Product Marketing
Strategies
Chapter 08
Learning Goals
1. Learn how companies find and
develop new-product ideas
2. Understand the steps in the new-
product development process
3. Know the stages of the product life
cycle
4. Realize how marketing strategies
change during the product’s life
cycle
9-2
Case Study
Nokia
Focus on Corporate Results
Innovation • Annual sales of $36
• Names its culture of billion across 130
continuous innovation countries
“renewal” • Global market share of
• Organizes into 38%, greater than that
autonomous units that of its nearest three
help foster innovation rivals combined
• Large R&D budget of $3
billion with 40% of
employees involved in 9-3
R&D
Definition
• New Product Development
Development of original
products, product
improvements, product
modifications, and new brands
through the firm’s own R & D
efforts.
9-4
Goal 1: Learn how companies find & develop new-product ideas
New Product
Development
Strategy
• New products can be obtained
via acquisition or
development.
• New products suffer from high
failure rates.
• Several reasons account for
failure.
9-5
Goal 1: Learn how companies find & develop new-product ideas
Stages of the New
Product Development
Process
• Stage 1: Idea Generation
Internal idea sources:
•R & D
External idea sources:
• Customers, competitors,
distributors, suppliers
9-6
Goal 2: Understand steps in the new-product development process
Stages of the New
Product Development
Process
• Stage 2: Idea Screening
Product development costs
increase substantially in later
stages so poor ideas must be
dropped
Ideas are evaluated against
criteria; most are eliminated
9-7
Goal 2: Understand steps in the new-product development process
Stages of the New
Product Development
Process
• Stage 3: Concept Development
and Testing
Concept development creates a
detailed version of the idea
stated in meaningful consumer
terms.
Concept testing asks target
consumers to evaluate product
concepts.
9-8
Goal 2: Understand steps in the new-product development process
Stages of the New
Product Development
Process
• Stage 4: Marketing Strategy
Development
• The target market, product
positioning, and sales, share, and
profit goals for the first few years.
• Product price, distribution, and
marketing budget for the first year.
• Long-run sales and profit goals and
the marketing mix strategy.
9-9
Goal 2: Understand steps in the new-product development process
Stages of the New
Product Development
Process
• Stage 5: Business Analysis
Sales, cost, and profit
projections
• Stage 6: Product Development
Prototype development and
testing
9 - 10
Goal 2: Understand steps in the new-product development process
Stages of the New
Product Development
Process
• Stage 7: Test Marketing
Standard test markets
Controlled test markets
Simulated test markets
• Stage 8: Commercialization
9 - 11
Goal 2: Understand steps in the new-product development process
Product Life-Cycle
Strategies
• The Product Life Cycle (PLC) has
Five Stages
Product Development, Introduction,
Growth, Maturity, Decline
Not all products follow this cycle:
• Fads
• Styles
• Fashions
9 - 12
Goal 3: Know the stages of the product life cycle process
Product Life-Cycle
Strategies
• The product life cycle concept
can be applied to a:
Product class (soft drinks)
Product form (diet colas)
Brand (Diet Dr. Pepper)
• Using the PLC to forecast brand
performance or to develop
marketing strategies is problematic
9 - 13
Goal 3: Know the stages of the product life cycle process
Product Life-Cycle
Strategies
PLC Stages • Begins when the
company
• Product develops a new-
development product idea
• Introduction
• Sales are zero
• Growth
• Investment costs
• Maturity
are high
• Decline
• Profits are 9 - 14
al 4: negative
Realize how marketing strategies change during the product life cy
Product Life-Cycle
Strategies
PLC Stages • Low sales
• High cost per
• Product customer acquired
development • Negative profits
• Introduction • Innovators are
• Growth targeted
• Maturity • Little competition
• Decline
9 - 15
al 4: Realize how marketing strategies change during the product life cy
Marketing Strategies:
Introduction Stage
• Product – Offer a basic product
• Price – Use cost-plus basis to set
• Distribution – Build selective
distribution
• Advertising – Build awareness among
early adopters and dealers/resellers
• Sales Promotion – Heavy
expenditures to create trial
9 - 16
al 4: Realize how marketing strategies change during the product life cy
Product Life-Cycle
Strategies
PLC Stages • Rapidly rising sales
• Average cost per
• Product customer
development • Rising profits
• Introduction • Early adopters are
• Growth targeted
• Maturity • Growing
• Decline competition
9 - 17
al 4: Realize how marketing strategies change during the product life cy
Marketing Strategies:
Growth Stage
• Product – Offer product
extensions, service, warranty
• Price – Penetration pricing
• Distribution – Build intensive
distribution
• Advertising – Build awareness and
interest in the mass market
• Sales Promotion – Reduce
expenditures to take advantage of
consumer demand
9 - 18
al 4: Realize how marketing strategies change during the product life cy
Product Life-Cycle
Strategies
PLC Stages • Sales peak
• Low cost per
• Product customer
development • High profits
• Introduction • Middle majority are
• Growth targeted
• Maturity • Competition begins
• Decline to decline
9 - 19
al 4: Realize how marketing strategies change during the product life cy
Marketing Strategies:
Maturity Stage
• Product – Diversify brand and
models
• Price – Set to match or beat
competition
• Distribution – Build more intensive
distribution
• Advertising – Stress brand
differences and benefits
• Sales Promotion – Increase to
encourage brand switching
9 - 20
al 4: Realize how marketing strategies change during the product life cy
Product Life-Cycle
Strategies
PLC Stages • Declining sales
• Low cost per
• Product customer
development • Declining profits
• Introduction • Laggards are
• Growth targeted
• Maturity • Declining
• Decline competition
9 - 21
al 4: Realize how marketing strategies change during the product life cy
Marketing Strategies:
Decline Stage
• Product – Phase out weak items
• Price – Cut price
• Distribution – Use selective
distribution: phase out
unprofitable outlets
• Advertising – Reduce to level
needed to retain hard-core
loyalists
• Sales Promotion – Reduce to
minimal level
9 - 22
al 4: Realize how marketing strategies change during the product life cy