INTRODUCTION
A company must be efficient in developing its new products and must also be efficient in managing them in the phases of changing tastes, technology and competition. Every product goes through a life cycle, is born, grows, matures, declines and dies. During the development of the product the company accumulates increasing costs, after launching, its sales go from an introductory period to a period of strong growth, followed by maturity and then decline. Profits go from negative to positive with a maximum and then decline.
The existence of the life cycle means that the company faces important challenges. The first is to find new products to replace those that are declining. The second is to optimally manage each stage of the life cycle for existing products.
A company can obtain new products in two ways:
- By acquiring, buying a whole company, buying a patent or a license to produce some products, the other is to develop new products by setting up your own research and development department. Innovation is expensive and carries its risks.
The categories of new products, a new product is a confusing term it can be a new product for the world, for the market or for the manufacturer. By new products we understand original, improved products, product modifications and new brands, below we describe the various modalities of new products:
- New product lines are goods that the company did not offer before and allows it to enter an established market. Additions to existing lines are new products that complement established lines in the company. Improvements or revisions of existing products are "new" products. and improved ”that present slight and significant changes. Product replenishments are existing products directed to other markets or to untapped segments. Lower priced products, products that work similarly to competitors but at lower prices Successful companies in the introduction of new products have the following characteristics: They support innovation and development of new products, they commit to the long term. They define objectives,strategies and tactics with a focus on new products as an essential element. They capitalize on experience to achieve and maintain competitive advantage.
Senior management fosters an environment to achieve corporate goals and specific new products.
1. THE PROCESS OF DEVELOPMENT OF NEW PRODUCTS
1.1 GENERATION OF IDEAS THESE COME FROM DIFFERENT SOURCES.
From consumers researching and learning about their needs and wants.
From marketing, advertising, market research employees, they analyze the market and come up with ideas for new products.
The distributors, have more contact with the users, know better their needs, those that satisfy and those that are not satisfied. Sales force inquires frequently
Competitors, through market intelligence, monitor the performance of competing products, attend fairs, exhibitions, parades, make contact with associations.
Research and development, basic research is scientific and new technologies, applied research, search for useful applications, product development turns applications into useful products.
External advisors, examine businesses and recommend new product ideas, analyze portfolio
1.2 FILTRATION OF IDEAS.
The ideas generated are passed through a filter, to eliminate those that are not consistent with the new product strategy or that are inappropriate, this process is carried out by a new product committee or another group.
The proof of concept evaluates the product idea, before creating a prototype, the reaction of consumers is perceived through descriptions or visual representations of the proposed article.
This test allows acceptable predictions of success of the new product when it is not imitation and does not require changes in consumer behavior.
1.3 BUSINESS ANALYSIS
This stage can be simple or complex, the ideas that pass the filter are analyzed by calculating preliminary figures for demand, sales, costs, profitability, comparing income and costs.
The precision of income depends on the size of the market, the nature of the competition, and the degree of novelty of the product.
In products sensitive to fluctuations, the business cycle, analysis of economic trends and their influence on sales must be analyzed.
When the economy is in an uncertain and risky stage, consumers postpone the purchase of expensive and durable products.
The following questions should be answered:
- What is the feasible demand for the product? What influence will the product have on total sales, profits, participation and return on investment? How will the new product affect existing ones? Will it destroy them? Will consumers benefit? with the product? Will the product improve the image of the company's global product mix? What new facilities will be required?
The favorable and related responses will lead us to a study of markets, competition, costs, technical capabilities, with which management will have a clear vision of the market's potential.
1.4 DEVELOPMENT STAGE
It can be a long and expensive period, engineering, research and development, prototyping of the product.
They begin to design the marketing, branding, packaging, labeling strategies and the preliminary pricing, promotion and distribution strategies.
The internet is a tool to improve the communication process between marketing, graphic design, advertising agencies, allows you to share ideas, reduce costs, streamlines the arrival of the product in stores.
The prototypes must offer security to the user, in tests the product must be subjected to strong treatment in homes and companies. For food, chemical, cleaning and industrial supplies, the performance characteristics evident to the user are evaluated.
The product is refined according to laboratory and application tests.
1.5 PROOF OF MARKET.
It is a limited introduction of the product with a marketing program to see the reactions of potential customers, evaluate the alternatives of the strategies and determine how they are integrated into the marketing mix.
The selected cities must reflect the market conditions for the new product, demographically, purchasing and distribution habits.
Test sites must be without media influence, otherwise product testing may attract consumers from outside the market.
The following is a criteria checklist:
- Similarity of planned distribution points. Relative isolation from other cities. Availability of help from the media. Representative and diversified sample of ages, religion, preferences, sociocultural aspects, etc. Purchase habits. Representative size of the population. Income per capita Good background as a test city, little used Stability of sales during the year Non-dominant television stations, different newspapers, magazines and radio stations Retailers willing to help Availability of investigators and audit services Free of influences As an industry domain, market testing is expensive, and many companies do not submit to this step the extensions of well-known product lines. Products that are reviewed frequently do not undergo market testing.
The high cost of testing is not simply financial, it exposes the product and its mixture to the competition, the surprise factor is lost, also other competitors can advance or sabotage or stop the test program.
1.6 MARKETING
It brings the product to the market, orders for equipment and materials begin, production starts, inventories, product dispatches, training for sellers, announcements of the new product to distribution companies and end consumers.
The time elapsed between making the decision to market it until the introduction is variable, ranging from weeks to years.
2. SUCCESS OR FAILURE OF NEW PRODUCTS
New products fail between 80% and 90% due to lack of strategy or poor development of it. Failure is absolute when production and marketing costs are not recovered. In failure is relative, the product may generate a certain profit but does not meet the objective of profit or market share.
The failure is due to the poor coupling between product characteristics and consumer wishes.
The product ignored by the market does not offer superior or distinctive value.
The overestimation of the market size is due to incorrect positioning, too high or low prices, poor distribution, poor promotion or the product is inferior compared to those of the competitors.
The success of the new product occurs because customers are listened to carefully, there is an obsession to develop the best possible product, there is a vision of what the future market will be like, leadership is strong.
3. ORGANIZATION FOR THE DEVELOPMENT OF NEW PRODUCTS
An organizational structure must be in place that cultivates the constant stream of products.
Receive new product ideas actively, committees, departments, teams and intrapreneurs.
3.1 THE COMMITTEE ON NEW PRODUCTS
They research and manage new product development, represent functional areas of manufacturing, research and development, finance and marketing, filter product ideas.
3.2 THE DEPARTMENT OF NEW PRODUCTS
It has the same committee functions but they are full-time, they recommend objectives and programs, exploratory curricula, evaluations of concepts and ideas, coordination of tests and interdepartmental teams. They communicate regularly with their peers.
A formal department ensures that authority and responsibility is well defined, is free from the influence of other departments, has authority to carry out its tasks, its manager will rely less on people who are outside its area of influence.
3.3 NEW BUSINESS TEAMS AND INTRA-ENTERPRISES
They are not a stable unit of the company, made up of a small group of different disciplines, marketing, development research and finance, it is market-oriented, their objective is to plan the company's entry into new businesses that provide profits.
They are used to manage important business activities and products that do not correspond to any unit, which require more financial resources and more time to mature than other units. They need a lot of creativity, full time commitment. They dissolve when they are not necessary.
3.4 THE INTERNAL BUSINESSMAN
An entrepreneur who works within a large company eager to stimulate innovations within its employees, has budget-oriented intra-entrepreneur training programs, guides, and training for potential entrepreneurs at any level of the company that provide ideas for new products. They have the option to invest part of their salary and participate in the income when the product is sold, they require support from senior management and a conscious environment that many products will not reach the market.
4. SIMULTANEOUS PRODUCT DEVELOPMENT
Approach that allows to shorten the process of simultaneous product development of all relevant functional areas and external suppliers. They participate in all stages of the development process.
The sooner the product is brought to the market, the greater the probability of having good profits, delays are lost sales.
5. SOCIAL TREND OR NEW
Having the ability to distinguish between a new social trend and a novelty, at an early stage, creates numerous opportunities or prevents the investment of money in a wrong product. "Whoever hits first hits twice", being the first when it comes to a novelty is an advantage compared to the competition, on the contrary, ignoring a trend implies investing money in campaigns to achieve competition, the American auto industry leads decades paying the cost of not paying attention to consumers who wanted smaller, higher-quality, fuel-efficient cars.
Correctly identifying a novelty has its own benefits - you make a lot of money by reaping the rewards for the short-term of a novelty and then abandoning it when it begins to lose momentum. Conservative companies overlook the short-lived novelty without undermining their situation.
Below is a list of questions to check for a trend or novelty:
DOES IT ADJUST TO CHANGES IN BASIC LIFESTYLE?
- Higher number of divorces Postponement of pregnancies Working women Mobility of workers
They have led to great consequences for the production and sale of new products in line with these changes. Questions in this regard are
- Which of these conflict with change, which support change?
If a new product complements other important changes, it is very likely a trend. If it conflicts with these changes, it is new. When introducing a new product, ask yourself if it agrees with these trends, clothing models, hairstyles, shoes, etc.
WHAT ARE THE BENEFITS?
- What benefits do consumers receive from the new product? How many benefits and how strong are they? Are consumers feeling good about the new product or were they forced to change reluctantly?
There has been an increase in chicken and fish meat because it is healthy, nutritious and low in fat and calories, socially more acceptable despite the preferences for the consumption of beef and pork.
IS IT POSSIBLE TO CUSTOMIZE IT?
One of the changes in values is the desire to have more individuality and
And forms of self-expression, there are strong desires to promote health and well-being in different ways; changes in diets, quitting cigarettes, reducing weight, controlling tension etc. A healthier life constitutes a trend.
IS IT A TREND OR SIDE EFFECT?
The expressions will emerge and will be replaced by others, the basic theme, such as the different ways of exercising, while the trend continues to grow, such as health and wellness.
WHAT OTHER CHANGES HAVE OCCURRED?
Is the new change supported by new products in other areas? If you are alone it is a novelty. The miniskirt in the 60s caused changes in the stockings market, pantyhose grew from 10% to 80% in two years. They have now declined due to the trend towards more informal clothing.
WHO HAS ADOPTED THE CHANGE?
It is important to determine which consumers changed their behavior. Two aspects are of special value in determining whether a new product will become a trend; support from unexpected sources and the degree of support from key groups.
When the number of working women began to increase, the majority were mothers with children who were of school age or slightly older, the women worked for extra expenses, had little commitment to work. But when mothers with young children started working, social values changed and support came from an unexpected source.
Two groups of consumers are of particular importance to the long-term potential of a new product. They are working women, especially professional mothers and the older half of the baby boomer generation.
6. PRODUCT LIFE CYCLE
Provides information to track the stages of acceptance of a product from its introduction to its death. Refers to the cycle for a category or class of product. The category includes all brands that meet a specific type of need.
The time a product spends in any of the stages varies radically. In novelty products the whole cycle passes in weeks, in household appliances it remains mature for decades.
Changes in a product, its uses, its image or positioning, extend its life cycle.
The life cycle does not dictate the marketing strategy, it helps to predict future events and suggest appropriate strategies.
When the product is successful in the market it does not retain its popularity indefinitely, the life of a product is divided into four stages, introduction, growth, maturation and decline, it is represented by an s-shaped curve where the x axis represents time and the axis and the sales volume of the industry.
Regarding applications, the model affirms that not all customers have been predisposed to adopt a new product in any of its stages, which allows developing selective sales strategies for certain segments, defined according to consumer behavior.
The life cycle curve is subject to different modifications due to unforeseen changes in the economic, political, social, technological environment, etc., which may direct demand in other directions or competitive activities that affect the demand and participation of each company in the market, also the offensive and defensive movements of the company affect its growth.
The marketing manager can extend or modify the shape of the curve, increasing the frequency of consumption, developing new uses or looking for new customers, making improvements to the product or the market.
6.1 INTRODUCTION
It is the first stage of the product, it is the appearance of an innovative product in the market, with a complete marketing program, this stage has the following characteristics:
- Product, limited number of models, frequent modifications, undifferentiated product. Competition, little, null, or does not exist. Customers, innovators represent 2.5%, early adopters represent 13.5%. They focus on those with the greatest need and purchasing capacity, those who can be induced to buy and the indifferent. Sales, slow drops, difficulty in forecasting demand. Usefulness, null due to high production and marketing costs. Global strategy, development of markets. Distribution strategy, diffuse, limited, high efforts to attract wholesalers and retailers. Promotion strategy, knowledge of the category, generates buyer approval, intensive use of sales personnel, samples and coupons for the consumer. High prices.
6.2 GROWTH
- Called market acceptance stage, with a rapid increase in its size. Product, large number, frequent modifications, differentiated product. Customers, mass market, timely majority 34%. Profits, high and growing, economies of scale and low costs. Global strategy, market penetration. Distribution strategy, intensive, high number of distributors, establishing long-term relationships with retailers and wholesalers. Lower price strategy, over time they are falling due to competitive pressure. Promotion strategy, brand preference, aggressive brand promotion, brand difference advertising.
6.3 MATURITY
- Sales are increasing, it is not possible to add new consumers indefinitely, it is the longest stage. Product, large number of differentiated models. Competition, competitors stabilize, difficulties to enter. Customers, mass market, late majority 34%. Sales, growth to a lesser extent.Utilities, decrease, stable or increasing costs.Global strategy, positioning, defensive.Price strategy, very low, tendency to fall.Promotional strategy, brand loyalty, aggressive promotions to retain consumers and distributors.
6.4 DECLINATION
- Obsolete product because others appear that are better, change in consumer tastes. Product, model elimination, line debugging. Competition, decreasing, low number of competitors, indirect competition. Sales, decreasing. Profits, few or none. Global strategy, efficiency or abandonment. Distribution strategy, selective. Price strategy, from stable prices to small increase. Promotion strategy, reinforcement.
6.5 THE STRATEGIC PORTFOLIO
Very few companies commercialize a single product, to assess opportunities or extend risks, new and different ones are added, a concept called product portfolio, which describes a group of products or businesses that are arranged in a matrix around which strategies are developed.
Different.
6.5.1 THE BOSTON CONSULTING GROUP METHOD
It is based on the assumptions that the most interesting markets are those that have a high rate of long-term growth and that the company has leadership, has greater benefits, which are the result of direct manufacturing costs and economies of scale, marketing and structure expenses. On the x-axis the relative share of the market share is placed and on the y-axis and the market growth rate, obtaining a position on the map for each product of the company, the map shows six areas as follows:
- Star products, corresponds to market-leading, high-expansion products that require monitoring of the growth rate and maintenance of the leadership situation. Incognito or dilemma products, corresponds to products that do not show leadership in the high-expansion market, they need support for the growth rate of the market and direct actions to get closer to the leadership, given the level of investment required. Dairy cow product, corresponds to low-growth market-leading products, where investment is directed to maintaining the competitive position, which allows a positive and higher cash flow than the rest of the competitors, makes a strong contribution of resources to the company. Dog product, corresponds to non-leading products in low growth markets,They need little investment but provide relatively small cash flow and in some cases little or no product. Pitcher product, are leading products in decreasing markets, are empty products in which they are progressively reduced. Flea product, are non-leading products in decreasing markets that harm more to the progress of the company
6.5.2 THE MATRIX OF MC KINSEY - SHELL - GENERAL ELECTRIC
It is a 4 by 5 double entry matrix, on the x axis the different stages of the product life cycle, birth, growth, maturity and old age, which represent the state of evolution of the industry, are placed on the y axis. it shows the firmness of the company, in dominant, strong, favorable, marginal and weak terms.
This matrix measures the impact of benefits on marketing strategies, highlights the importance of market share in determining profit, a large market share, allows savings in production, purchases and marketing. A larger dimension of operations makes resources available for research and development, quality control, executive training, and long-term planning.
- Strong firmness with growth, allows natural development Favorable firmness with maturity, allows selective development Marginal firmness with maturity and growth Allows for strategic options Marginal firmness with maturity and old age Reflocation Marginal firmness with old age, determines abandonment Weak firmness with growth, maturity and old age abandon
6.5.3 THE ARTHUR D LITTLE MATRIX
It is a 3-by-3 double-entry matrix, on the x-axis of the industry's activity, measured in size, setting of properties, market diversity, competitive structure, industry performance, technological base, social base, environment, framework legal and human framework. In the y axis is the firmness of the company in terms of size, growth, participation, position, profitability, profit margins, technological position, strengths, weaknesses, image and personnel.
- High and medium firmness with high and medium activity allows investment and growth High firmness with low activity, medium firmness with medium activity, and low firmness with low activity imply selectivity in benefits Medium firmness with low activity, low firmness with medium and low activity, implies harvesting and divest.
The strategic portfolio has provided tools for the management of large diversified companies, making them more manageable, allowing them to be seen as a whole of activities no longer so complex and heterogeneous, discovering synergies between the UEN, latent capacities of the company, hidden weak points, new sources of funds and new investment opportunities
6.5.4 MANAGING A RANGE OF PRODUCTS
By analyzing and evaluating the dynamics of the competitive evolution of the market and relying on the techniques of the product portfolio, the companies implement strategic decisions to launch, expand, reduce or eliminate the product range. When you have varieties of many products, the product manager is responsible for the operational management of the products in the market. Developing the following strategies:
- Develop a long-term competitive and growth strategy for your products Prepare the marketing plan and budget for it Act as an interlocutor for external services such as advertising, research etc. Motivate the sales team and the channel to support the product Permanently collect information on product results, consumer habits and attitudes Initiating product improvements to respond to changing market needs.
7. BIBLIOGRAPHY
- CLANCY Kevin J - SHULMAN Robert S. THE MARKETING REVOLUTION. Vergara editions. Buenos Aires. Argentina 1994 ENCYCLOPEDIA OF BUSINESS MANAGEMENT AND ADMINISTRATION Editions ORBIS 1987. Volume IIIKOTLER PHILIP. MARKETING. First edition. PHH Publishing, Mexico, October 1984LAMB Charles et al. MARKETING, fourth edition. International Thonson Editores. Mexico Federal District 1198LAMBIN Jean Jacques. STRATEGIC MARKETING, Second Edition, Editorial Mc Graw Hill, Mexico Federal District 1992O ”SHAUGHNESSY Jhon. COMPETITIVE MARKETING. Ediciones Diaz de Santos SA Madrid Spain, 1991STANTON Willian and Cundiff Richard MARKETING FUNDAMENTALS, Ediciones Mac Graw Hill. Mexico Federal District 1995
