Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

10. Product Management
    and New−Product
    Development

Text © The McGraw−Hill

Companies, 2002

Product Management and New-Product Development 285

profits of the market growth stage—profits that are no longer possible. If top

managers don’t understand the situation, they may place impossible burdens on the

marketing department—causing marketing managers to think about collusion with

competitors, deceptive advertising, or some other desperate attempt to reach impos-

sible objectives.

Product life cycles keep moving. But that doesn’t mean a firm should just sit by

as its sales decline. There are other choices. A firm can improve its product or

develop an innovative new product for the same market. Or it can develop a strat-

egy for its product (perhaps with modifications) targeted at a new market. For

example, it might find a market in a country where the life cycle is not so far along,

or it might try to serve a new need. Or the firm can withdraw the product before

it completes the cycle and refocus on better opportunities. See Exhibit 10-3.

When a firm’s product has won loyal customers, it can be successful for a long

time—even in a mature or declining market. However, continued improvements

may be needed to keep customers satisfied, especially if their needs shift. An out-

standing example is Procter & Gamble’s Tide. Introduced in 1947, this powdered

detergent gave consumers a much cleaner wash than they were able to get before

because it did away with soap film. Tide led to a whole new generation of powdered

laundry products that cleaned better with fewer suds. The demands on Tide con-

tinue to change because of new washing machines and fabrics—so the powdered

Tide sold today is much different than the one sold in 1947. In fact, powdered Tide

has had at least 55 (sometimes subtle) modifications.

Sales ($) Sales ($) Sales ($)

Time Time Time

Total industry

sales for product

Sales of firm’s

new product

Total industry sales for

product in “old” market

Sales of firm’s

product in new

market

Total industry sales

for product

Sales of firm’s

product

Firm introduces an

innovative new (or

improved) product that

starts a new cycle.

Firm introduces old (or

modified) product in a

new market with a

different cycle.

Firm begins to phase out,

and then withdraws, a

dying product.

Exhibit 10-3

Examples of Three

Marketing Strategy Choices

for a Firm in a Mature

Product-Market

Some companies continue to do

well in market maturity by

improving their products. Lipton

has developed a cold brew tea

and Nintendo’s Game Boy

remains popular with new color

features.

Improve the product or

develop a new one