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MGMA01H3 (184)
Chapter 10

Chapter 10 Notes

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University of Toronto Scarborough
Management (MGM)
Tarun Dewan

Chapter 10: This product life cycle presents 2 major challenges: 1) because all products eventually decline, a firm must be good at developing new products to replace aging ones (the challenge of new-product development) 2) the firm must be good at adapting its marketing strategies in the face of changing tastes, technologies, and competition as product pass through life-cycle stages (the challenge of product life-cycle strategies) New Product Development Strategy Obtain new products in 2 ways: buying company, patent, license or new product development New-product development the development of original products, product improvements, product modifications, and new brands through the firms own product-development efforts For companies, new products are a key source of growth For customers, they bring new solutions and variety to their lives 90% of all new products fail (lose US$20-30) Product fails when: overestimate market size, poorly designed, incorrectly positioned, launch at wrong time, price too high, or poorly advertised, cost higher than expected, competitors fight back hard than expected The New-Product Development Process 1. Idea Generation the systematic search for new-product ideas major sources include internal sources and external sources a) Internal Idea Sources a. Through research and development, employees b) External Idea Sources a. Through distributors (close to market, can pass along information about consumer problems and new-product possibilities) b. Suppliers can tell the company about new concepts, techniques, and materials that can be used to develop new products www.notesolution.com
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