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Life-Cycle Strategies
Chapter 9
New Product Development
Stage 8: Commercialization
•i) When (timing)
ii) Where (geographic strategy)
iii) To whom ( target market prospect)
iv) How (introductory market strategy)
Managing New Product Development
• Successful new-product development requires a
Maturity
Growth
Introduction Decline
Time
Product
development
stage
• Product development
Characteristics :
• Begins when the company develops a new-product
idea
• Sales are zero
• Investment costs are high
• Profits are negative
• Introduction
Characteristic :
• Low and slow sales
• High cost per customer acquired
• Negative or low profits because sales are low and distribution and A&P
expenses are high
• Innovators are targeted
• Little competition
Marketing Strategies:
• Product – Offer a basic product
• Price – Use cost-plus basis
• Distribution – Build selective distribution
• Advertising – Build awareness among early adopters and dealers/resellers
• Promotion – Heavy expenditures to create trial-sales promotion
• Growth
Characteristic:
• Rapidly rising sales
• Rising profits
• Early adopters are targeted and continue to buy and later buyer
will start following
• Growing competition
Marketing Strategies
• Product – Offer product extensions, service, warranty
• Price – Penetration pricing (setting a low price)
• Distribution – Build intensive distribution
• Advertising – Build awareness and interest in the mass market
• Promotion – Reduce expenditures to take advantage of consumer
demand
• Maturity
Characteristic:
• Sales peak
• At some point a product’s sales will slow down
• At this stage normally lasts longer than the previous stage
• High profits
• Middle majority are targeted
• Competition begins to decline because competitors begin marking
down prices, increasing their A&P and upping their R&D budgets to
find better versions of products
Marketing Strategies:
• Product – Diversify brand and models
• Price – Set to match or beat competition
• Distribution – Build more intensive distribution
• Advertising – Stress brand differences and benefits
• Promotion – Increase to encourage brand switching
Decline
Characteristic:
• Declining sales because of technological advances, shifts in consumer
tastes and increased competition
• Declining profits
• Laggards are targeted
• Declining competition
Marketing Strategies:
• Product – Phase out weak items, pay attention to the aging product, decide
whether to maintain, harvest or drop each of these declining product
• Price – Cut price
• Distribution – Use selective distribution: phase out unprofitable outlets
• Advertising – Reduce to level needed to retain hard-core loyalists
• Promotion – Reduce to minimal level
Product Life-Cycle Strategies
Modifying Strategies
• Market modifying
• Product modifying
• Marketing mix modifying
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Product Life-Cycle Strategies
Modifying Strategies
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Product Life-Cycle Strategies
Modifying Strategies
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Additional Product and Service Considerations
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Additional Product and Service Considerations
Challenges
• Determining what products and services to introduce in which countries
• Standardization versus customization
• Packaging and labeling
• Customs, values, laws
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