UNIVERSITY OF CEBU (UC)
GRADUATE SCHOOL
Sanciangko St., Cebu City
REACTION PAPER IN
MARKETING MANAGEMENT (BM 207)
Masterand: Agnes C. Ampo Course: MBA
Professor: Dr. Eddie E. Llamedo Schedule: BL1 Sat, 12:00nn-4:30pm
Chapter 9 - New Product Development and Product Life-Cycle Strategies
Introduction
In highly competitive markets, the best and toughest firms sustain growth and
maintain profitability over the longer term through successfully developing and
launching a steady stream of new products or services. Firms must develop new
products or services because of the rapid changes in customer tastes, technology
and competition. Moreover, products have a finite life which is determined by the
overall pace of new-product innovation taking place in the product market as well as
by how well the marketing manager manages the brand during all stages of the
product life-cycle. Introducing new products alone is therefore not sufficient. The firm
must also know how to manage the new product as it goes through its life-cycle: that
is, from its birth, through growth and maturity, to eventual demise as newer products
come along that better serve consumer needs.
Topic Summary
Companies find and develop new-product ideas from a variety of sources.
Many new-product ideas stem from internal sources. Companies conduct formal
R&D. Or they pick the brains of their employees, urging them to think up and develop
new-product ideas. Other ideas come from external sources. Companies track
competitors’ offerings and obtain ideas from distributors and suppliers who are close
to the market and can pass along information about consumer problems and new-
product possibilities. Perhaps the most important source of new-product ideas is
customers themselves. Companies observe customers, invite their ideas and
suggestions, or even involve customers in the new product development process.
Many companies are now developing crowd sourcing or open-innovation new-
product idea programs, which invite broad communities of people—customers,
employees, independent scientists and researchers, and even the general public—
into the new-product innovation process. Truly innovative companies do not rely only
on one source or another for new-product ideas. The new-product development
process consists of eight sequential stages. The process starts with idea generation.
Next comes idea screening, which reduces the number of ideas based on the
company’s own criteria. Ideas that pass the screening stage continue through
product concept development, in which a detailed version of the new-product idea is
stated in meaningful consumer terms. In the next stage, concept testing, new-
product concepts are tested with a group of target consumers to determine whether
the concepts have strong consumer appeal. Strong concepts proceed to marketing
strategy development, in which an initial marketing strategy for the new product is
developed from the product concept. In the business-analysis stage, a review of the
sales, costs, and profit projections for a new product is conducted to determine
whether the new product is likely to satisfy the company’s objectives. With positive
results here, the ideas become more concrete through product development and test
marketing and finally are launched during commercialization. New-product
development involves more than just going through a set of steps. Companies must
take a systematic, holistic approach to managing this process. Successful new-
product development requires a customer-centered, team-based, systematic effort.
Each product has a life cycle marked by a changing set of problems and
opportunities. The sales of the typical product follow an S-shaped curve made up of
five stages. The cycle begins with the product development stage in which the
company finds and develops a new-product idea. The introduction stage is marked
by slow growth and low profits as the product is distributed to the market. If
successful, the product enters a growth stage, which offers rapid sales growth and
increasing profits. Next comes a maturity stage in which the product’s sales growth
slows down and profits stabilize. Finally, the product enters a decline stage in which
sales and profits dwindle. The company’s task during this stage is to recognize the
decline and decide whether it should maintain, harvest, or drop the product. The
different stages of the PLC require different marketing strategies and tactics
Marketers must consider two additional product issues. The first is social
responsibility. This includes public policy issues and regulations involving acquiring
or dropping products, patent protection, product quality and safety, and product
warranties. The second involves the special challenges facing international product
and services marketers. International marketers must decide how much to
standardize or adapt their offerings for world markets.
Recommendation
The reporter was able to report well the topic. Plenty of examples were given
which help us easily understand the concepts presented. The voice was well
modulated. I can clearly hear it. The pacing of the report is also ideal, not that fast
and not that slow, enough for me to understand. It would also help if there will be
interaction with the co-masterand. Like letting them participate by asking them to
read some of the texts presented with the slide or presentation.
Conclusion
A company’s current products face limited life spans and must be replaced by
newer products. But new products can fail—the risks of innovation are as great as
the rewards. The key to successful innovation lies in a customer focus, total-
company effort, strong planning, and a systematic new-product development
process.