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 Product Life Cycle Strategies
(continued)

3) Repositioning a product

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Product Life Cycle Strategies

(continued)
4) Introducing a new product
Best New Product Award Winners
Product Category
Neutrogena Hydro Boost Body Gel Cream Fragrance Free (body lotion) Health and beauty
Batiste Bare Dry Shampoo (dry shampoo) products
Sensodyne Rapid Relief (toothpaste)
Robitussen Honey (cough syrup)
Beyond Meat Burger (plant-based burger) Food and beverage
Siggi’s Yogurt (yogurt) products
Triscuit Woven with Chia Seeds Rosemary & Jalapeno (crackers)
Sabra Avocado Toast (grab-and-go meal)
Milk-Bone Wonder Bones (dog food/treat) Household
Finish In-Wash Dishwasher Cleaner (dishwasher cleaner) products
Downy Wrinkleguard Fabric Conditioner (fabric enhancer)
Airpods Pro (noise-cancelling earbuds)

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 New Products

“New products are the lifeblood of a company,

helping to make products relevant and to bring future
revenues into the company.”

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New Products (continued)

Degree of product innovation
Minor Innovation Continuous Innovation Radical Innovation
Definition Requires no new Changes consumer’s Requires new learning
learning by normal routine but and consumption
consumers does not require patterns by consumers
totally new learning
Examples New and improved Swiffer WetJet; Amazon Alexa or
toothpaste or wearable technology Google Home; self-
detergent driving cars; 3D
printers
Marketing Gain consumer Advertise points of Educate consumers
emphasis awareness and wide difference and benefits through advertising,
distribution to consumers product trial, and
personal selling; public
relations can play a
major role
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 The Adoption Curve

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The Adoption Curve (continued)

Barriers that deter adoption:
product is not consistent with existing
Usage usage habits

Value there is no incentive to change

existence of physical, economic, or

Risk social risks if the product is purchased

Psychological cultural or image differences

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 New Product Development

• Expensive undertaking
• High risk of failure
• High research costs
• Time and effort on developing prototypes and
marketing materials
• Expensive product launches
• Lack of future credibility in the market

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New Product Development

(continued)

Avoiding new product failure

Issue Potential Solution
Insignificant • Determine a distinctive and meaningful point
point of of difference for the target audience.
difference • Conduct research with consumers and
monitor competitors’ products/activities.
Incomplete • Identify consumer insights and clearly define
new concept the product’s features and benefits.
definition • Develop a clear positioning.
Insufficient • Identify a target market (with a need) that is
market large enough and has growth potential to
attractiveness support the product.
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 New Product Development
(continued)

Avoiding new product failure (continued)

Issue Potential Solution
Poor execution • Ensure the 4 Ps—product (including brand
of the name and package), price, promotion,
marketing mix distribution—are aligned and attractive to
consumers.
• Focus on gaining sufficient distribution to
access consumers.
Bad timing • Launch products when consumers are eager
to purchase.
• Monitor market conditions and competitor
actions.
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Approaches to New Product

Development
• Strategic direction

Strategic approaches to growth

Markets Current Products New Products
Current Market Penetration Product Development
Finding ways to make Reaching current
current products appeal customers with a new
to current customers product
New Market Development Diversification
Reaching new customers Reaching new customers
with a current product with a new product

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 Approaches to New Product
Development (continued)
• Company structure
“New product development success ultimately requires
the expertise of people with different specializations.”
– cross-functional team-based approach
– focused approach
– included in the role of the general marketer
– new venture teams

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The New Product Development

Process

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 The New Product Development
Process (continued)
Elements in each stage of the new product
development process
Stage of Process Purpose of Stage Marketing Information
and Methods Used
New product Identify new-product Company objectives; SWOT
development development focus that analysis of
strategy meets company company/product/brand
objectives
Idea generation Brainstorm new ideas Ideas from employees, co-
workers, and consumers
Screening and Evaluate product ideas Internal evaluation of
evaluation and develop concepts technical requirements,
external concept tests
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The New Product Development

Process (continued)
Elements in each stage of the new product
development process (continued)
Stage of Process Purpose of Stage Marketing Information
and Methods Used
Business analysis Identify the product’s Product’s key features and
features and its anticipated marketing mix;
marketing strategy, and assessment of production,
make financial legal, and profitability
projections issues
Test marketing Test the product and Test marketing in defined
marketing strategy in the areas
marketplace on a limited
scale (if necessary)

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 The New Product Development
Process (continued)
Elements in each stage of the new product
development process (continued)
Stage of Process Purpose of Stage Marketing Information
and Methods Used
Development Create the prototype and Internal company
test it internally at the assessments and external
company and externally tests on product prototypes
with consumers
Commercialization Launch and fully market Implement all areas of the
the product in the marketing mix; possible
marketplace regional rollout

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