MARKETING MANAGEMENT12th edition

20 Introducing New Market Offerings

Kotler Keller

20-2

Chapter Questions

• What challenges does a company face in developing new products?

• What organizational structures are used to manage new-product development?

• What are the main stages in developing new products?

• What is the best way to set up the new-product development process?

• What factors affect the rate of diffusion and consumer adoption of newly launched products?

20-3

3M Emphasizes New Product Development

20-4

Categories of New Products

New-to-the-world

Cost reductions

New product lines

Additions

Improvements

Repositionings

20-5

Innovations

20-6

Factors That Limit New Product Development

• Shortage of ideas

• Fragmented markets

• Social and governmental constraints

• Cost of development

• Capital shortages

• Faster required development time

• Shorter product life cycles

20-7

Table 20.1 Finding One Successful New Product

20-8

Venture Team

Cross-functional group charged withdeveloping a specific product or business; intrapreneurs are relieved of other dutiesand provided a budget and time frame.

20-9

Criteria for Staffing Venture Teams

• Desired team leadership style• Desired level of leader

expertise• Team member skills and

expertise• Level of interest in concept• Potential for personal reward• Diversity of team members

20-10

Figure 20.1 The New Product-Development Decision Process

20-11

Idea Generation: Creativity Techniques

• Attribute listing• Forced relationships• Morphological

analysis• Reverse assumption

analysis• New contexts• Mind mapping

20-12

Lateral Mapping

• Gas stations + food• Cafeteria + Internet• Cereal + snacking• Candy + toy• Audio + portable

20-13

Variations on Failure

• Absolute product failure• Partial product failure• Relative product failure

20-14

Table 20.2 Product-Idea Rating Device

20-15

Concepts in Concept Development

• Product idea

• Product concept

• Category concept

• Brand concept

• Concept testing

20-16

Concept Testing

• Communicability and believability

• Need level

• Gap level

• Perceived value

• Purchase intention

• User targets, purchase occasions, purchasing frequency

20-17

Figure 20.5 Utility Functions Based on Conjoint Analysis

20-18

Airlines Use Conjoint Analysis

20-19

Marketing Strategy

• Target market’s size, structure, and behavior

• Planned price, distribution, and promotion for Year 1

• Long-run sales and profit goals and marketing-mix strategy over time

20-20

Figure 20.6 PLS Sales for Three Product Types

20-21

Table 20.3 Projected 5-year Cash-Flow Statement (in thousands $)

20-22

Product Development

• Quality function deployment (QFD)– Customer attributes– Engineering

attributes

20-23

Prototype Testing

• Alpha testing

• Beta testing

– Rank-order method

– Paired-comparison method

– Monadic-rating method

• Market testing

20-24

Consumer Goods Market Testing

• Sales-Wave Research• Simulated Test

Marketing• Controlled Test

Marketing• Test Markets

20-25

Test Market Decisions

• How many test cities?

• Which cities?

• Length of test?

• What information?

• What action to take?

20-26

Timing of Market Entry

• First entry

• Parallel entry

• Late entry

20-27

Criteria for Choosing Rollout Markets

• Market potential

• Company’s local reputation

• Cost of filling pipeline

• Cost of communication media

20-28

Consumer-Adoption Process

Adoption is an individual’s decision

to become a regular user

of a product.

20-29

Stages in the Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption

20-30

Figure 20.7 Adopter Categorization

20-31

Characteristics of an Innovation

• Relative advantage

• Compatibility

• Complexity

• Divisibility

• Communicability

20-32

Marketing Debate

Who should you target with new products?

Take a position:1. New products should always target newadopters.2. New products should target the broadestmarket possible.

20-33

Marketing Discussion

Think about the last new productyou bought. How do you thinkits success will be affected by the five characteristics of an

innovation?