Principles of Marketing - Philip Kotler

goals

Chapter 9. Development of products: the approach to new product development and product life cycle issues

After reading this chapter, you should be able to:

1. Identify and describe the stages of the process of developing a new product.

2. Explain how the company decides what goods you need to create.

3. Ensure the goods at all stages of its life cycle.

4. Tell how changing the marketing strategy in the course of the product life cycle.

Corporation "Procter & Gamble" courageously engaged in marketing of potato chips, "Pringle"

In the mid 50-ies of the corporation "Procter & Gamble" has come to the conclusion that all the usual old potato chips could be improved. Almost a hundred years have passed since the appearance of chips, no one has ever offered to produce them any new technology, and at the corporation did not have a clear idea about what should be improved chips. But the company knew that the chips in their current form are not satisfied consumers.

The specialists of "Procter & Gamble" interviewed a lot of fans of chips. According to the results of the market research firm found that most consumers something necessarily unhappy in chips. Especially complained about the fact that: 1) the chips rapidly stale and 2) sometimes they turn out to be stale in the time of purchase, 3) chips enough crunchy, 4) they almost always turn out to be broken or 5) burnt, 6) they are too greasy, 7 ) bags of chips is difficult to close, 8) packets of crisps is inconvenient to store.

These eight claims identified in the study of consumer opinions, and became the starting point for the research and development department of the corporation. Specialist of the department auditioned more than a decade to create a product which has received food "Newfangled Pringle potato chips", or simply "Pringle". They found a method of converting the dehydrated potato plant tissue and cutting the tissue slices of the same size, which are easily stacked piles. Chips fried in the vacuum and packaged in tin boxes, such as those that sell tennis balls.

In the fall of 1968, "Pringle" chips went on trial sale in Evansville, Indiana, and grabbed yourself a healthy 20 per cent piece of the local market of potato chips. After this corporation began cautiously and gradually bring them to other markets. In 1975, the goods finally got a nationwide distribution, and its sales reached 100 million. USD., Or nearly 10% of total sales in the potato chip market. It seemed that the corporation "Procter & Gamble" offered the market another win-win product. Twenty-year work on the creation of chips "Pringle" - from the beginning of the study before the start of the nationwide distribution - began to finally pay off.

Corporation with great optimism staring at the prospect of profits, since, despite the fact that the value of production equipment was higher than in enterprises, manufacturing traditional chips, the costs for the dissemination of chips "Pringle" was lower. At that time - as the competitors had to maintain an expensive sales force and truck fleet to deliver fresh products to stores and the transfer of its "hands" nemnuschiesya banks and annual term preservation of chips "Pringle" allowed the corporation "Procter & Gamble" spread the goods on conventional storage product distribution channels with minimal cost to its damage and transportation.

However, in 1976, sales of chips "Pringle" began to fall, and the amount of sales decreased to 90 mln. USD. At the "face" of the goods began to appear wrinkles. The public is increasingly concerned about the problem of dietary food, and she increasingly turned to natural foods. A "Pringle" presents many chips with something synthetic, entirely composed of preservatives and additives, devoid of pleasant natural taste freshly made potato chips. One of the users complained that the taste "Pringle" more like tennis balls rather than potato chips. Such statements served as the springboard for a counterattack, undertaken by the manufacturers of fresh chips, led by the Institute of potato chips manufacturers. They insisted that "Pringle" - a product which can not be called "real", and even served on the corporation "Procter & Gamble" in court, trying to ban known as "Pringle" potato chips.

At the same time some customers "Pringle" chips seemed too expensive. These buyers do not believe that in a tin box squeezed into the same amount of chips, as well as in the usual competitors packages. Many returned to the fresh chips and "Pringle" began to buy only on special occasions.

The volume of sales fell to 80 million. Dollars. But the company "Procter & Gamble" was not going to give up. Instead, she looked deep into his store of professional marketing and technical tricks. In addition, the corporation changed its advertising campaign several times. There were announcements, demonstrating that the content "Pringle" box as well with the top fills a bowl, like the contents of a package of conventional chips. Later ads focused on the production technology in order to be able to underline that in the chips "Pringle" "no preservatives, no artificial ingredients."

In 1980, the company "Procter & Gamble" has launched a "new, improved" version of the chip, "Pringle" hoping to give an opportunity to start a new product life cycle. The Corporation believes that, thanks to a successful combination of salt in the formulation of the product and kitchen grease, she managed to overcome one of the major difficulties and make chips "delicious." These new, improved chips "Procter & Gamble" offered in the usual, sophisticated and "corrugated" version. When re-entering the market allocation of advertising increased from 339.7 thousand. USD. In 1980 to $ 8 million.. In 1981, and the main theme of the campaign was the slogan "I'm crazy about the taste of the new chips" Pringle " ". In the first three months of sales share of goods on the market of two billion of potato chips has increased from 4.5 to 5.5%.

"Procter & Gamble" is really a game of chance market with the belief that this time chips "Pringle" is waiting for victory. Losses will make already 200 million. USD., Not cooled ardor of the patient, persistent market leader who has never regretted that has spent 10 years developing the toothpaste "Crest", and several years to develop a shampoo "Head End Shoulders", which became the market 1 successes.

The firm must be able to create new products. In addition, it should be able to manage their production in response to changing tastes, changes in technology and in competition. During the existence of any goods as it extends the life cycle of four phases: Phase-to-market, growth stage, maturity stage and decline stage.

The existence of the product life cycle means that before the firm faces two major challenges. Firstly, it should promptly seek new products to replace are in decline stage (the problem of developing new products). And secondly, the firm must be able to effectively organize work with the currently existing products at each stage of their life cycle (the problem of a strategic approach to the stages of the product life cycle). Some companies, not knowing how to properly work with existing products, focusing their efforts on creating new products. Others, on the contrary, the energy is directed to work with the existing products at the expense of the creation of a sufficient number of new products with the future in mind. The firm must somehow balance these two extremes.

First, we'll look at the problem of creating new products, and then the problem of successful work with them at all stages of the life cycle.