Page 172 - DMGT408DMGT203_Marketing Management

Unit 7: New Product Development and Product Life Cycle Strategies

Notes
Did u know? Microsoft spent more than $200 million on its media advertising campaign
when it introduced Windows 95.
Companies generally do not launch new products overnight, but adopt the rollout method. They
introduce the product in stages. It is first introduced in a region (it could be a country for global
players) and subsequently in adjoining areas, states, or countries. Cities where test marketing
has been conducted are sometimes chosen as the initial marketing area as a natural extension of
test marketing. The major factor that may favour this approach is if the product fails, the company
will suffer smaller losses. Also, if the company does not already have a wide network in place,
it would take considerable time to set up a distribution network.

Self Assessment

Multiple Choice Questions:

4. Which of these is not a creative method used by companies to generate ideas?
(a) Brainstorming (b) Hypothesis testing
(c) Forced relationship (d) Reverse assumption analysis
5. A ……………………… error occurs when the company rejects, an otherwise promising
idea from further consideration.
(a) Go (b) Drop
(c) Pass (d) Default
6. At ……………………… stage, some firms use rapid prototyping (a computer-aided design
programme) to design small appliances and produce plastic models.
(a) Idea generation (b) Concept testing
(c) Product development (d) Test marketing

7. In ……………………… technique of test marketing, consumers are offered free samples
for trial and they may also be exposed to one or more ads.
(a) Sales wave (b) Controlled simulation

(c) Controlled test marketing (d) Simulated test marketing

7.3 Concept of Product Life Cycle

The concept of the product life cycle (PLC) is based on the following facts:
1. Product has a limited life

2. A product sale passes through distinct stages
3. Profits rise and fall at different stages of Product Life Cycle
4. Products require different marketing, financial, manufacturing, purchasing and human
resource strategies in each life cycle stage.

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