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 287

those mature markets. They are constantly developing strategies for new markets where

Teflon will meet needs. For example, Teflon is now selling well as a special coating for

the wires used in high-speed communications between computers.^14

Not all strategies have to be exciting growth strategies. If prospects are poor in

some product-market, a phase-out strategy may be needed. The need for phasing

out becomes more obvious as the sales decline stage arrives. But even in market

maturity, it may be clear that a particular product is not going to be profitable

enough to reach the company’s objectives using the current strategy. Then the wis-

est move may be to develop a strategy that helps the firm phase out of the

product-market—perhaps over several years.

Marketing plans are implemented as ongoing strategies. Salespeople make calls,

inventory moves in the channel, advertising is scheduled for several months into the

future, and so on. So the firm usually experiences losses if managers end a plan too

abruptly. Because of this, it’s sometimes better to phase out the product gradually. Man-

agers order materials more selectively so production can end with a minimum of unused

inventory and they shift salespeople to other jobs. They may cancel advertising and

other promotion efforts more quickly since there’s no point in promoting for the long

run. These various actions obviously affect morale within the company—and they may

cause middlemen to pull back too. So the company may have to offer price induce-

ments in the channels. Employees should be told that a phase-out strategy is being

implemented—and hopefully they can be shifted to other jobs as the plan is completed.

Obviously, there are some difficult implementation problems here. But phase-out

is also a strategy—and it must be market-oriented to cut losses. In fact, it is possi-

ble to milk a dying product for some time if competitors move out more quickly.

This situation occurs when there is still ongoing (though declining) demand and

some customers are willing to pay attractive prices to get their old favorite.

Tide detergent has been

improved many times over the

years, and now has a new

WearCare formula that helps

protect cotton threads from

damage. By contrast, Dryel is a

completely new type of product

and being able to dry clean

delicate clothes at home is a new

idea.

New-Product Planning

Phasing out dying

products

Competition is strong and dynamic in most markets. So it is essential for a firm to

keep developing new products, as well as modifying its current products, to meet

changing customer needs and competitors’ actions. Not having an active new-product