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MGMA01H3 (184)
Chapter 10

Chapter 10 - Week 8

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University of Toronto Scarborough
Management (MGM)
Alison Jing Xu

1 P a g e M G T B 0 4 W e e k 8 Chapter 10 New-Product Development and Product Life-Cycle Strategies (pg. 312 339) - Apple excels at developing and managing new products - The product life cycle presents two major challenges o Since all products decline, a firm must be good at developing new products to replace the aging ones (the challenge of new-product development) o The firm must be good at adapting its marketing strategies in the face of changing tastes, technologies, and competition (the challenge of product life-cycle) New-Product Development Strategy - A firm can obtain new products in two ways, through acquisition (buying a whole company, 5,903947OL.038094574:.084204300O808574:.9 47-new products - New-product development is the development of original products, product improvements, 574:.924L1L.,9L438,330Z-7,389K74:JK9K01L7284Z3574:.9-development efforts - New products are important to both the customers and the marketers o Customers: brings new solutions and variety to their lives o Companies: new products are a key source of growth - Innovation can be very expensive and risky where approximately 90% of all new products fail - Some new products fail because the company may overestimate market size, product is poorly designed, priced too high, poorly advertised, costs exceeded budget, competitors The New-Product Development Process - In order to successfully develop new products, must set up a customer-driven new-product development process for finding and growing new products, there are eight major steps 1. Idea Generation - Idea generation is the systematic search for new-product ideas (create large number of ideas) - A company typically generates hundreds of ideas, even thousands, to find a few good ones - Major sources of new-product ideas include internal sources and external sources o Internal Idea Sources By using internal sources, companies find new ideas through traditional R&D (14% of the time), employees (41% of the time), and customers (36%) $420.425,3L08K,;00;0O4508:..0881:OL397,57030:7L,O574J7,289K,9 encourages employees to think up and develop new-product ideas o External Idea Source Distributors and suppliers N Since distributors are close to the market, they can pass along information about consumer problems and new-product possibilities N Suppliers can tell the company about new concepts, techniques, and materials that can be used to develop new products Competitors N 425,3L08Z,9.K.42509L9478,894J09.O:08,-4:99K0L730Z products (buy competing products and dissemble, analyze sales) Other idea sources include trade magazines, shows, and seminars Companies can also seek help from new-product consultancies and design firm Turn to online collaborative communities to help solve problems (e.g. P&G) Customers www.notesolution.com
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