Chapter 8
New-Product Development and Product Life-Cycle Strategies
Previewing the Concepts: Chapter Objectives
1.
2.
3.
4.
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.
JUST THE BASICS
Chapter Overview
For companies to succeed, they must be constantly developing new products and
services. Even a company as well-known in the marketplace as Apple Computer must
constantly innovate. Firms can either acquire new products through buying a whole
company, a patent, or a license to produce a product, or through internal development in
their own research and development department.
New-product development should be a systematic process; this can lessen the probability
of failure. New products fail at an alarming rate. It is estimated that 95% of all new
products fail. To avoid that fate, companies follow a new product development process,
which includes idea generation, idea screening, concept development and testing,
marketing strategy development, business analysis, product development, test marketing,
and commercialization. As each step is accomplished, a firm go/no go decision is made
as to whether to continue. This is done because as each successive stage is passed, new
product development costs increase. Therefore, it makes sense to cut the product
development process short if it appears the product will not be a success in the
marketplace.
All products follow a life cycle. Some go through the cycle quickly, others can take many
years. The standard product life cycle (PLC) includes the phases of introduction, growth,
maturity, and decline. The PLC concept can describe a product class, a product form, or a
brand. Most products are in the mature stage of the PLC.
Chapter Outline
1.
Introduction
a.
Apple Computer, an early product innovator, got off to a fast start, but
only a decade later, as its creative fires cooled, Apple was on the brink of
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b.
c.
d.
2.
extinction. This set the stage for one of the most remarkable turnarounds
in corporate history.
By the mid- to late-nineties, Apple’s sales had plunged 50 percent, yet by
2005 Apple had engineered a turnaround. Apple rediscovered the magic
that had made the company so successful in the first place: dazzling
creativity and customer-driven innovation.
The first task was to revitalize Apple’s computer business by launching
the iMac, which won raves for design and lured buyers in droves. The
Mac OS X was unleashed, a ground-breaking new operating system which
served as the launching pad for a new generation of Apple computers and
software products.
Then Apple introduced the iPod, a tiny computer with an amazing
capacity to store digital music, one of the greatest consumer electronics
hits of all time. By January 2005, Apple had sold 10 million iPods. As the
Apple story suggests, a company has to be good at developing and
managing new products. Every product goes through a product life cycle.
New Product Development Strategy
a.
A firm can obtain new products in two ways. One is through acquisition of
a whole company, a patent, or a license to produce someone else’s
product. The other way is through new product development in the
company’s own research and development department.
Use Key Term New Product Development here.
Use Chapter Objective 1 here.
b.
c.
d.
e.
New products are original products, product improvements, product
modifications, and new brands that the firm develops.
New product development is risky. One source estimates that no more
than 10% of new products are still on the market and profitable after three
years. Failure rates for new industrial products may be as high as 30%.
There are several reasons new products fail. Although an idea may be
good, the market size may have been overestimated. The actual product
might not have been designed as well as it should have been. The product
could be incorrectly positioned in the market, priced too high, or poorly
advertised. Sometimes the cost of development is higher than expected.
To lower these risks, companies need to set up a systematic new product
development process for finding and growing new products. Figure 8-1
shows the eight major steps in this process.
Use Figure 8-1 here.
Use Chapter Objective 2 here.
Use Discussing the Issues 1 here.
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Idea Generation
f.
New product development begins with idea generation, which is a
systematic search for new product ideas. A company normally has to
generate many ideas in order to find a few good ones.
Use Key Term Idea Generation here.
g.
Major sources of new product ideas include both internal and external
sources.
1.
The company can use internal sources to find new ideas through
formal research and development. It can get the ideas from
executives, scientists, engineers, manufacturing staff, and salespeople.
2.
Good external sources include watching and listening to
customers. The company can analyze the questions and complaints
of customers to find new products. The company can also have
engineers or salespeople meet and work with customers to get
suggestions. It can also conduct surveys or focus groups to learn
about customer needs and wants. Consumers can often create new
products and uses on their own, and sometimes companies can
give consumers the resources to design their own products.
Use Discussing the Issues 2 here.
Use Under the Hood/Focus on Technology here.
h.
i.
j.
k.
For some products, especially technical ones, customers may not know
what they need.
Competitors can be a good source of new product ideas. Companies can
watch competitors’ ads to get clues about their products. They can
purchase competing products, take them apart, analyze their sales, and
decide if they should bring out a new product of their own.
Distributors and suppliers can also contribute new product ideas. Other
sources include trade magazines, shows, and seminars, as well as
government agencies, new product consultants, advertising agencies,
marketing research firms, university and commercial laboratories, and
individual inventors.
The search for new products should be systematic. Management can
develop an idea management system that directs new ideas to a central
point where they can be collected, reviewed, and evaluated.
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Applying the Concept
Reread the opening vignette about Microsoft and its new product ideas. How might
Microsoft collect product ideas from its customers?
Idea Screening
l.
Idea generation is all about creating a large number of ideas. Idea
screening is the first idea-reducing stage. Product development costs rise
rapidly in later stages, so companies want to go ahead with only the
product ideas that will become profitable.
Use Key Term Idea Screening here.
Concept Development and Testing
m.
An attractive idea should be developed into a product concept. A product
concept is a detailed version of the idea stated in meaningful consumer
terms. A product image is the way consumers perceive an actual or
potential product.
1.
In concept development, several descriptions of the product are
generated to find out how attractive each concept is to customers.
From these concepts, the best one is chosen.
2.
Concept testing calls for testing new product concepts with groups
of target consumers. The concepts may be presented symbolically
or physically. Table 8-1 lists some questions that might be asked of
consumers after they have been exposed to the product concept.
The answers will help the company decide which concept has the
strongest appeal.
Use Key Terms Product Concept, Concept Testing here.
Use Table 8-1 here.
Use Application Questions 1 here.
Marketing Strategy Development
n.
Marketing strategy development entails designing an initial marketing
strategy for introducing the product to the market. It consists of three
parts:
1.
The first part describes the target market, the planned product
positioning, and the sales, market share, and profit goals for the
first few years.
2.
The second part outlines the product’s planned price, distribution,
and marketing budget for the first year.
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3.
The third part describes the long-run sales, profit goals, and
marketing mix strategy.
Use Key Term Marketing Strategy Development here.
Use Application Questions 2 here.
Business Analysis
o.
Now the company evaluates the business attractiveness of the proposed
product. Business analysis involves a review of the sales, costs, and profit
projections for a new product to find out whether they satisfy the
company’s objectives.
1.
To estimate sales, the company could look at the sales history of
similar products, or conduct surveys of market opinion. It can then
estimate the minimum and maximum sales to assess the range of
risk.
Use Key Term Business Analysis here.
Product Development
p.
If the product concept passes the business analysis stage, it moves into
product development. Here, R&D or engineering develops the product
concept into a physical product. There is now a large jump in investment,
but this stage will show whether the product idea is workable.
q.
Often, products will undergo rigorous tests to make sure that they perform
safely and effectively. Tests might also show if consumers will find value
in them.
Use Key Term Product Development here.
Let’s Discuss This
What kind of safety testing might a new baby stroller need to go through? How about a
new flashlight? A new telephone?
Test Marketing
r.
This is the stage in which the product and marketing program are
introduced into more realistic market settings. Test marketing gives the
marketer experience with marketing the product before going to the great
expense of a full introduction.
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s.
The amount of test marketing varies with each new product.
1.
When introducing a new product requires a big investment, or
when management is not sure of the product or marketing
program, a company may do a lot of test marketing. Although
these costs can be high, they are often small when compared to the
costs of making a major mistake.
Use Key Term Test Marketing here.
Commercialization
t.
Commercialization involves introducing the product into the market. The
first decision that needs to be made is timing. The second decision
involves where to launch the product—a single location, a region, the
national market, or the international market. Many companies will develop
a planned market rollout.
Use Key Term Commercialization here.
Use Discussing the Issues 3 here.
Organizing for New Product Development
u.
Under sequential product development, one company department works
individually to complete its stage of the new product development process
before passing the new product along to the next department and stage.
1.
This orderly process can help bring control to complex and risky
projects. But, it can also be very slow.
Use Key Term Sequential Product Development here.
v.
The simultaneous product development (or team-based or collaborative
product development) concept can be used to get products to market more
quickly.
1.
Company departments work closely together through crossfunctional teams, overlapping the steps in the product development
process to save time and increase effectiveness.
2.
Teams usually include people from the marketing, financing,
design, manufacturing, and legal departments. Sometimes even
suppliers and customer companies are involved.
3.
There are some limitations to this approach. Fast product
development can be riskier and more costly than the more orderly
process. There can also be increased organizational tension and
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4.
confusion. The company must also ensure that quality is not
sacrificed by rushing a product to market.
But the rewards outweigh the risks. Companies that get new and
improved products to the market faster than competitors often gain
competitive advantage.
Use Key Term Simultaneous (or Team-based) Product Development here.
Use Marketing at Work 8-1 here.
Use Discussing the Issues 4 here.
Use Linking the Concepts here.
Use Focus on Ethics here.
3.
Product Life-Cycle Strategies
a.
A typical product life cycle (PLC) is shown in Figure 8-2. It shows the
course that a product’s sales and profits take over its lifetime. There are
five distinct PLC stages:
1.
Product development begins when the company finds and develops
new product ideas. Sales are zero in this stage and the company’s
investment costs mount.
2.
Introduction is a period of slow sales growth as the product is
introduced into the market. Profits are nonexistent because of the
heavy expenses of product introduction.
3.
Growth is a period of rapid market acceptance and increasing
profits.
4.
Maturity is a period of slower sales growth because the product has
achieved acceptance by most potential buyers. Profits level off or
decline because of increased marketing outlays.
5.
Decline is the period when sales fall off and profits drop.
Use Key Term Product Life Cycle (PLC) here.
Use Figure 8-2 here.
Use Chapter Objective 3 here.
b.
c.
Not all products follow this product life cycle. Some products are
introduced and die quickly; others stay in the mature stage for a very long
time. Some can enter the decline stage and then cycle back into the growth
stage through strong promotion or repositioning.
The PLC concept can describe a product class, such as gasoline-powered
automobiles; a product form, such as SUVs; or a brand, such as the Ford
Explorer.
1.
Product classes have the longest life cycles.
2.
Product forms tend to have the standard PLC shape.
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d.
The PLC concept can also be applied to styles, fashions, and fads. Their
special life cycles are shown in Figure 8-3.
1.
A style is a basic and distinctive mode of expression.
2.
A fashion is a currently accepted or popular style in a given field.
3.
Fads are fashions that enter quickly, are adopted with great zeal,
peak early, and decline very quickly. They last only a short time
and tend to attract only a limited following.
Use Key Terms Style, Fashion, and Fad here.
Use Figure 8-3 here.
Use Discussing the Issues 5 here.
e.
Using the PLC concept for forecasting product performance or for
developing marketing strategies creates some difficulties. Marketers could
have trouble identifying which stage of the PLC the product is in, or in
pinpointing when the product moves into the next stage. It can also be
difficult to determine why the product moves through the stages. Using the
PLC concept to develop marketing strategy also can be difficult because
strategy is both a cause and a result of the product’s life cycle.
Introduction
f.
The introduction stage starts when the new product is first launched.
g.
In this stage, profits are negative or low because of low sales and high
distribution and promotion expenses. Promotion spending is relatively
high to inform consumers of the new product.
Use Key Term Introduction Stage here.
Growth Stage
h.
If the new product satisfies the market, it will enter a growth stage in
which sales will begin climbing quickly. Early adopters will continue to
buy, and later buyers will start following their lead.
i.
New competitors will enter the market. This leads to an increase in the
number of distribution outlets. Prices remain where they are or fall
slightly. Companies keep their promotion spending at the same or a
slightly higher level.
j.
Profits increase during the growth stage as promotion costs are spread
over a larger volume and as unit manufacturing costs fall.
Use Key Term Growth Stage here.
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Maturity Stage
k.
As the product’s sales growth slows down, the product enters a maturity
stage. This stage normally lasts longer than the previous stages. Most
products are in the maturity stage of the life cycle, and therefore most of
marketing management deals with the mature product.
l.
Competitors begin marking down prices while increasing their advertising
and sales promotions. They may also up their R&D budgets to find better
versions of the product. These steps lead to a drop in profit.
m.
Product managers should consider modifying the market, product, and
marketing mix at this point.
1.
In modifying the market, companies try to increase the
consumption of the current product. They look for new users and
market segments.
2.
The company may also try to modify the product by changing
characteristics such as quality, features, or style to attract new
users and to inspire more usage. Or the company could add new
features to expand the product’s usefulness, safety, or convenience.
3.
The company can modify the marketing mix to improve sales. It
can cut prices, launch a better advertising campaign, or use
aggressive sales promotions.
Use Key Term Maturity Stage here.
Use Linking the Concepts here.
Use Applications Questions 3 here.
Decline Stage
n.
The sales of most product forms and brands eventually dip. This is the
decline stage.
o.
Sales decline for many reasons, including technological advances, shifts in
consumer tastes, and increased competition. Some firms will withdraw
from the market; others may prune their product offerings.
p.
Marketers could decide to maintain the brand without change in the hope
that competitors may leave the industry. Or, management may decide to
reposition or reformulate the brand in hopes of moving it back into the
growth stage of the PLC. Marketers could also decide to harvest the
product, which means reducing various costs while hoping that the sales
hold up. Or, the company could simply drop the product.
q.
Table 8-2 summarizes the key characteristics of each stage of the product
life cycle. It also lists the marketing objectives and strategies for each
stage.
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Use Key Term Decline Stage here.
Use Table 8-2 here.
Use Marketing at Work 8-2 here.
Use Chapter Objective 4 here.
Use Discussing the Issues 6 here.
Applying the Concept
Discuss several soft drinks that are on the market today. Define which stage of the PLC
you think each is in and why.
Travel Log
Discussing the Issues
1. Why do so many new products fail? What lessons can marketing managers learn
from this to apply to the new product-development process?
Although an idea may be good, the company may overestimate market
size. The actual product may be poorly designed, or maybe it might be
incorrectly positioned, priced too high, or poorly advertised. A high-level
executive might push a favorite idea despite poor marketing research
findings. Sometimes the costs of product development are higher than
expected, and sometimes competitors fight back harder than expected.
2. Describe the major internal and external sources of new-product ideas. Which
source do you think provides the best ideas? Which source delivers the most
ideas?
Using internal sources, the company can find new ideas through formal
research and development. It can pick the brains of its executives,
scientists, engineers, manufacturing staff, and salespeople.
Some
companies have developed successful “intrapreneurial” programs that
encourage employees to think up and develop new-product ideas.
External sources include customer questions and complaints, surveys,
focus groups, competitors’ ads, and relationships with distributors and
suppliers.
3. What major factors should a company consider when it proceeds with the
commercialization of a new product? Which factor do you believe is most
important?
The company launching a new product must first decide on introduction
timing.
Next, the company must decide where to launch the new product—in a
single location, a region, the national market, or the international market.
Few companies have the confidence, capital, and capacity to launch new
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products into full national or international distribution. They will develop
a planned market rollout over time.
4. Compare sequential product development and simultaneous product development.
What are the advantages and disadvantages of each approach?
Under the sequential product development approach, one company
department works individually to complete its stage of the process before
passing the new product along to the next department and stage. This
orderly, step-by-step process can help bring control to complex and risky
projects. However, it also can be dangerously slow. In order to get their
new products to market more quickly, many companies are adopting a
faster, team-oriented approach called simultaneous product development
(or team-based or collaborative product development). Under this
approach, company departments work closely together through crossfunctional teams, overlapping the steps in the product development
process to save time and increase effectiveness. In the sequential process,
a bottleneck at one phase can seriously slow the entire project. In the
simultaneous approach, if one functional area hits snags, it works to
resolve them while the team moves on. The simultaneous team-based
approach does have some limitations. Superfast product development can
be riskier and more costly than the slower, more orderly sequential
approach. Moreover, it often creates increased organizational tension
and confusion. The company must also be sure that rushing a product to
market doesn’t adversely affect its quality—the objective is not only to
create products faster, but to create them better and faster.
5. Briefly describe the five stages of the product life cycle. Identify one product
class, form, or brand that is in each stage.
Student responses to the second question will vary. Product development
begins when the company finds and develops a new-product idea. During
product development, sales are zero and the company’s investment costs
mount. Introduction is a period of slow sales growth as the product is
introduced in the market. Profits are nonexistent in this stage because of
the heavy expenses of product introduction. Growth is a period of rapid
market acceptance and increasing profits. Maturity is a period of
slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits level off or decline because of increased
marketing outlays to defend the product against competition. Decline is
the period when sales fall off and profits drop.
6. Explain the difference between maintaining, harvesting, and dropping a brand in
the decline stage. Why might a company select one of these strategies over the
other?
Management may decide to maintain its brand without change in the hope
that competitors will leave the industry. Management may also decide to
reposition or reinvigorate the brand in the hopes of moving it back into
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the growth stage of the product life cycle. Management may decide to
harvest the product, which means reducing various costs (plant and
equipment, maintenance, R&D, advertising, sales force) and hoping that
sales hold up. If successful, harvesting will increase the company’s profits
in the short run. Or, management may decide to drop the product from
the line. It can sell it to another firm or simply liquidate it at salvage
value.
Application Questions
1. In a small group, brainstorm ideas for a new product. Develop three different
product concepts for one of the new product ideas your group has generated.
Student responses will vary.
2. Select the product concept from the previous question that you believe is the most
viable. Develop a marketing strategy statement for the new product based on that
concept.
Student responses will vary.
3. Identify a product that has been successfully modified to meet changing consumer
needs and, as a result, has avoided the decline stage. Did the company modify the
market, the product, or the marketing mix? How?
Student responses will vary. Cable television has kept up with changing
technologies by modifying its product to include digital recording, onscreen guides, and music channels as options to compete with Satellite
providers.
Under the Hood
Sometimes the most difficult part of new-product development is generating new ideas
that solve old problems. Companies have tried everything from costly retreats to
customer feedback hoping to develop ideas that are good enough to weather the product
development process. Always on the lookout for fresh ways to create innovative ideas,
some marketers have turned to idea generating software. Creativity Unleashed Limited
offers “Imagination Engineering” software, designed to spur creativity by thinking about
problems in new ways. But, can software really inspire creativity? The company’s Web
site reassures clients, saying “If it seems strange that something as mechanical as
software can improve creativity, don’t worry. It’s not the software that’s creative, it’s
you. All the software does is stimulate the bits that other stimulants can’t reach.”
1. Can software really help marketers generate successful new product ideas? Does
such software have inherent limitations?
Student responses will vary. Software can stimulate new ideas, but may be limited in its
ability to generate successful new product ideas.
2. Visit the Creativity Unleashed Web site at http://www.cul.co.uk/software/imeng.htm
and download the Imagination Engineering software. Returning, once again, to the
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new product idea from Application Question 1, use the software to develop other
ideas that solve the same problem. How well does the software work? Did you find
it easy to use?
Student responses will vary.
Focus on Ethics
In many cases, getting a new product to market before the competition is the key to
rapidly building market share and establishing brand awareness. But rushing through the
stages of product development to achieve commercialization has both its benefits and its
drawbacks. Employees feeling pressure to make deadlines and beat the competition to
market may neglect consumer needs or overlook important safety concerns. Balancing
safety, quality, and speed is often difficult in an environment of rapid change and fierce
competition.
1. What can a company do to ensure that all the necessary product development steps
are adequately followed under the pressure of being first to market? What controls
might be put in place?
Student responses will vary. Standardized procedures for the product development
process that detail product requirements throughout the stages of development may help.
In addition, companies may choose to make those responsible for testing autonomous
from those responsible for product development.
2. Discuss the potential negative consequences of rushing a new product to market.
How can marketers balance these concerns with the need to innovate?
Student responses will vary. Rushing to market may ultimately harm a company’s
relationships with consumers by delivering faulty products, thereby tarnishing brand
equity and the company’s image.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
Understanding the systematic nature of the new product development process will
cause problems for some students. They will have some difficulty understanding
why a process is needed at all, and they will also not realize how development
costs rise at each and every stage. Finally, the amount of analysis that goes into
the screening phases might be a surprise to them. To overcome these barriers,
come up with a new product idea in class and review how you might develop it
into a viable product.
The commercialization phase of the new product development process could also
be somewhat difficult for the students to comprehend. They may not be aware that
not all products are launched nationally or globally when first introduced. Some
examples of products that are available only regionally—food and drink products
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3.
4.
frequently are regional—may help them to understand the logistics of launching a
new product.
The phases of the product life cycle, and the fact that it can apply to product
classes, forms, and brands, can cause some difficulty. Discussing brands that are
in each stage helps tremendously, as does discussing products that have
successfully moved back from decline into maturity or growth (e.g., Arm &
Hammer baking soda).
The differences among fads, fashions, and styles can be explained through asking
the students to discuss clothing in those terms. Because these items are routinely
discussed in terms of fashions and styles, students can easily internalize the
differences in meaning of these terms.
Student Projects
1.
2.
3.
4.
5.
6.
7.
Discuss the purpose for test marketing. What potential problems may complicate
test marketing?
Discuss how you would use the Internet to collect new product ideas.
For your favorite soft drink, trace the product life cycle. Do enough research to be
able to support your timeline and the stage it is in today.
Identify one new product that is on the market. What kind of product is it? Is it
part of a family of products? How is it positioned? What can you infer about the
commercialization strategies of the company? What do you predict for length of
life of the product? What could be done to prolong the product’s life?
Take a product that has failed. Analyze why this happened. What suggestions
could you offer that might have prevented the failure?
Take a fad product and show how it could be maintained on the market past its
fad stage. Describe your strategies for doing so. How could the Internet be used to
aid your strategy?
Collect and describe five advertisements that show products in different phases of
the product life cycle. What did you use to determine which stage the products
were in?
Interactive Assignments
Small Group Assignment
1. Form students into groups of three to five. Each group should read the opening
vignette to the chapter about Apple. Each group should then answer the following
questions:
a. How did Apple, an early industry leader which almost faced extinction,
use creativity?
b. Why would Apple feel the need to launch many new products in a few
years?
c. How has Apple built customer-driven innovation into its organization?
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d. Trace one of Apple’s products through the product life cycle stages. How
quickly does a computer move through the stages?
Each group should share its findings with the class.
Individual Assignment
1. Read the opening vignette to the chapter. Think about the answers to the
following questions:
a. How did Apple, an early industry leader which almost faced extinction,
use creativity?
b. Why would Apple feel the need to launch many new products in a few
years?
c. How has Apple built customer-driven innovation into its organization?
d. Are iPods styles, fashions, or fads?
Share your findings with the class.
Think-Pair-Share
1. Consider the following questions, formulate an answer, pair with the student on
your right, share your thoughts with one another, and respond to questions from
the instructor.
a. How can a firm obtain new products?
b. What is a new product?
c. Why do new products fail?
d. What are the steps in the new product development process? Characterize
each one.
e. Which step do you think is the most important? Explain and justify.
f. What are the major sources of new product ideas?
g. What is involved in idea screening?
h. What is a product concept?
i. What is one way product concepts are tested?
j. What are the parts of a marketing strategy?
k. What must happen before a product can be developed?
l. What are the different types of test markets?
m. How can new product development be sped up?
n. What are the stages of the product life cycle? Comment on each stage as to
characteristics.
o. What is the difference between a style, fashion, and fad?
p. What are the different strategies for modifying a product in the maturity
stage?
q. What are the strategies for dealing with products in the decline stage?
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Outside Example
ProductScan® Online is an Internet-based service from Market Intelligence Service, Ltd.
It is a full-service marketing intelligence service for new product launches in the
consumer packaged goods field. It offers subscribers enough information for them to spot
trends or track potential threats to their business.
They’ve developed six criteria to measure new products against, because they claim that
“the key to success in new consumer packaged goods marketing is innovation.” So, they
decided to define innovation. Their criteria are:






Positioning the product to new users or usage
Providing a consumer benefit with new packaging
Offering additional value through a new formulation
Introducing new technology to the product
Opening a new market for the product
Merchandising
Although the last criterion, merchandising, has not been addressed in the textbook as of
yet, the other five criteria have been. Go to the Web site, www.productscan.com, and
click on “What’s New.” There are free reports there, by year, on new product innovations
that have been released. Select the latest year, and review the products listed. Answer the
following questions:
1. Apply the above criteria to the products listed. Are they all truly innovative?
2. Look at the number of products launched over the years (statistics contained
within the report). Considering that only one in ten new products succeed, what is
the motivation for companies to launch such an astounding number of new
products?
3. Which of the products listed would you have test marketed? Why?
4. Which products do you predict will still be considered innovative in another year?
5. Take any of the products discussed and trace through their likely life cycle. What
kind of marketing strategy would you use in each stage to keep the product at the
forefront?
Classroom Exercise/Homework Assignment
If ever a product class seemed to be in the maturity stage, it would be bottled drinks.
They’ve been around for a long time, and it doesn’t seem like there’s much you can do to
energize the category. But that’s not the case at all, as evidenced by the success of
Snapple brand drinks. Named for a carbonated apple beverage, Snapple has achieved
stunning success in its category. It’s done that by being extremely innovative, developing
and launching new products at breakneck speed. Snapple now offers juice drinks, teas,
lemonades, and diet drinks. Review www.snapple.com to see their innovative marketing
techniques as well as a full listing of their products.
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Which of Snapple’s types of drinks and flavors would you think are in the mature
stage of the product life cycle?
Snapple is constantly bringing new flavors to market. While iced tea as a product class
and flavored teas as a product form would both seem to be in a mature stage, the flavors
Snapple introduces, such as Kiwi Teawi, keep their brands in the growth stage. The same
can be applied to their other drink categories as well, except for lemonades, in which
there are only two flavors: traditional lemonade and pink lemonade. These could be
considered mature products, and perhaps even in decline.
1.
2.
How is Snapple managing to keep so much of its product line in the growth stage?
Snapple uses innovative marketing techniques that most companies would steer clear of.
For instance, when you go to their Web site, you don’t immediately see a display of their
products; instead, you are launched into a make-believe town where you can meet all
kinds of interesting characters.
Snapple has made their brand fun in order to capture the youth market, which spends the
most on bottled drinks. They are also constantly launching new flavors and naming them
sometimes-silly names. Again, this keeps the youth crowd returning for more.
3.
How might Snapple generate ideas for new products and flavors?
Snapple gives ample opportunity on its Web site for customers to write in. One section on
Snapple's Web site asks if you know someone who really loves Snapple. There is an
opportunity to tell this person's personal story and email it to Snapple. There are games
and contests on the Web site to allow the company to gather valuable information about
what consumers like and don't like.
Student responses can vary as to where Snapple can generate product ideas outside of
the Web site and local events.
Classroom Management Strategies
This is a relatively short chapter, and so you have the luxury of really being able to focus
on each section. Still, there is a lot of material to discuss, so effective use of time is
important. The majority of class time should be spent on the New Product Development
section, with slightly less than half being devoted to Product Life-Cycle Strategies.
1.
2.
An introductory 5 minutes should be spent on the discussion of Apple’s
development as an example of why companies need to continually offer new
products and services.
Another 5 minutes should be spent discussing the reasons why a systematic new
product development process is important, rather than developing products in a
haphazard manner. Tie this discussion back to earlier in the term when you talked
about marketing strategies, mission statements, and goals and objectives for the
company as a whole.
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3.
4.
Spend about 35 minutes going through the eight stages of the new product
development process. At each phase, using examples from your own and the
students’ experience will help tremendously. Having a guest speaker from a
company that has developed and launched several products is a unique way of
driving home the importance of a systematic process.
Finally, spend 15 minutes discussing the PLC and the marketing strategies that
can accompany each stage. Going online and looking at Web sites for various
kinds of products at each of the different stages could make this more interesting
for the students, while also providing a more detailed introduction to the meaning
of a product life cycle.
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