Principles of Marketing
Kotler and Armstrong
Chapter 9:
New Product
Development
Insert
Textbook
Cover Image
and Product Life-
Cycle Strategies
Copyright 2016 Pearson Education,
9-1
Inc.
New Product Development
Copyright 2016 Pearson Education,
9-2
Inc.
New Product Development
Learning Objectives
Objective 1: Explain how companies find
and develop new product ideas.
Objective 2: List and define the steps in the
new product development process and the
major considerations in managing this
process.
Copyright 2016 Pearson Education, Inc. 9-3
New Product Development
Learning Objectives
Objective 3: Describe the stages of the
product life cycle and how marketing
strategies change during a products life
cycle.
Objective 4: Discuss two additional product
issues: socially responsible product decisions
and international product and services
marketing.
Copyright 2016 Pearson Education, Inc. 9-4
New Product Development
Learning Objective 1
Explain how companies find and develop
new product ideas.
New Product Development Strategy
Copyright 2016 Pearson Education, Inc. 9-5
New Product Development Strategy
Ways to Obtain New Products
Acquisition refers to the buying of a whole
company, a patent, or a license to
produce someone elses product.
New product development refers to
original products, product improvements,
product modifications, and new brands
developed from the firms own research
and development.
Copyright 2016 Pearson Education, 9-6
Inc.
New Product Development
Learning Objective 1
Explain how companies find and develop
new product ideas.
New Product Development Strategy
Copyright 2016 Pearson Education, Inc. 9-7
New Product Development
Learning Objective 2
List and define the steps in the new product
development process and the major
considerations in managing this process.
New Product Development Process
Managing New Product Development
Copyright 2016 Pearson Education, Inc. 9-8
Process
Major Stages in New Product Development
Product Ideas
ent
Developm
FIGURE | 9.1
Copyright 2016 Pearson Education, 9-9
Inc.
Process
Idea
Generation
Idea generation
is the
systematic
search for new
product ideas.
Sources of new
product ideas
Internal
External Copyright 2016 Pearson Education, 9-10
Inc.
Process
Idea
Generation
Internal sources refer to the companys own
formal research and development, management
and staff, and intrapreneurial programs.
External sources refer to sources outside the
company such as customers, competitors,
distributors, suppliers, and outside design firms.
Copyright 2016 Pearson Education, 9-11
Inc.
Process
Idea
Generation
Crowdsourcing involves inviting broad
communities of peoplecustomers,
employees, independent scientists and
researchers, and even the public at large
into the new product innovation process.
Copyright 2016 Pearson Education, 9-12
Inc.
Process
Idea Screening
Identify good ideas and drop
poor ideas
R-W-W screening framework:
Is it real?
Can we win?
Is it worth doing?
Copyright 2016 Pearson Education, 9-13
Inc.
Process
Concept Development and Testing
Product idea is an idea for a possible
product that the company can see itself
offering to the market.
Product concept is a detailed version of
the idea stated in meaningful consumer
terms.
Product image is the way consumers
perceive an Copyright
actual orPearson
2016 potential
Education, product. 9-14
Inc.
Process
Concept Development and Testing
Concept testing
refers to testing
new product
concepts with
groups of target
consumers.
Copyright 2016 Pearson Education, 9-15
Inc.
Process
Marketing Strategy
Development
Marketing strategy development is
designing an initial marketing strategy for
a new product based on the product
concept.
Marketing strategy statement consists
of:
Target market description
Value proposition planned
Copyright 2016 Pearson Education, 9-16
Inc.
Process
Business Analysis
Business analysis is a review of the
sales, costs, and profit projections for a
new product to find out whether these
factors satisfy the companys objectives.
Copyright 2016 Pearson Education, 9-17
Inc.
Process
Product Development
Product
development is
developing the
product concept
into a physical
product to ensure
that the product
idea can be turned
into a workable
market offering.
Copyright 2016 Pearson Education,
Inc.
9-18
Process
Test Marketing
Test marketing is
the stage of new
product
development in
which the product
and its proposed
marketing program
are tested in
realistic market
settings.
Copyright 2016 Pearson Education, 9-19
Inc.
Process
Test Marketing
Marketing Strategy Development
When test When test
marketing is marketing is
likely unlikely
New product Simple line
with large extension
investment Copy of
Uncertainty competitor
about product product
or marketing Low costs
program Management
confidence
Copyright 2016 Pearson Education, 9-20
Inc.
Process
Commercialization
Commercialization involves introducing
a new product into the market.
When to launch?
Where to launch?
Planned market rollout?
Copyright 2016 Pearson Education, 9-21
Inc.
Managing New Product Development
Successful new product development should
be:
Customer centered
Team based
Systematic
Copyright 2016 Pearson Education, 9-22
Inc.
Managing New Product Development
Customer-Centered New Product
Development
Customer-centered
new product
development focuses
on finding new ways to
solve customer
problems and creating
more customer-
satisfying experiences.
Copyright 2016 Pearson Education, 9-23
Inc.
Managing New Product Development
Team-Based New Product
Development
Team-based new product development
involves various company departments
working closely together, overlapping the
steps in the product development process
to save time and increase effectiveness.
Copyright 2016 Pearson Education, 9-24
Inc.
Managing New Product Development
Systematic New Product
Development
Innovation management system
Creates an innovation-oriented company
culture
Yields a large number of new product ideas
New Product Development in
Turbulent Times
Tempted to reduce spending
May become less competitive
Copyright 2016 Pearson Education,
Inc.
9-25
New Product Development
Learning Objective 2
List and define the steps in the new product
development process and the major
considerations in managing this process.
New Product Development Process
Managing New Product Development
Copyright 2016 Pearson Education, Inc. 9-26
New Product Development
Learning Objective 3
Describe the stages of the product life cycle
and how marketing strategies change during
a products life cycle.
Product Life-Cycle Strategies
Copyright 2016 Pearson Education, Inc. 9-27
Product Life-Cycle Strategies
FIGURE | 9.2
Copyright 2016 Pearson Education, 9-28
Inc.
Product Life-Cycle Strategies
Product development
Zero sales and increasing investment
costs
Introduction
Slow sales and nonexistent profits
Growth
Rapid market acceptance and increasing
profits
Maturity
Slow sales growth and profits level off or
decline
Copyright 2016 Pearson Education,
Decline Inc.
9-29
Product Life-Cycle Strategies
FIGURE | 9.3
Copyright 2016 Pearson Education, 9-30
Inc.
Product Life-Cycle Strategies
Introduction Stage
Slow sales growth
Little or no profit
High distribution and promotion
expenses
Copyright 2016 Pearson Education, 9-31
Inc.
Product Life-Cycle Strategies
Growth Stage
Sales increase
New competitors enter the market
Profits increase
Economies of scale
Consumer education
Lowering prices to attract more
buyers
Copyright 2016 Pearson Education, 9-32
Inc.
Product Life-Cycle Strategies
Maturity Stage
Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to
competition
Increased promotion and R&D
to support sales and profits
Copyright 2016 Pearson Education, 9-33
Inc.
Product Life-Cycle Strategies
Maturity Stage
Modification Strategies
Modify the market
Modify the product
Modify the
marketing mix
Copyright 2016 Pearson Education, 9-34
Inc.
Product Life-Cycle Strategies
Decline Stage
Maintain the product
Harvest the product
Drop the product
Copyright 2016 Pearson Education, 9-35
Inc.
Product Life-Cycle Strategies
Table 9.2 Part 1
Copyright 2016 Pearson Education, 9-36
Inc.
Product Life-Cycle Strategies
Table 9.2 Part 2
Copyright 2016 Pearson Education, 9-37
Inc.
New Product Development
Learning Objective 3
Describe the stages of the product life cycle
and how marketing strategies change during
a products life cycle.
Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Copyright 2016 Pearson Education, Inc. 9-38
New Product Development
Learning Objective 4
Discuss two additional product issues:
socially responsible product decisions and
international product and services marketing.
Additional Product and Service
Considerations
Copyright 2016 Pearson Education, Inc. 9-39
Additional Product and Service Considerations
Product Decisions and Social
Responsibility
Public policy and regulations
regarding developing and dropping
products, patents, quality, safety,
and product warranties should be
considered carefully.
Copyright 2016 Pearson Education, 9-40
Inc.
Additional Product and Service Considerations
International Product and Service
Marketing
Determining
what products
and services to
introduce in
which countries
Standardization
versus
customization
Packaging and
labeling Copyright 2016 Pearson Education, 9-41
Inc.
New Product Development
Learning Objective 4
Discuss two additional product issues:
socially responsible product decisions and
international product and services marketing.
Additional Product and Service
Considerations
Product Decisions
Public policy and regulations
Social responsibility
Products and services
Copyright 2016 Pearson Education, Inc. 9-42
Principles of Marketing
PowerPoint Copyright Page
Copyright 2016 Pearson Education, 9-43
Inc.
