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New Product Development and
Product Life-Cycle Strategies
Chapter 11
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I nstructor name
Course name
School name
Date
Principles of Marketing, Sixth Canadian Edition
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Principles of Marketing, Sixth Canadian Edition
11.2
Learning Objectives
After studying this chapter, you should be able to:
Explain how companies find and develop new-product ideas
List and define the steps in the new-product development
process
Describe the stages of the product
life cycle
Describe how marketing strategies
change during the products life
cycle
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Principles of Marketing, Sixth Canadian Edition
11.3
Major Stages in New Product Development
Idea generation: systematic search for new ideas
Internal sources: brainstorming
External sources: customers, competitors,
distributors and suppliers
Idea screening: identify
good ideas and drop poor ones
Usefulness to consumers
Good for company
Fit with objectives and
strategies
Have the resources
Add value
Figure 11.1
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Principles of Marketing, Sixth Canadian Edition
11.4
Major Stages in New Product Development
Concept development: detailed version of the
product concept in meaningful consumer terms
Concept testing: testing new-product concepts for
consumer appeal
Marketing strategy: initial
strategy for product concept:
Target market, positioning,
and sales, market share, and
profit goals
Price, distribution, and
marketing budget
Strategy statement, long-run
sales, profit goals, and
marketing mix
Figure 11.1
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Principles of Marketing, Sixth Canadian Edition
11.5
Major Stages in New Product Development
Business analysis: review of sales, costs, and profit
projections to determine if they meet company
objectives.
Product development:
developing the product
concept into a physical
product
Large investment
Building a prototype
Testing for safety,
durability, and
acceptability
Figure 11.1
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Principles of Marketing, Sixth Canadian Edition
11.6
Major Stages in New Product Development
Test marketing: testing the product in more
realistic market settings
Determine the target market profile
Assess consumer
acceptability, trial, repeat
purchase rate
Evaluate trade reception
and distribution penetration
Design effective media
plans
Standard test markets
Controlled test markets
Simulated test market

Figure 11.1
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Principles of Marketing, Sixth Canadian Edition
11.7
Major Stages in New Product Development
Commercialization: introducing a new product
into the market
Introduction timing
Market rollout or full-scale
introduction
Sequential product
development
Simultaneous (team-
based) product
development
Figure 11.1
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Principles of Marketing, Sixth Canadian Edition
11.8
Product Life-Cycle Strategies
Product life cycle (PLC): the course of a products
sales and profits over its life
Figure 11.2
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Principles of Marketing, Sixth Canadian Edition
11.9
Styles, Fashions, and Fads
Style: basic and distinctive mode of expression
Fashion: currently accepted or popular style in a
given field
Fad: a fashion the enters quickly, adopted with great
zeal, peaks early, and decline very fast
Figure 11.3
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Principles of Marketing, Sixth Canadian Edition
11.10
Summary of PLC (Table 11.2)
Characteristics: Introduction Growth Maturity Decline
Sales Low Rapidly rising sales Peak Declining sales
Costs High cost Average cost Low cost Low cost
per customer per customer per customer per customer
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number Declining number
Marketing objectives:
Create product Maximize market Maximize profit & Reduce expenditure
awareness and trial share defend market share & milk brand
Strategies:
Product Offer basic product Offer product Diversify brand and Phase out weak
extensions, service models items
Price Use cost-plus Price to penetrate Price to match or Cut price
market best competitors
Distribution Build selective Build intensive Build more Selective; phase out
distribution distribution intensive distribution unprofitable outlets
Advertising Build awareness Build awareness & Stress brand differences Reduce to level needed
early adopters/dealers interest mass market and benefits to retain hard-core loyals
Sales promotion Heavy sales promotion Reduce promotion due Increase to encourage Reduce to minimal
to entice trial to heavy demand brand switching level
Source: Philip Kotler and Peggy Cunningham, Marketing Management: Analysis, Planning, I mplementation,
and Control, Canadian 11th Edition, Pearson Education Canada, Toronto, Ontario, 2004, p. 347
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Principles of Marketing, Sixth Canadian Edition
11.11
In Conclusion
The learning objectives for this chapter were:
Explain how companies find and develop new-product ideas
List and define the steps in the new-product development
process
Describe the stages of the product
life cycle
Describe how marketing strategies
change during the products life
cycle