TOPIC: DIFFUSIONTOPIC: DIFFUSION

PRESENTED BY: PRESENTED BY: OMER MALIKOMER MALIK

ASIM MUSTAFAASIM MUSTAFAAMAT-UL-MATEENAMAT-UL-MATEEN

BILAL JAVEDBILAL JAVED

COURSE: MARKETING COURSE: MARKETING MANAGEMENTMANAGEMENTSECTION-B

Key points to discussKey points to discuss

Challenges in New Product Development (NPD)Challenges in New Product Development (NPD) Stages & Management of NPDStages & Management of NPD Trajectories of Change, Advantages/Disadvantages Trajectories of Change, Advantages/Disadvantages Diffusion & Adaption of New ProductsDiffusion & Adaption of New Products

DiffusionDiffusion

Four Key ElementsFour Key Elements

InnovationInnovation The social system on which the innovation impactsThe social system on which the innovation impacts The communication channels of that social systemThe communication channels of that social system TimeTime

New Product DevelopmentNew Product Development

What challenges does a company face in developing new products What challenges does a company face in developing new products and services?and services?

Categories of New ProductsCategories of New Products

Challenges in NPDChallenges in NPD

Idea ShortageIdea Shortage Uneven MarketsUneven Markets Social & Governmental ConstraintsSocial & Governmental Constraints CostCost Capital ShortageCapital Shortage Need for SpeedNeed for Speed Shorter Product Life CyclesShorter Product Life Cycles

New Product FailureNew Product Failure

Over ChampioningOver Championing Overestimated DemandOverestimated Demand Poor DesignPoor Design Poor Marketing ExecutionPoor Marketing Execution High Development CostsHigh Development Costs Strong Competitive ReactionStrong Competitive Reaction

New Product SuccessNew Product Success

Incremental Innovation e.g. Powdered Milk (Nestle Incremental Innovation e.g. Powdered Milk (Nestle Everyday), Samsung LED Televisions etc.Everyday), Samsung LED Televisions etc.

Disruptive Technologies (e.g. Q-Mobile Smart Phones)Disruptive Technologies (e.g. Q-Mobile Smart Phones)

What organizational structures and processes do managers use to What organizational structures and processes do managers use to manage new-product development?manage new-product development?

New Product Development New Product Development ProcessProcess

IdeaGeneration

ConceptDevelopmentand Testing

MarketingStrategy

Development

IdeaScreening

BusinessAnalysis

ProductDevelopment

MarketTesting

Commercialization

Trajectories of ChangeTrajectories of Change

Radical ChangeRadical Change Creative ChangeCreative Change Intermediating ChangeIntermediating Change Progressive ChangeProgressive Change

RadicalRadical

Changes when both the core assets and core activities are Changes when both the core assets and core activities are strengthened? The knowledge and brand capital built up in strengthened? The knowledge and brand capital built up in the industry erode, and so do customer and supplier the industry erode, and so do customer and supplier relationshipsrelationships

A good example is the travel business. Agencies’ core A good example is the travel business. Agencies’ core activities and core assets came under fire as the airlines activities and core assets came under fire as the airlines implemented systems to enhance direct price competition implemented systems to enhance direct price competition that offered new value (online monitoring of available that offered new value (online monitoring of available flights and fares)flights and fares)

Progressive ChangeProgressive Change

When neither core activities nor core assets are endanger. When neither core activities nor core assets are endanger.

Long-way trucking and commercial airlines. In those Long-way trucking and commercial airlines. In those industries, the basic assets, activities, and underlying industries, the basic assets, activities, and underlying technologies remained stable.technologies remained stable.

Creative ChangeCreative Change

When core assets are under threat and core activities are When core assets are under threat and core activities are stable. For instance: Think of movie studios churning out stable. For instance: Think of movie studios churning out new films or oil companies mining for new wells.new films or oil companies mining for new wells.

IntermediateIntermediate

When core activities are threatened while core assets When core activities are threatened while core assets retain their capacity to create value. retain their capacity to create value.

Companies that are emerging are offering digital media Companies that are emerging are offering digital media players that are based upon nonphysical discs which in players that are based upon nonphysical discs which in some aspects offer better performance than the incumbent some aspects offer better performance than the incumbent industry’s products.industry’s products.

An effective innovation strategy answers three key An effective innovation strategy answers three key questions: questions:

How will we Create value?

How will weDeliver value?

How will weCapture value?

Step 1: Creating ValueStep 1: Creating Value

How will the technology evolve?How will the technology evolve?

How will the market change? How will the market change?

Step 2: Capturing ValueStep 2: Capturing Value

How should we design the product model? How should we design the product model? Where should we compete in the value chain? Where should we compete in the value chain?

Step 3: Delivering ValueStep 3: Delivering Value

How do we manage the core business and growth? How do we manage the core business and growth? How do we use our strategy to drive real resource How do we use our strategy to drive real resource

allocation? allocation? What organizational structure, processes, measurements, What organizational structure, processes, measurements,

and incentive mechanisms do we use?and incentive mechanisms do we use?

Managing Development ProcessManaging Development Process

Generating IdeasGenerating Ideas Interacting with othersInteracting with others Interacting with EmployeesInteracting with Employees Studying CompetitorsStudying Competitors Adopting Creativity TechniquesAdopting Creativity Techniques Using idea Screening Using idea Screening

Advantages & DisadvantagesAdvantages & Disadvantages

Advantages:Advantages: Increased ReachIncreased Reach Speed & FlexibilitySpeed & Flexibility Disadvantages:Disadvantages: CompetitionCompetition HomogenizationHomogenization

Factors Affecting diffusion Factors Affecting diffusion

&&

Adaption of New Products Adaption of New Products

The Consumer Adoption ProcessThe Consumer Adoption Process

Adoption is an individual’s decision to become a regular user Adoption is an individual’s decision to become a regular user of a product.of a product.

Factors Influencing the Adoption ProcessFactors Influencing the Adoption Process

Differences in individual readiness to try new productsDifferences in individual readiness to try new products

Effect of personal influenceEffect of personal influence

Factors Influencing the Adoption Process Con’tFactors Influencing the Adoption Process Con’t

Differing rate of adoption and differences in organizationsDiffering rate of adoption and differences in organizations

Readiness to try new productsReadiness to try new products

The Traditional Model of Industry Life CycleThe Traditional Model of Industry Life Cycle

Time

Sal

es v

olum

e

Fermentation Shakeout Maturity Decline

An Alternate Model of Industry Life CycleAn Alternate Model of Industry Life Cycle

Time

Sale

s vol

ume

Emergence Convergence Coexistence Dominance

Established Industry

Emerging Industry

Stages of adoptionStages of adoption

– Awareness - the individual is exposed to the innovation but lacks Awareness - the individual is exposed to the innovation but lacks complete information about it complete information about it

– Interest - the individual becomes interested in the new idea and Interest - the individual becomes interested in the new idea and seeks additional information about it seeks additional information about it

– Evaluation - individual mentally applies the innovation to his Evaluation - individual mentally applies the innovation to his present and anticipated future situation, and then decides present and anticipated future situation, and then decides whether or not to try it whether or not to try it

– Trial - the individual makes full use of the innovationTrial - the individual makes full use of the innovation

– Adoption - the individual decides to continue the full use of the Adoption - the individual decides to continue the full use of the innovationinnovation