2. New Product Development and
Product Life-Cycle Strategies
Technology Management
Industrial Development Strategies
Technical Language , Professor B. Pourabdollahian (PH.D.)
Providers : Hamid Reza Bahmani & Seyyed Taghi Mahmoudi

3. Learning Objectives
After studying this chapter, you will be
able to:
• Explain how companies find and develop
new-product ideas
• List and define the steps in the new-product
development process
• Describe the stages of the product life cycle
• Describe how marketing strategies change
during the product’s life cycle
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4. Major Stages in New Product Development
Idea generation : systematic search for new ideas
• Internal sources : brainstorming
• External sources : customers, competitors, distributors and
suppliers
Idea screening : identify good ideas and drop poor ones
• Usefulness to consumers
• Good for company
• Fit with objectives and strategies
• Have the resources
• Add value
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5. Major Stages in New Product Development
Concept development and concept testing :
• Concept development : detailed version of the product concept in
meaningful consumer terms
• Concept testing : testing new-product concepts for consumer
appeal
Marketing strategy : initial strategy for product concept :
• Target market, positioning, and sales, market share, and profit
goals
• Price, distribution, and marketing budget
• Strategy statement, long-run sales, profit goals, and
marketing mix
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6. Major Stages in New Product Development
Business analysis : review of sales, costs, and profit projections to
determine if they meet company objectives.
Product development : developing the product concept into a
physical product
• Large investment
• Building a prototype
• Testing for safety, durability, and acceptability
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7. Major Stages in New Product Development
Test marketing : testing the product in more realistic market
settings
• Determine the target market profile
• Assess consumer acceptability, trial, repeat purchase rate
• Evaluate trade reception and distribution penetration
• Design effective media plans
 Standard test markets
 Controlled test markets
 Simulated test market
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8. Major Stages in New Product Development
Commercialization : introducing a new product into the market
• Introduction timing
• Market rollout or full-scale introduction
 Sequential product development
 Simultaneous (team-based) product development
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9. Introduction to Product Life Cycle Concepts
Products, services, and processes all have a life cycle. For
products, the life cycle begins when raw materials are extracted
or harvested. Raw materials then go through a number of
manufacturing steps until the product is delivered to a
customer. The product is used, then disposed of or recycled.
Processes also have a life cycle. The life cycle begins with
planning, research and development. The products and
processes are then designed and constructed. A process will
have an active lifetime, then will be decommissioned and, if
necessary, remediation and restoration may occur.
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10. Product Life - Cycle Template Gragh
It involves four distinct stages :
Introduction, Growth, Maturity, and Decline.
 Introduction stage : The product life-cycle
stage in which the new product is first
distributed and made available for purchase.
 Growth stage : The product life-cycle stage
in which a product’s sales start climbing
quickly.
 Maturity stage : The stage in the product
life cycle in which sales growth slows or
levels off.
Modify the market, the product, and the
marketing mix.
 Decline Stage : The product life cycle stage
in which a product’s sales decline
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11. Relationship Between Sales and Profit in
Product Life - Cycle
Product Life Cycle (PLC) : The course of a product’s sales and profits over its life
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12. Introduction Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative
Create product awareness
and trial
Offer a basic product
Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among early
adopters and dealers

13. Growth Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer product extensions, service,
warranty
Price to penetrate market
Distribution Build intensive distribution
Advertising Build awareness and interest in the
mass market

14. Maturity Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Product
Price
Peak sales
Low cost per customer
High profits
Maximize profit while defending
market share
Diversify brand and models
Price to match or best competitors
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits

15. Decline Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and milk the brand
Phase out weak items
Cut price
Distribution Go selective: phase out unprofitable
outlets
Advertising Reduce to level needed to retain
hard-core loyal customers

16. Summary of PLC
Characteristics: Introduction Growth Maturity Decline
Sales Low Rapidly rising sales Peak Declining sales
Costs High cost Average cost Low cost Low cost
per customer per customer per customer per customer
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number Declining number
Marketing objectives:
Create product Maximize market Maximize profit & Reduce expenditure
awareness and trial share defend market share & milk brand
Strategies:
Product Offer basic product Offer product Diversify brand and Phase out weak
extensions, service models items
Price Use cost-plus Price to penetrate Price to match or Cut price
market best competitors
Distribution Build selective Build intensive Build more Selective; phase out
distribution distribution intensive distribution unprofitable outlets
Advertising Build awareness Build awareness & Stress brand differences Reduce to level needed
early adopters/dealers interest mass market and benefits to retain hard-core loyals
Sales promotion Heavy sales promotion Reduce promotion due Increase to encourage Reduce to minimal
to entice trial to heavy demand brand switching level
Source: Philip Kotler and Peggy Cunningham, Marketing Management: Analysis, Planning, Implementation,
and Control, Canadian 11th Edition, Pearson Education Canada, Toronto, Ontario, 2004, p. 347
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17. Thank You
Hamid Reza Bahmani
Seyyed Taghi Mahmoudi
11/December/2015
Science & Research Branch University