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Basics of Marketing - Kotler Philip

Summary

Organizations and enterprises are increasingly aware of the need to develop new products and services and the benefits associated with this. The lifetime of existing goods is decreasing, and they have to be replaced with new products.

However, the novelty can fail. The risk associated with innovation is great, but the material benefits associated with it are just as great. The key to successful innovative activity is the creation of a good organizational structure for working with the ideas of new products, conducting serious research and making informed decisions at each stage of creating a novelty.

The process of creating a new product includes eight stages: the formation of ideas, the selection of ideas, design and verification, the development of marketing strategies, analysis of production and marketing opportunities, product development, testing in market conditions and the deployment of commercial production. The goal of each stage is to decide whether or not it is appropriate to continue working on the idea. The firm strives to minimize the chances of developing weak ideas and dropping out sound ones.

Each product, launched in commercial production, has its own life cycle , marked by a number of constantly emerging problems and opportunities. The trading history of a typical commodity can be represented in the form of a curve, in which four stages are distinguished. The stage of entering the market is characterized by a slow growth in sales and minimal profits, while the goods are pushed through the distribution channels. In case of success, the product enters a growth phase, characterized by rapid sales growth and increased profits. At this stage, the company seeks to improve the product, penetrate new market segments and distribution channels, and also slightly reduce prices. Then follows the stage of maturity, in which sales growth slows down, and profits stabilize. For the revival of sales, the company is looking for various innovative techniques, including, in particular, the modification of the market, the modification of the goods and the modification of the marketing mix. Finally, the commodity enters a stage of decline, when sales and profits are reduced. The task of the firm at this stage is to identify the decrepit goods and take a decision with respect to each of them, either to continue the release, or to "reap the fruits" or to exclude it from the nomenclature. In the latter case, the goods can be sold to another firm or simply removed from production.

Table 13. Product life cycle: basic characteristics and typical responses of producers