CH08 (Developing Products) (Out)

CH8
Developing New Products and Managing the Product

Life Cycle
BUSI 2208 Dr. Irene Lu

Topics
1. New product development process

2. Managing product life cycle

Topic 1
The new product development process

Major Stages in New Product Development

Step 1. New-product strategy and
development
 Using environmental scanning to identify trends that can be

opportunities or threats
 Determining the type of innovation the company wishes to
pursue

Step 2. Idea generation
• Systematic search for new product ideas

• Internal idea sources:
– Internal social networks
– Intrapreneurial programs
• External idea sources:
– Distributors and suppliers
– Competitors
– Customers

Crowdsourcing:
• inviting broad communities of people—customers,
employees, independent scientists and researchers,
and even the public at large—into the new product
innovation process

Step 3: Idea Screening
 Involving internal and external evaluations of the

new-product ideas to eliminate those that warrant no
further effort

Step 4. Concept Development & Testing
• Developing a product idea into alternative product

concepts
– Find out how attractive each concept is to
customers
– Choose the best one

Concept Testing
• Testing new product concepts with groups of target

consumers
• Methods:
– Presenting the concepts to consumers
symbolically or physically
– Asking customers to respond by answering
questions about their reactions to the concepts

Concept Testing: fuel-cell-powered electric car
An efficient, fun-to-drive, fuel-cell-powered electric

subcompact car that seats four.
This high-tech wonder runs on liquid hydrogen,

providing practical and reliable transportation with
almost no pollution.
It goes up to 90 miles per hour and, unlike battery-

powered electric cars, it never needs recharging.

Questions for Fuel-Cell Electric Car Concept Test
1. Do you understand the concept of a fuel-cell-powered electric car?

2. Do you believe the claims about the car's performance?
3. What are the major benefits of the fuel-cell-powered electric car
compared with a conventional car?
4. What are its advantages compared with a batter-powered electric car?
5. What improvements in the car's features would you suggest?
6. For what uses would you prefer a fuel-cell-powered electric car to a
conventional car?
7. What would be a reasonable price to charge for the car?
8. Who would be involved in your decision to buy such a car? Who
would drive it?
9. Would you buy such a car? (Definitely, probably, probably not,
definitely not)

Step 5. Marketing Strategy Development
• Initial marketing strategy for a new product

• Three parts of the marketing strategy statement:
– Describes the target market, planned value
proposition, sales, market-share, and profit goals
– Determines product’s planned price, distribution,
and marketing budget
– Develops long-run sales, profit goals, and
marketing mix strategy

Step 6: Business Analysis
• A review of the sales, costs, and profit projections for

a new product
– To find out whether these factors satisfy the
company’s objectives
 If no, eliminates the product concept
 If yes, move to product development

Step 7: Development
• Developing the product concept into a physical

product to ensure that the product idea can be turned
into a workable product
• Prototypes may be developed for testing purposes

Step 8. Test Marketing
• Introduces the product and its proposed marketing

program into realistic market settings
• Gives the marketer an experience with marketing a
product before full introduction
• Tests the product and its marketing program
• Alternatives to standard test markets
– __________ test markets
– __________ test markets

Step 9: Commercialization
• Introduction of the new product into the marketplace.

– When
– Where: regional rollouts

Topic 2
Product life cycle

Product Life Cycle

Styles, Fashions, and Fads

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CH8

Developing New Products and Managing the Product

BUSI 2208 Dr. Irene Lu

1. New product development process

BUSI 2208 Dr. Irene Lu

The new product development process

BUSI 2208 Dr. Irene Lu

BUSI 2208 Dr. Irene Lu

 Using environmental scanning to identify trends that can be

BUSI 2208 Dr. Irene Lu

• Systematic search for new product ideas

BUSI 2208 Dr. Irene Lu

BUSI 2208 Dr. Irene Lu

 Involving internal and external evaluations of the

BUSI 2208 Dr. Irene Lu

• Developing a product idea into alternative product

BUSI 2208 Dr. Irene Lu

• Testing new product concepts with groups of target

BUSI 2208 Dr. Irene Lu

An efficient, fun-to-drive, fuel-cell-powered electric

This high-tech wonder runs on liquid hydrogen,

It goes up to 90 miles per hour and, unlike battery-

BUSI 2208 Dr. Irene Lu

1. Do you understand the concept of a fuel-cell-powered electric car?

BUSI 2208 Dr. Irene Lu

• Initial marketing strategy for a new product

BUSI 2208 Dr. Irene Lu

• A review of the sales, costs, and profit projections for

BUSI 2208 Dr. Irene Lu

• Developing the product concept into a physical

BUSI 2208 Dr. Irene Lu

• Introduces the product and its proposed marketing

BUSI 2208 Dr. Irene Lu

• Introduction of the new product into the marketplace.

BUSI 2208 Dr. Irene Lu

Product life cycle

BUSI 2208 Dr. Irene Lu

BUSI 2208 Dr. Irene Lu

BUSI 2208 Dr. Irene Lu

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