CHAPTER TEN

Product Management
and New Product
Development

For use only with

Perreault and McCarthy
texts.
© 2005 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin www.mhhe.com/fourps
When we finish this lecture 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 new-product development
process.
4. See why product liability must be considered
in screening new products.
5. Understand the need for product or brand
managers.

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Exhibit 10-1
Managing Products over Their Life Cycles

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Market Introduction – Investing in the Future

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Market Growth – Profits Go Up and Down

Innovation Attracts
Competition

Monopolistic Competition
Develops

Profits Peak and Then

Decline

Don’t Ignore Long-Term Competitive Trends!

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Market Maturity – Sales Level Off,
Profits Continue Down

Persuasive, More Costly

Promotion

Brands Are More Similar

Greater Price
Competition/Price Sensitivity

Maturity May Last a Long

Time
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Sales Decline – A Time of Replacement

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Which Stage of the PLC?

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Product Life Cycles Should Be
Related to Specific Markets

Individual Market
Brands Definitions
• May not follow the • Should be
classic pattern carefully
developed
• May be introduced AND
in market growth • Different markets,
or maturity different stages

• Not all brands are • Contribute to the

equally strong length of the cycle

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Product Life Cycles Vary in Length

Competitive
Easy to Use
Advantage

Some Products
Move Fast Easy to
Compatible
Communicate

Can Be Tried

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Interactive Exercise: Adoption

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Other Issues in Product Life Cycle Length

Product Life Cycles Are

Getting Shorter

The Early Bird Usually Profits

Fashions and Fads

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Planning for Different Stages
of the Product Life Cycle

Allocate
Consider the
Sufficient
Four Ps
Money

Market
Introduction
Anticipate
Be Flexible & Growth Speed of
Movement

Competitors
May Help
Adoption
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Managing Mature Products

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Exhibit 10-3
Improve the Product or Develop a New One

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Are Product Modifications Really New Products?

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Phasing Out Dying Products

Phase-out May
Be Necessary

Don’t Pull the

Plug So Quickly
Product Line
Profitability Customer
Support
Sales Decline
Can Be Profitable

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

New Product Planning

What Is a New Product?

FTC Rule: 6 Months

Ethical Dilemmas Exist

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New Product

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Exhibit 10-4
An Organized New Product Development Process is Critical

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Step 1: Idea Generation

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Step 2: Screening

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Step 3: Idea Evaluation

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Step 4: Development

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Step 5: Commercialization

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Exhibit 10-6
New Product Development: A Total Company Effort

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Need for Product Managers

Product/Brand
Managers

Common in Large
Companies

Some Are “Product

Champions”

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Key Terms

• Product life cycle • Consumer Product

• Market introduction Safety Act
• Market growth • Product liability
• Market maturity • Concept testing
• Sales decline • Product managers
• Fashion • Brand managers
• Fad
• New product
• Federal Trade
Commission (FTC)

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin