Chapter 12: Developing and Managing Products
CHAPTER SUMMARY AND LEARNING OBJECTIVES
LO 12.1 Summarize the four strategies for new product development.
The most effective strategy for new product development depends on a firm’s current product
mix and market conditions. Companies may choose to develop new offerings through market
penetration, market development, product development, or product diversification.
LO 12.2 Describe the six steps in the product development process.
To minimize the risks of new product development, firms follow a disciplined step-by-step
development process. The steps include idea generation; screening; business analysis;
development; test marketing; and commercialization.
LO 12.3 Describe the five categories of purchasers based on relative time to adoption.
Consumers differ significantly in how rapidly they adopt new products. The fastest group is
known as innovators; other categories include early adopters, early majority, late majority, and
laggards.
LO 12.4 Differentiate the four stages of the product lifecycle in terms of industry sales
and profits.
Like people, products progress through lifecycle stages: introductory, growth, maturity, and
decline. Each of these stages is associated with distinctive fluctuations in overall industry sales
and profits.
LO 12.5 Given an example of a product, identify marketing strategies for that product’s
stage of the product lifecycle.
Marketers face different challenges as their products move through the product lifecycle. They
may need to stimulate demand; encourage trial; counter intense competition; or make deletion
decisions.
LO 12.6 Distinguish product mix breadth from product line depth.
The breadth of a product mix refers to the number of different products a firm sells. Product line
depth refers to variations in each product the firm markets in its mix.
LO 12.7 Summarize methods commonly used for measuring and managing product
quality.
Product quality as a marketing strategy may be pursued for both tangible goods and intangible
services. Methods such as quality programs and benchmarking, and implementation of lean or
six sigma methods can help firms make objective, actionable quality assessments.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Chapter 12: Developing and Managing Products
ACTIVATOR EXERCISE: Developing New Products
Purpose: To help students understand the necessity of a structured development process.
Format: Group brainstorming, then presentations.
Time: 20–40 minutes, depending on format.
Activity: Divide students into groups and ask them to imagine they have been asked to develop
one of the following products for their company:
A new all-natural carbonated beverage
A new teen-oriented Xbox game
A new luxury baby stroller
A new line of women’s athletic leisure apparel
A new personal finance app
After students have picked their product category, have them create a detailed description of
their actual product. What are its features? What does it look like? Why did they choose those
features?
Now, ask them to specify their process for bringing the product to market. What exactly do they
need to find out and do to give the product the best chance of succeeding in the marketplace
(where the majority of new products fail)? How exactly will they move the product from idea to
production to a store shelf (or app store)?
After 10–15 minutes of preparation, ask each group to share their product and their
development plan with the class.
Possible discussion questions for class: How did you choose the features you chose? How
do you know there aren’t better ideas that haven’t been considered? How do you decide
whether the product can even make money? Have you considered the competition and what
they already offer? How can you minimize the risk of this launch?
Result: Students will likely realize they missed a number of steps in the development process—
starting with generating a number of ideas before picking one to pursue. Without a menu of
product ideas, it’s easy to miss opportunities that your competition can seize upon. In addition,
students likely will not have structured their process to ensure a strong business case before
moving to actual production, which could lead to huge losses if they miscalculate the likely
demand for the product.
Key takeaway: Developing a new product is often time-consuming, risky, and expensive.
Usually, firms must generate dozens of new product ideas to produce even one successful
product.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2
, Chapter 12: Developing and Managing Products
LECTURE OUTLINE
12-1 Strategies for New Product Development
As markets evolve and consumer needs change, firms must add new items to continue to
prosper. Some new products may offer major technological breakthroughs. Other new products
simply extend existing product lines.
There are four alternative development strategies:
market penetration
market development
product development
product diversification
PRESENTATION VISUAL: MindTap Exhibit 12.1 showing the different development
strategies
A market penetration strategy seeks to increase sales of existing products in existing markets.
Firms may modify products, improve product quality, or promote new and different ways to use
products.
A market development strategy concentrates on finding new markets for existing products.
The strategy of product development refers to the introduction of new products into
established markets.
A product diversification strategy focuses on developing entirely new products for new
markets.
A firm’s strategy choice depends on:
● its existing product mix (discussed later in this chapter);
● the match between current offerings and the firm’s overall marketing objectives;
● the current market positions of its products.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
CHAPTER SUMMARY AND LEARNING OBJECTIVES
LO 12.1 Summarize the four strategies for new product development.
The most effective strategy for new product development depends on a firm’s current product
mix and market conditions. Companies may choose to develop new offerings through market
penetration, market development, product development, or product diversification.
LO 12.2 Describe the six steps in the product development process.
To minimize the risks of new product development, firms follow a disciplined step-by-step
development process. The steps include idea generation; screening; business analysis;
development; test marketing; and commercialization.
LO 12.3 Describe the five categories of purchasers based on relative time to adoption.
Consumers differ significantly in how rapidly they adopt new products. The fastest group is
known as innovators; other categories include early adopters, early majority, late majority, and
laggards.
LO 12.4 Differentiate the four stages of the product lifecycle in terms of industry sales
and profits.
Like people, products progress through lifecycle stages: introductory, growth, maturity, and
decline. Each of these stages is associated with distinctive fluctuations in overall industry sales
and profits.
LO 12.5 Given an example of a product, identify marketing strategies for that product’s
stage of the product lifecycle.
Marketers face different challenges as their products move through the product lifecycle. They
may need to stimulate demand; encourage trial; counter intense competition; or make deletion
decisions.
LO 12.6 Distinguish product mix breadth from product line depth.
The breadth of a product mix refers to the number of different products a firm sells. Product line
depth refers to variations in each product the firm markets in its mix.
LO 12.7 Summarize methods commonly used for measuring and managing product
quality.
Product quality as a marketing strategy may be pursued for both tangible goods and intangible
services. Methods such as quality programs and benchmarking, and implementation of lean or
six sigma methods can help firms make objective, actionable quality assessments.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Chapter 12: Developing and Managing Products
ACTIVATOR EXERCISE: Developing New Products
Purpose: To help students understand the necessity of a structured development process.
Format: Group brainstorming, then presentations.
Time: 20–40 minutes, depending on format.
Activity: Divide students into groups and ask them to imagine they have been asked to develop
one of the following products for their company:
A new all-natural carbonated beverage
A new teen-oriented Xbox game
A new luxury baby stroller
A new line of women’s athletic leisure apparel
A new personal finance app
After students have picked their product category, have them create a detailed description of
their actual product. What are its features? What does it look like? Why did they choose those
features?
Now, ask them to specify their process for bringing the product to market. What exactly do they
need to find out and do to give the product the best chance of succeeding in the marketplace
(where the majority of new products fail)? How exactly will they move the product from idea to
production to a store shelf (or app store)?
After 10–15 minutes of preparation, ask each group to share their product and their
development plan with the class.
Possible discussion questions for class: How did you choose the features you chose? How
do you know there aren’t better ideas that haven’t been considered? How do you decide
whether the product can even make money? Have you considered the competition and what
they already offer? How can you minimize the risk of this launch?
Result: Students will likely realize they missed a number of steps in the development process—
starting with generating a number of ideas before picking one to pursue. Without a menu of
product ideas, it’s easy to miss opportunities that your competition can seize upon. In addition,
students likely will not have structured their process to ensure a strong business case before
moving to actual production, which could lead to huge losses if they miscalculate the likely
demand for the product.
Key takeaway: Developing a new product is often time-consuming, risky, and expensive.
Usually, firms must generate dozens of new product ideas to produce even one successful
product.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2
, Chapter 12: Developing and Managing Products
LECTURE OUTLINE
12-1 Strategies for New Product Development
As markets evolve and consumer needs change, firms must add new items to continue to
prosper. Some new products may offer major technological breakthroughs. Other new products
simply extend existing product lines.
There are four alternative development strategies:
market penetration
market development
product development
product diversification
PRESENTATION VISUAL: MindTap Exhibit 12.1 showing the different development
strategies
A market penetration strategy seeks to increase sales of existing products in existing markets.
Firms may modify products, improve product quality, or promote new and different ways to use
products.
A market development strategy concentrates on finding new markets for existing products.
The strategy of product development refers to the introduction of new products into
established markets.
A product diversification strategy focuses on developing entirely new products for new
markets.
A firm’s strategy choice depends on:
● its existing product mix (discussed later in this chapter);
● the match between current offerings and the firm’s overall marketing objectives;
● the current market positions of its products.
© 2019 Cengage Learning. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part, except for
use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
