Textbook Notes (368,566)
Canada (161,966)
MGMA01H3 (184)
Chapter 10

Chapter 10 Notes

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Management (MGM)
Alison Jing Xu

Chapter 10 New Product Development and Product Life Cycle Strategies Notes New-Product Development Strategy a firm can obtain new products in two ways: (1) acquisition, and (2) new-product development acquisition buying a whole company, a patent, or a licence to produce someone elses product new-product development the development of original products, product improvements, product modifications, and new brands through the firms own product-development efforts new products are importantto both customers and the marketers who serve them for companies, new products are a key source of growth; for customers, they bring new solutions and variety to their lives The New-Product Development Process new product development process: idea generation idea screening concept development and testing marketing strategy development business analysis product development test marketing commercialization Idea Generation idea generation the systematic search for new-product ideas major sources include internal sources and external sources such as customers, competitors, distributors, suppliers, and others Internal Idea Sources using internal sources, the company can find new ideas through formal research and development companies can pick the brains of employeesfrom executives to scientists, engineer, manufacturing staff, and salespeople some companies have developed successful intrapreneurial programs that encourage employees to think up and develop ideas External Idea Sources distributors are close to the market and can pass along information about consumer problems and new-product possibilities suppliers can tell the company about new concepts, techniques, and materials that can be used to develop new products companies watch competitors ads to get clues about their new products; they buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own other idea sources include trade magazines, shows, seminars; government agencies; advertising agencies; marketing research firms; university and commercial laboratories; and inventors the company can analyze customer questions and complaints to find new products that better solve consumer problems company engineers or salespeople ca meet with and work alongside customers to get suggestions and ideas other companies actively solicit ideas from customers and turn customers into co-creators finally, customers often create new products and uses on their own, and companies can benefit by putting them on the market Idea Screening idea screening screening new-product ideas to spot good ideas and drop poor ones as soon as possible product-development costs rise greatly, so the company wants to go ahead only with the product ideas that will turn profitable many companies require their executives to write up new-product ideas in a standard format that can be reviewed by a new- product committeedescribes product or service, proposed customer value proposition, target market, and competition; it also makes rough estimates of market size, product price, development time and costs, manufacturing costs, and rate of return Concept Development and Testing product concept a detailed version of the new-product idea stated in meaningful consumer terms Concept Testing concept testing testing new-product concepts with a group of target consumers to find out if concepts have strong appeal the concept may be presented to consumers symbolically or physically many firms routinely test new-product concepts with consumers before attempting to turn them into actual new products Marketing Strategy Development marketing strategy development designing an initial marketing strategy for a new product based on the product concept the marketing strategy statement consists of 3 parts(1) describe the target market; the planned value proposition; and the sales, market share, and profit goals for the first few years; (2) outline the products planned price, distribution, and marketing budget for the first year; and (3) describe the planned long-run sales, profit goals, and marketing mix strategy Business Analysis business analysis a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the companys objectives; if they do, the product can move to the product development stage to estimate sales, the company might look at the sales history of similar products and conduct market surveys after preparing the sales forecast, management can estimate the expected costs and profits for the product, including marketing, R & D, operations, accounting, and finance costs, which can be used to analyze the new products financial attractiveness Product Development www.notesolution.com
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