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Similar to Chapter 7: Developing and Managing Offerings
Similar to Chapter 7: Developing and Managing Offerings (20)
Chapter 7: Developing and Managing Offerings
- 1. by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond
Principles of Marketing
- 3. ©2010 Flat World Knowledge, Inc. 3
Developing new products for most companies is a constant
process.
Some “new” offerings may be only improved versions of existing
offerings.
The New Offering DevelopmentThe New Offering Development
ProcessProcess
- 4. The New Offering DevelopmentThe New Offering Development
ProcessProcess
Learning Objectives
1. Identify an effective process for creating offerings and
bringing them to market.
2. Understand the relative importance of each step in the
new-offering development process and the functions
within each step.
3. Distinguish between the various forms of testing and
analysis that take place before a new offering is brought
to the market
©2010 Flat World Knowledge, Inc. 4
- 5. ©2010 Flat World Knowledge, Inc. 5
It all starts with an idea
and, ideas come from
everywhere.
Does it fit?
Is it profitable?
What features
do customers
want?
Make prototypes
Define manufacturing
Limited and
market tests
Commercialization
Monitor progress
Most offerings go through a seven step process:
Offering Development—7 StepsOffering Development—7 Steps
- 6. ©2010 Flat World Knowledge, Inc. 6
• Most companies follow a seven step process in developing
new products.
• Ideas for new products can come from employees,
customers, competitors, and suppliers.
• Follow-on steps include: idea screening, feature
specification, development, testing, and launching.
• Evaluation and monitoring of new products is the last step
in the process.
• Companies face risks in investment of time and money
when new products fail.
• There is also the risk of missing opportunity if products are
not introduced.
Key TakeawaysKey Takeaways
- 7. Managing New ProductsManaging New Products
©2010 Flat World Knowledge, Inc. 7
Learning Objectives
1.Explain how organizations manage offerings after they are introduced to the
marketplace.
2.Explain how managing an offering may be different in international markets.
3.Explain the product lifecycle and the objectives and strategies for each stage.
4.Explain why during the introduction stage the marketing costs related to a product are
typically higher and why companies must generate awareness of it and encourage
consumers to try it.
5.Explain why and when penetration and skimming pricing are used in the introduction
stage.
6.Describe the characteristics of the growth stage and why competitors are likely to enter
the market during this stage.
7.Understand how companies develop different strategies to extend the life cycle of
products in the maturity stage.
8.Differentiate between product modifications, market modifications, and marketing-mix
modifications.
9.Understand the difference between harvesting and divesting when a product is in the
decline stage.
- 8. The Product Life Cycle (PLC)The Product Life Cycle (PLC)
©2010 Flat World Knowledge, Inc. 8
- 9. Product Life Cycle FactorsProduct Life Cycle Factors
©2010 Flat World Knowledge, Inc. 9
- 10. ©2010 Flat World Knowledge, Inc. 10
This is the 6th step in the product development cycle.
Product Introduction PhaseProduct Introduction Phase
- 12. Growth and DistributionGrowth and Distribution
• Effective marketing during the growth
phase in the life cycle requires expanding
distribution channels.
• Having the product in the right place
at the right time means expanded presence
in order to serve the increasing demand.
• This distribution attention continues
the higher costs during the growth phase.
©2010 Flat World Knowledge, Inc. 12
- 14. The Maturity PhaseThe Maturity Phase
©2010 Flat World Knowledge, Inc.
14
• Products like people reach a stage of maturity,
or leveling off of growth.
• Sales level off as demand erodes and sales are
largely replacement or repeat users as opposed
to new customers.
• This phase can last longer, and only the
strongest suppliers will survive.
- 16. Modifying Products to Extend MaturityModifying Products to Extend Maturity
©2010 Flat World Knowledge, Inc. 16
- 18. The Decline StageThe Decline Stage
• Product sales decrease at an increasing rate.
• Technology obsoletes products.
• Fads generally have short lives.
• Fashions change life cycles!
• Harvesting of products is accomplished through
reducing costs to maintain profits.
• Modifying products during maturity may avoid
a decline phase.
©2010 Flat World Knowledge, Inc. 18
- 19. Key TakeawaysKey Takeaways
• Understanding life cycles necessary for successful
product marketing.
• Consumer awareness of new products is critical.
• Product benefits and value must be addressed during
the growth phase.
• Sales level off and competition intensifies during the
maturity phase.
• Marketing efforts are needed to extend the maturity
phase.
• Harvesting decisions are needed in the decline phase.
©2010 Flat World Knowledge, Inc. 19
