Developing & Managing Products

Chapter 11

New Product DevelopmentNew Product Strategy

Idea Generation

Idea Screening

Business Analysis

Development

Test Marketing

Commercialization

New-product Strategy

Link product development to MKT strategy 3M

Identify markets and strategic roles Environmental

scanning SWOT analysis

Source: http://www.logotecs.com

Idea Generation

Customers Employees Distributors Vendors Competitors Research &

Development Consultants

Source: http://www.clker.com/clipart-9721.html

Idea Screening

First filter

Committee Reviews

Concept test

Business Analysis

Last checkpoint before capital is committed Look at product and marketing strategy

needed to commercialize it Preliminary figures

Development

“Paper into prototype” Testing against standards

Work on marketing mix

Team-based analysis Internet Customer panels

Market Testing

Company chooses a specific market, based on criteria

Advantages Disadvantages Internet

Commercialization

Positioning and launching a product Most expensive step Slotting fee Failure fee

Diffusion of Innovation

Innovators (2.5%)

Early adopters (13.5%)

Early majority (34%)

Late majority (34%)

Laggards (16%)

Source: http://tutor2u.net

Diffusion of Innovation

Factors for Adoption Complexity Compatibility Relative advantage Observability Trialability

Implications

The Product Life Cycle

Introduction Stage Growth Stage Maturity Stage Decline Stage

Introduction Stage

Create awareness and encourage customers to try the product Advertising

Primitive demand

Distribution issues Pricing issues

Growth Stage

Rapid increases in sales Competition Advertising

Selective demand Who is buying? Distribution

Maturity Stage

Slowing sales and decreasing profits Marketing strategy

Hold market share

Decline Stage

Sales and profits drop

Marketing strategy Deletion Harvesting

Product Cycle Dimensions

Length Shape

Generalized product High learning

product Low learning

product Fashion product Fad product

Source: www.your90s.com

Why do New Products Fail?

Insignificant “point of difference” Incomplete market and product

definition before development starts Too little market attentiveness Poor execution of marketing mix Bad timing No economical access to buyers