Page 163 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes Introduction

In this unit, you are going to be introduced to two important concepts related to product,
namely, new product development and product life cycle. In this unit, we will look into the new
product development process in organizations. It is that observed in the Indian market between
40-50% of products sold in the market did not exist some ten years ago. The market is flooded
with many new products like plasma television, dishwashers, more powerful and stylish
motorbikes and new generation cars. So, given the resources, the companies develop new
products after regular intervals to meet changing consumer needs and wants.
Once a product is developed, it goes through a cycle, called the product life cycle. In its simplest
form, product life cycle explains the market response to a new product introduced in the market
over a period of time. The idea of product life cycle is borrowed from biology and an analogy is
drawn with the life of an organism. As a living being progresses through the stages of birth,
growth, maturity, decline and death, so also a product passes through similar stages during its
market entry and obvious exit.

7.1 New Product Options

The term ‘new product’ has many connotations. Most definitions of new-product have a common
feature that new products offer innovative benefits. Everett M. Rogers observes that some
researchers have favoured a consumer-oriented approach in defining new products. Consulting
firm of Booz, Allen, and Hamilton in their survey found that products introduced by 700 US
companies over a period of five years were not equally “new.” The study identified six new
product categories based on their degree of newness as perceived by both the company and the
customers in the target markets.
‘New to the World’ Products: 10 per cent were true innovations, not just new to the company.
Such products create an entirely new market.
New Product Lines: 20 per cent constituted new product category for the company introducing
it, but the products were not new to customers in the target market, as one or more competitive
brands already existed.
Additions to Existing Product Lines: 26 per cent were actually new items added in the existing
product lines. These items may be moderately new to both the company and the customers in its
established product-markets. They may help extend the market segments to which the product
line appeals.
Improvements in or Revisions of Existing Products: 26 per cent items provide improved
performance or enhanced perceived value brought out to replace existing products. These items
may present moderately new marketing and production challenges to the company. Unless
these items represent technologically new generation of products, customers are likely to perceive
them as similar to the products they replace.
Repositioning: 7 per cent products are targeted at new applications and new market segments.

Cost Reductions: 11 per cent products are modifications providing similar performance at low
costs.

Self Assessment

State whether the following statements are true or false.
1. Promoting the product again with different tagline, different celebrity, different packaging
etc. can also be categorised as new product development.

2. Only a handful of new products are true innovations that create an entirely new market.

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