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Chapter 10: Product Management and New-Product Development

This chapter delves into the intricacies of the Product Life Cycle (PLC), illustrating its phases—from introduction to sales decline. It stresses the importance of adapting product strategies throughout lifecycle stages, emphasizing that industry profits and sales can vary significantly by product. The chapter also explores new product planning, highlighting processes from idea generation to commercialization and the market's dynamic nature. Key strategies for managing mature and declining products and the significance of market adaptation are also discussed.

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Chapter 10: Product Management and New-Product Development

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  1. Chapter 10: Product Management and New-Product Development

  2. Market Introduction Market Growth Market Maturity Sales Decline Total Industry Sales + Total Industry Profit $ 0 Time – The Product Life Cycle (PLC) Exhibit 10-1 10-3

  3. Product Life Cycle Issues • The product life cycle refers to industry profits and sales for a new product idea. • There is no time limit placed on the PLC. • PLCs are getting shorter. • Some products move faster than others through the PLC. • Profits don’t always go to the innovators. • Fashions have short life cycles, fads even shorter. • Firms often try to extend the PLC for a product.

  4. Introducing New Products Managing Mature Products Focus: Budget / Rate of Growth Future Adaptation Focus: Persuasion / Less Profit New Markets Focus: New or Improve? Dying Products Focus: New Strategies Focus: Phase Out Planning for Life Cycle Stages 10-4

  5. New-Product Planning • A new product is one that is new in any way for the company concerned. • The FTC says that a firm can call a product “new” for six months if the product is entirely new or has been changed in a “functionally significant or substantial respect.”

  6. Idea Generation Screening Idea Evaluation Development Commercial -ization Ideas from: Customers and users Marketing research Competitors Other markets Company people Middlemen Strengths and Weaknesses Fit with objectives Market trends Rough ROI estimate Concept testing Customer reactions Rough estimates of cost, sales, profits R & D Develop model or service prototype Test marketing mix Revise plans as needed ROI estimate Finalize product and marketing plan Start production and marketing “Roll out” in select markets Final ROI estimate New-Product Development Process Exhibit 10-4 10-5

  7. Top Level Support Authority Key Issues Market-Guided R & D Integration & Coordination New-Product Development Management 10-7

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