New Product Development and Product Life-Cycle Strategies www.kafebisnis2010.wordpress.com

New Product Development Process This CTR corresponds to Figure 9-1 on p. 275 and relates to the discussion on pp. 275-286. New Product Development Process Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization Stages in New Product Development Idea Generation. This stage is the systematic search for new product ideas. Sources for new product ideas include internal sources, customers, competitor's products, distributors & suppliers, and other sources. Screening. This stage focuses on reducing the number of ideas by dropping poor ideas as soon as possible. This helps reduce costs and focus attention more productively. Concept Development and Testing. This stage involves translating ideas into product concepts or detailed versions of the ideas stated in meaningful consumer terms. Concepts are then tested on target consumers. Marketing Strategy. This stage consists of three parts. The first part describes the target market, the second part outlines the product's projected price, distribution, and budget for the first year, the third part describes long-term sales, profit goals, and marketing mix strategy. Business Analysis. This stage reviews the sales, costs, and profit projections for the product to find out if they satisfy overall company objectives. Product Development. This stage involves bringing the product concept into existence as a physical product to ensure that the idea is a workable product. Test Marketing. This is the stage at which the product and marketing program are implemented in one or more realistic market settings. Commercialization. This stage involves actually introducing the new product into the competitive marketplace. In this stage, the company must make decisions involving when to introduce, where, to whom, and how.

Systematic Search for New Product Ideas New Product Development Process Step 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers

New Product Development Process Step 2. Idea Screening Process to spot good ideas and drop poor ones Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return

New Product Development Process Step 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts New Product Development Process Step 3. Concept Development & Testing 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

New Product Development Process Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy Part One - Overall: Target Market Planned Product Positioning Market Share

Review of Product Sales, Costs, and Profits Projections to See if Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives New Product Development Process Step 5. Business Analysis Step 6. Product Development If No, Eliminate Product Concept If Yes, Move to Product Development

New Product Development Process Step 7. Test Marketing This CTR relates to the discussion on pp. 282-284. New Product Development Process Step 7. Test Marketing Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test in a simulated shopping environment to a sample of consumers. Controlled A few stores that have agreed to carry new products for a fee. Test Marketing Standard Test Markets. Under this approach, the company finds a small number of representative test cities, conducts a full marketing campaign in those cities, and then measures and evaluates performance. This provides a “real world” picture of how the product performs. But there are drawbacks. Standard testing is expensive, long, and tips competitors to company strategy. Controlled Test Markets. This approach uses a research firm that has designated store placement space for their clients. Participating stores receive a fee. Some services like Scantrack (Nielsen) and BehaviorScan (IRI) offer computerized monitoring of individual consumer panels whose television viewing is cross-tabulated with store purchases. Controlled testing is quicker and less expensive than standard testing. Concerns revolve around representativeness of the test markets (small size) and tipping off competitors. Simulated Test Markets. This approach creates a simulated shopping environment by the company or research firm. Consumers are exposed to promotions and then given money to shop with. Purchase patterns are observed and consumers are interviewed afterward by researchers. Simulated test marketing is inexpensive and quick. Representativeness and demand characteristics are concerns and this approach might be used as a pretest for a go-no go decision on further testing.

Product Life Cycle

Product Life Cycle – shows the stages that products go through from development to withdrawal from the market

Tingkat Pertumbuhan Pasar Model BCG BINTANG TANDA TANYA SAPI PERAH ANJING 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Tingkat Pertumbuhan Pasar 4x 2x 1,5x 1x 0,5x 0,4x 0,3x 0,2x 0,1x Pangsa Pasar Relatif

Product Life Cycle (PLC) Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow

Causes of New Product Failures Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions To create successful new products, the company must: understand it’s customers, markets and competitors develop products that deliver superior value to customers.

Introduction Stage of the PLC Product Life-Cycle Strategies This CTR relates to the material on pp. 289 and 293. 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 Product Life Cycle Strategies Introduction. In this stage marketers spend heavily on promotions to inform the target market about the new product's benefits. Low or negative profits may encourage the company to price the product high to help offset expenses. companies can concentrate on skimming strategies to generate high profits now or on penetration strategies to build market share and dominant the market for larger profits once the market stabilizes.

Growth Stage of the PLC Sales Costs Profits Product Price Distribution Product Life-Cycle Strategies This CTR relates to the material on pp. 289-290 and 293. 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 Product Life-Cycle Strategies Growth. In this stage the company experiences both increasing sales and competition. Promotion costs are spread over larger volume and strategic decisions focus on growth strategies. Strategies include adding new features, improving quality, increasing distribution, and entering new market segments.

Maturity Stage of the PLC Product Life-Cycle Strategies This CTR relates to the material on pp. 290-292 and 293. 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 Product Life Cycle Strategies Maturity. In this stage the company must manage slower growth over a longer period of time. Strategic decisions made in the growth stage may limit choices now. Marketing managers must proactively seek advantage by either market modification to increase consumption, product modification to attract new users (quality, feature, and style improvements), or marketing mix modification in an attempt to improve competitive position.

Decline Stage of the PLC Product Life-Cycle Strategies This CTR relates to the material on pp. 292-293. 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 Product Life Cycle Strategies Decline. In this stage the costs of managing the product may eventually exceed profits. Rate of decline is a major factor in setting strategy. Management may maintain the brand as competitors drop out, harvest the brand by reducing costs of support for short term profit increases, or drop the product (divest) altogether.

Tujuan Pemasaran Perkenal-an Pertumbu-han Kedewa-saan Penurunan Menciptakan kesadaran dan keinginan mencoba produk Memaksimal kan pangsa pasar Memaksimal kan laba, memperta hankan pangsa pasar Mengurangi pengeluaran

Strategi Perkenalan Pertumbu-han Kedewa-saan Penurunan Produk Harga Tawaran produk dasar Tawaran perluasan produk, pelayanan, jaminan Diversifikasi merk dan model Lepas jenis produk yang lemah Harga Menyesuaikan biaya-plus Harga untuk menembus pasar Harga sama atau lebih baik dari pesaing Turunkan harga Distribusi Buat distribusi selektif Buat distribusi intensif Buat lebih banyak distribusi intensif Selektif lepas segmen yang tidak menguntungkan

Strategi (lanjutan) Perkenalan Pertumbu-han Kedewa-saan Penurunan Pengikla-nan Bangun kesadarn produk diantara pemakai awal dan penyalur Bangun kesadaran minat di pasar massal Tekankan perbedaan dan manfaat merk Kurangi sampai tingkat yang diperlukan untuk mempertahankan pemakai setia Promosi penjualan Gunakan banyak promosi penjualan untuk menarik pencoba Kurangi untuk mengambil keuntungan dari besarnya permintaan konsumen Tingkatkan untuk mendorong peralihan merk Kurangi sampai tingkat minimal

Siklus hidup produk (product life cycle – PLC) adalah perjalanan penjualan dari suatu produk dalam masa hidupnya. Siklus hidup produk merupakan suatu konsep penting yang memberikan pemahaman tentang dinamika kompetitif suatu produk.

Kesimpulan Konsep siklus hidup produk sangat baik digunakan untuk menginterpretasikan dinamika produk dan pasar. Kelemahan dari konsep ini, yaitu kurang dapat digunakan sebagai alat prediksi karena sejarah penjualan menunjukkan pola yang beragam, dan tahap-tahapnya itu berbeda durasinya. Selain itu, perusahaan juga menemui kesulitan untuk mengetahui di tahap apa suatu produk sedang berada.