In this chapter you will: Understand how product life cycles affect strategic planning, know what is involved in designing new products and what "new products" really are, understand the new-product development process, see why product liability must be considered in screening new products. | Chapter 10: Product Management and New-Product Development When you finish this chapter, you should 10-2 Chapter 10 Objectives 1. Understand how product life cycles affect strategy planning. 2. Understand what is involved in designing new products and what “new products” really are. 3. Understand the new-product development process. 4. See why product liability must be considered in screening new products. 5. Understand the need for product or brand managers. 6. Understand the important new terms. The Product Life Cycle 10-3 Exhibit 10-1 Total Industry Profit + – $ 0 Market Introduction Market Growth Market Maturity Sales Decline Time Total Industry Sales Summary Overview It is useful to think of product concepts as passing through various stages in their “life.” The product life cycle describes the stages a really new product idea goes through from beginning to end. Marketing managers can identify specific types of decisions for strategy planning that characterize each stage. The Product Life Cycle Market Introduction. In the market introduction stage, sales are low as the idea is first introduced to the market. Informative promotion is needed to tell potential customers about the advantages and uses of the new product. Because this process takes time, company resources are being spent but revenues are not very large or may even be nonexistent. Market Growth. In this stage, industry sales grow fast but industry profits rise and then start falling. The innovator realizes big profits and attracts competition. As competitors enter, monopolistic competition develops leading to down-sloping demand curves. During this stage, competitor analysis is especially useful to the marketing manager as an aid to appropriate strategy planning. Too much focus on current profits while ignoring long term competitive trends is a common mistake. Market Maturity. In this stage, sales level off and competition continues to increase. Promotion costs increase and price competition in some | Chapter 10: Product Management and New-Product Development When you finish this chapter, you should 10-2 Chapter 10 Objectives 1. Understand how product life cycles affect strategy planning. 2. Understand what is involved in designing new products and what “new products” really are. 3. Understand the new-product development process. 4. See why product liability must be considered in screening new products. 5. Understand the need for product or brand managers. 6. Understand the important new terms. The Product Life Cycle 10-3 Exhibit 10-1 Total Industry Profit + – $ 0 Market Introduction Market Growth Market Maturity Sales Decline Time Total Industry Sales Summary Overview It is useful to think of product concepts as passing through various stages in their “life.” The product life cycle describes the stages a really new product idea goes through from beginning to end. Marketing managers can identify specific types of decisions for strategy planning that characterize each stage. The .
