Principles of Marketing

Eighteenth Edition, Global Edition

Chapter 9
Developing New Products and
Managing the Product Life Cycle

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GOOGLE (…er, Alphabet): The New
Product Moonshot Factory
• Alphabet is the New Product Google and parent company
Moonshot Factory. Google’s Alphabet are wildly innovative. The
new product development company’s innovation machine is
process moves quickly and renowned for producing new
has unleashed diverse new product “moonshots,” futuristic long
products. Innovation is more shots that, if successful, will
than a process at Google; it is profoundly change how people live.
part of the company’s DNA.
“Where does innovation
happen at Google? It happens
everywhere.”

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Learning Objectives
9.1 Explain how companies find and develop new product
ideas.
9.2 List and define the steps in the new product
development process and the major considerations in
managing this process.
9.3 Describe the stages of the product life cycle and how
marketing strategies change during a product’s life
cycle.
9.4 Discuss two additional product issues: socially
responsible product decisions and international product
and services marketing.

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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 else’s product.
New product development refers to original products,
product improvements, product modifications, and new
brands developed from the firm’s own research and
development.

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New Product Development Process
(1 of 17)
Figure 9.1 Major Stages in New Product Development

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New Product Development Process
(2 of 17)
Idea Generation Internal new product ideas:
Many companies—such as
Idea generation is the Facebook—use hackathons to
systematic search for new
pick the brains of their own
product ideas. employees for innovative ideas.
Sources of new product ideas
• Internal
• External

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New Product Development Process
(3 of 17)
Idea Generation

Internal sources refer to the company’s 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.

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New Product Development Process
(4 of 17)
Idea Generation Crowdsourcing: Food container giant
Crowdsourcing involves inviting broad Tupperware sponsored the Clever
communities of people—customers, Container Challenge contest seeking
employees, independent scientists and ideas for integrating Internet-of-Things
researchers, and even the public at technologies into food containers for
large—into the new product innovation future smart kitchens.
process.

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New Product Development Process
(5 of 17)
Idea Screening

Identify good ideas and drop poor ideas

R-W-W screening framework:
• Is it real?
• Can we win?
• Is it worth doing?

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New Product Development Process
(6 of 17)
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 actual or
potential product.

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New Product Development Process
(7 of 17)
Concept Development and Testing All-electric cars: This is Tesla’s initial all-
Concept testing refers to testing new electric full-sized sedan. Its more recent
product concepts with groups of target Model 3 compact travels up to 310 miles
consumers. on a single charge and costs pennies
per mile to operate.

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New Product Development Process
(8 of 17)
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
• Sales, market-share, and marketing mix

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New Product Development Process
(9 of 17)
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 company’s objectives.

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New Product Development Process
(10 of 17)
Product Development Product testing: Brooks has enlisted an
Product development is developing army of users it calls Lab Rats and Wear
the product concept into a physical Testers to test its products. “Your
product to ensure that the product feedback is what helps determine fit,
idea can be turned into a workable function, and design of all our future
market offering. products.”

Copyright © 2021 Pearson Education Ltd.

New Product Development Process
(11 of 17)
Test Marketing Companies sometimes shorten or skip
Test marketing is the stage of new test marketing to take advantage of fast-
product development in which the changing market developments, as
product and its proposed marketing Starbucks did with its hugely successful
program are tested in realistic market mobile payments app.
settings.

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New Product Development Process
(12 of 17)
Test Marketing

Marketing Strategy Development

• When test marketing is likely

– New product with large investment
– Uncertainty about product or marketing program
• When test marketing is unlikely
– Simple line extension
– Copy of competitor product
– Low costs
– Management confidence

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New Product Development Process
(13 of 17)
Commercialization

Commercialization involves introducing a new product into

the market.
• When to launch?
• Where to launch?
• Planned market rollout?

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New Product Development Process
(14 of 17)
Successful new product development should be:
• Customer centered
• Team based
• Systematic

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New Product Development Process
(15 of 17)
Customer-Centered New Product Customer-centered new product
Development development: Toymaker LEGO listens to
its customers and actively taps its user
Customer-centered new product community for new product ideas,
development focuses on finding new making it what one observer calls “the
ways to solve customer problems and Apple of Toys.”
creating more customer-satisfying
experiences.

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New Product Development Process
(16 of 17)
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.

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New Product Development Process
(17 of 17)
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

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Learning Objective 3
Describe the stages of the product life cycle and how
marketing strategies change during a product’s life cycle.

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Product Life-Cycle Strategies (1 of 9)
Figure 9.2 Sales and Profits over the Product’s Life from
Inception to Decline

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Product Life-Cycle Strategies (2 of 9)
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
Decline
• Sales fall off and profits drop

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Product Life-Cycle Strategies (3 of 9)
Introduction Stage

• Slow sales growth

• Little or no profit
• High distribution and promotion expenses

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Product Life-Cycle Strategies (4 of 9)
Growth Stage

• Sales increase
• New competitors enter the market
• Profits increase
• Economies of scale
• Consumer education
• Lowering prices to attract more buyers

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Product Life-Cycle Strategies (5 of 9)
Maturity Stage

• Slowdown in sales
• Many suppliers
• Substitute products
• Overcapacity leads to competition
• Increased promotion and R&D to support sales and profits

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Product Life-Cycle Strategies (6 of 9)
Maturity Stage Managing the product life cycle: The
140-year old Quaker brand is acting
Modification Strategies
anything but its age. Through what it
• Modify the market calls “oatsperiments,” the brand has
added a kitchen cabinet full of
• Modify the product contemporary new products and a full
slate of modern marketing approaches.
• Modify the marketing mix

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Product Life-Cycle Strategies (7 of 9)
Decline Stage

• Maintain the product

• Harvest the product
• Drop the product

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Product Life-Cycle Strategies (8 of 9)
Table 9.2 Summary of Product Life-Cycle Characteristics,
Objectives, and Strategies

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Product Life-Cycle Strategies (9 of 9)
Table 9.2 Summary of Product Life-Cycle Characteristics,
Objectives, and Strategies

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Learning Objective 4
Discuss two additional product issues: socially responsible
product decisions and international product and services
marketing.

Copyright © 2021 Pearson Education Ltd.

Additional Product and Service
Considerations (1 of 2)
Product Decisions and Social Responsibility

Public policy and regulations regarding developing and

dropping products, patents, quality, safety, and product
warranties should be considered carefully.

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Additional Product and Service
Considerations (2 of 2)
International Product and Service Global product adaptation: By adapting
Marketing its menu and operations to the needs
and preferences of French consumers
• Determining what products and and their culture, McDonald’s has turned
services to introduce in which France into its second-most-profitable
countries world market.
• Standardization versus
customization
• Packaging and labeling
• Customs, values, laws

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