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Chapter 10

Principles of Marketing_Chapter 10.docx

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Department
Management Core
Course
MGCR 352
Professor
Sameer Mathur
Semester
Winter

Description
Chapter 10: New-Product Development and Product Life-Cycle Strategies New-Product Development Strategy  New-product development: development of original products, product improvements, product modifications, and new brands through the firm’s own product-development efforts.  Can get new products in 2 ways: o Acquisition (buying another company) and new-product development efforts  Picture: NewProductWorks – Smuckers Ketchup, Ben-Gay aspirin, etc. o Visiting the NewProductWorks is like finding yourself in some nightmare version of a supermarket. Each product failure represents squandered dollars and hopes. The New-Product Development Process Concept Marketing Product generation screening dent ande developme analysis developme marketing alization testing nt nt Idea Generation  Idea generation: systematic search for new-product ideas o Internal idea sources  Picture: Samsung  Internal new-product idea sources: Samsung built a special Value Innovation Program Center in which company researchers, engineers, and designers co-mingle to come up with creative new-product ideas. o External idea sources  Distributors and suppliers, competitors, clients  Picture: Lego  Product ideas from customers: advice from 250 train-set enthusiasts resulted in LEGO Santa Fe Super Chief set, a blockbuster new product that sold out in less than 2 weeks Idea Screening  Idea screening: screening new-product ideas to spot good ideas and drop poor ones as soon as possible Concept Development and Testing  Product concept: detailed version of the new-product idea stated in meaningful consumer terms  Product idea, product concept, product image  Concept development: develop alternative product concepts, find out how attractive each concept is to consumers, choose best one  Concept testing: testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal Marketing Strategy Development  Marketing strategy development: designing an initial marketing strategy for a new product based on the product concept  Marketing strategy statement has 3 parts o Target market, planned value proposition, sales/market share/profit goals for first few years o Product’s planned price, distribution, and marketing budget for first year o Long-run sales, profit goals, and marketing mix strategy Business Analysis  Business analysis: review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives Product Development  Product development: developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering  R&D departments  Picture: Gillette o Product testing: Gillette uses employee-volunteers to test new shaving products – “we bleed so you’ll get a good shave at home” says one Gillette employee Test Marketing  Test marketing: stage of new-product development in which the product and marketing program are tested in realistic market settings  Cadbury uses Ontario as its test market  Amount of test marketing varies per product  Picture: KFC o Test marketing: KFC test marketed its new Kentucky Grilled Chicken product for 3 years before rolling it out nationally. Says the chain’s president, “we had to get it right”  Standard test markets: small # of representative test cities and go all out in them  Controlled test markets: controlled panels of stores that have agreed to carry new product fo
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