Chapter 10:
Product
Management and
New-Product
Development
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Chapter 10 Objectives
When you finish this chapter, you should
1. Understand how product life 4. See why product liability
cycles affect strategy must be considered in
planning. screening new products.
2. Understand what is involved 5. Understand the need for
in designing new products product or brand managers.
and what “new products” 6. Understand the important new
really are. terms.
3. Understand the new-product
development process.
For use only with Perreault and McCarthy texts.
10-2 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
The Product Life Cycle
Market Market Market Sales
Introduction Growth Maturity Decline
Total Industry
Sales
+
Total Industry
Profit
$0
Time
–
Exhibit 10-1
For use only with Perreault and McCarthy texts.
10-3 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Planning for Life Cycle Stages
Introducing New Focus:
Products Budget / Rate of Growth
Managing Mature Focus:
Products Persuasion / Less Profit
Focus:
Future Adaptation
New or Improve?
Focus:
New Markets
New Strategies
Focus:
Dying Products
Phase Out
For use only with Perreault and McCarthy texts.
10-4 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
New-Product Development Process
Idea Screening Idea Development Commercial
Generation Evaluation -ization
Ideas from: Strengths Concept R&D Finalize
Customers and testing Develop product and
and users Weaknesses Customer model or marketing
Marketing Fit with reactions service plan
research objectives Rough prototype Start
Competitors Market estimates Test production
Other trends of cost, marketing and
markets Rough ROI sales, mix marketing
Company estimate profits Revise plans “Roll out” in
people as needed select
Middlemen ROI estimate markets
Final ROI
estimate
Exhibit 10-4
For use only with Perreault and McCarthy texts.
10-5 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Types of New Product Opportunities
Immediate Satisfaction
High Low
High Desirable Salutary
Products Products
Long-Run
Consumer
Welfare
Pleasing Deficient
Low
Products Products
For use only with Perreault and McCarthy texts.
10-6 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
New-Product Development Management
Top Level
Support
Authority
Key
Issues
Market-Guided
R&D
Integration &
Coordination
For use only with Perreault and McCarthy texts.
10-7 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Key Terms
Product Life Cycle
Market Introduction
Market Growth
Market Maturity
Sales Decline
Fashion
Fad
New Product
FTC
Consumer Product Safety Act
Product Liability
Concept Testing
Product Managers
Brand Managers
For use only with Perreault and McCarthy texts.
10-8 © The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill