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
cycles affect strategy
planning.
2. Understand what is involved
in designing new products
and what “new products”
really are.
3. Understand the new-product
development process.
10-2
4. See why product liability
must be considered in
screening new products.
5. Understand the need for
product or brand managers.
6. Understand the important new
terms.
For use only with Perreault and McCarthy texts.
© 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
Tim
– e

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
Long-Run Products Products
Consumer
Welfare
Low
Pleasing Deficient
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