Marketing’s role in new product development and product decisions.
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Transcript of Marketing’s role in new product development and product decisions.
• Marketing’s role in new product development and product decisions
LEARNING OBJECTIVES
• Categorize products by type.• Define new product success and newness
and learn how to set the stage for creating success.
• Describe strategies, processes, and organizational structures by which products are developed.
Categorize products by type
Define new product success and newness and learn how to set the stage for creating success
Describe strategies, processes, and organizational structures by which products are developed
LEARNING OBJECTIVES
• Discuss the importance of branding, packaging, and labeling decisions.
• Understand how to manage products through their life cycles.
• Identify issues associated with managing across multiple projects in the portfolio.
Discuss the importance of branding, packaging, and labeling decisions
Understand how to manage products through their life cycles
Identify issues associated with managing across multiple projects in the portfolio
TYPES OF PRODUCTS
• Consumer Products
• Business-to-Business Products
• Table 8.1
Consumer Products
SETTING THE STAGE FOR SUCCESSFUL NEW PRODUCT DEVELOPMENT
• New to the market
• New to the company
New Product Development (NPD) Success
• Financial success• Technical performance success• Success from the customer’s
perspectiveMarket shareCustomer satisfaction
Why Products Fail
• Strategic FactorsNo advantage or performance
improvementLack of synergy with
technologies and manufacturing processes
Lack of synergy with marketing• Developmental Process Factors
Requirements for Developing Successful New Products
• Uncover unmet needs and problems
• Develop a competitively advantaged product
• Shepherd products through the firm
Uncovering Unmet Needs and Problems
• Defining Customer Needs• Understanding Customer Needs• Becoming the Customer:
Discovering Problems• Anthropological Excursions: Live
with and Critically Observe Customers
• Talk to Customers to Get Needs and Problems (VOC)
Developing a Competitively Advantaged Product
• Competitively advantaged product is a product that solves a set of customer problems better than any competitor's product.
Shepherding products Through the Firm
• Leading NPD ProjectsProject leadersChampionsNPD process owners
• Mustering Management Support for NPD
New Product Development Process
• Successful product development:
Uncover unmet needs and problems Develop
competitively advantaged product Shepherd
products through a firm
New Product Development Process
• Define customer needs• Understand customer needs
Become customers - first hand experience Observe customers - anthropological
excursions Interview customers - voice of the customer
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
• Strategic focus Markets/Market segments Product types or categories Product lines Technologies/Technology platforms
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
• Project Strategy Describes target market and core benefit
package for the product
• Managing development Stage-Gate Process (next slides)
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
Gate
1Stage 1 Stage 2
Stage 3 Stage 4 Stage 5
IdeationGate
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Idea generation and screen
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
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1Stage 1 Stage 2
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Preliminary investigation
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
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1Stage 1 Stage 2
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Detailed investigation
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
Gate
1Stage 1 Stage 2
Stage 3 Stage 4 Stage 5
IdeationGate
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Development
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
Gate
1Stage 1 Stage 2
Stage 3 Stage 4 Stage 5
IdeationGate
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Testing and validation
New Product Development Process
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
Review
Gate
1Stage 1 Stage 2
Stage 3 Stage 4 Stage 5
IdeationGate
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Product launch
• Insert Table 8.2
A Framework for Managing Product Development: Stage-Gate Processes
• Insert Table 8.3
Generate and Screen Ideas
• Insert Table 8.4
Generate and Screen Ideas
New Product Development Process
• NPD project leadershipProject leaders - most frequent, appointed
by upper management with formal powerChampions - unofficial, informally influenceProcess owners - build and maintain
expertise in NPD, may act in leadership roles as well
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
• NPD project organizationFunctional NPD structure -
responsibility resides with a managerDivisional NPD structure - each division
is responsible for their own marketsVenture group structure - risky
projects
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
• NPD project management support tips Interview specific managers for project
expectations, customer needs Send out weekly updates Invite relevant managers to participate Request management involvement with
prototypes
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
New Product Development Process
• NPD project management support tips Use managers as test subjects Create a weekly/monthly lunch for managers Invite managers to after-hours team functions
Uncover unmet needs and problems
Develop competitively advantaged product
Shepherd products through a firm
MAKING PRODUCT DECISIONS
• Branding
• Packaging
• Labeling
Branding
• Brands - used to simplify choices and reduce purchase risk for consumers
• Brand equity - marketplace value of a brand based on reputation and goodwill
• Insert Figure 8.7
Successful and Unsuccessful Brand Extensions
Brand Name, Logo, Trademark
• Brand name, logo, trademark shouldAttract attentionBe memorableHelp communicate the
positioning of the productDistinguish the product
Branding Strategies
• Branding strategiesIndividual brand
name strategy•Proctor and Gamble, General Mills, etc.
Branding Strategies
• Branding strategiesFamily brand
name strategy•Coca-Cola, Fischer Price, etc.
Branding Strategies
• Branding strategiesHybrids: blanket
family name, separate family names for types of products, family/individual brand combinations
Packaging Strategies
• Packaging provides:ProtectionIdentificationInformationUsage enhancementDisposal enhancementChannel acceptance
enhancement
Labeling Strategies
• Labeling helps customers by:Identifying the manufacturer,
country of origin, ingredientsReporting expiration dates,
content gradingExplaining product useWarning about potential misuseProviding care instructionsServing as a communications link
between the user, eventual buyers, and the company
• Insert table 8.5
PRODUCT MANAGEMENT: MANAGING PRODUCTS THROUGH THEIR LIFE CYCLES
Product modeProduct mode
Price policy Price policy
PlacePlace
PromotionPromotion
ProfitsProfits
Product modeProduct mode
Price policy Price policy
PlacePlace
PromotionPromotion
ProfitsProfits
newnew
use skimming or use skimming or penetration strategiespenetration strategies
rapidly building distribution rapidly building distribution networknetwork
build general demandbuild general demand
expected lossesexpected losses
newnew
use skimming or use skimming or penetration strategiespenetration strategies
rapidly building distribution rapidly building distribution networknetwork
build general demandbuild general demand
expected lossesexpected losses
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Product Life Cycle
Product modeProduct mode
Price policyPrice policy
PlacePlace
PromotionPromotion
ProfitsProfits
Product modeProduct mode
Price policyPrice policy
PlacePlace
PromotionPromotion
ProfitsProfits
differentiated productsdifferentiated products
maintain stable pricing policymaintain stable pricing policy
solidify distribution channels and solidify distribution channels and networknetwork
generate secondary demandgenerate secondary demand
start of profitsstart of profits
differentiated productsdifferentiated products
maintain stable pricing policymaintain stable pricing policy
solidify distribution channels and solidify distribution channels and networknetwork
generate secondary demandgenerate secondary demand
start of profitsstart of profits
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Product Life Cycle
Product modeProduct mode
Price policy Price policy
PlacePlace
PromotionPromotion
ProfitsProfits
Product modeProduct mode
Price policy Price policy
PlacePlace
PromotionPromotion
ProfitsProfits
modify product or product usagemodify product or product usage
price reductionprice reduction
increase distribution effortsincrease distribution efforts
concentrate on productconcentrate on product
positioningpositioning
highest profits (peak)highest profits (peak)
modify product or product usagemodify product or product usage
price reductionprice reduction
increase distribution effortsincrease distribution efforts
concentrate on productconcentrate on product
positioningpositioning
highest profits (peak)highest profits (peak)
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Product Life Cycle
Product modeProduct mode
Price policyPrice policy
PlacePlacePromotionPromotion
ProfitsProfits
Product modeProduct mode
Price policyPrice policy
PlacePlacePromotionPromotion
ProfitsProfits
maintain a basic productmaintain a basic product
maintain pricing or raise pricesmaintain pricing or raise prices
limit distribution effortslimit distribution efforts
cut-back on advertising and cut-back on advertising and sales promotionssales promotions
reduced profitsreduced profits
maintain a basic productmaintain a basic product
maintain pricing or raise pricesmaintain pricing or raise prices
limit distribution effortslimit distribution efforts
cut-back on advertising and cut-back on advertising and sales promotionssales promotions
reduced profitsreduced profits
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Product Life Cycle
The Product Diffusion Process
Innovators:Innovators: First purchasers of a new productFirst purchasers of a new product Venturesome, willing to accept risk, socially Venturesome, willing to accept risk, socially aggressive, communicative, and cosmopolitanaggressive, communicative, and cosmopolitan
InnovatorsEarly
Adopters LaggardsEarly
MajorityLate
Majority
2.5%2.5%
The Product Diffusion Process
Early Adopters:Early Adopters: Are the next customers to buy new productAre the next customers to buy new product Enjoy leadership, prestige, and respect that early Enjoy leadership, prestige, and respect that early purchases bringpurchases bring Tend to be opinion leadersTend to be opinion leaders Adapt new ideas but use discretionAdapt new ideas but use discretion
InnovatorsEarly
Adopters LaggardsEarly
MajorityLate
Majority
13.5%13.5%
The Product Diffusion Process
Early Majority:Early Majority: First part of mass marketFirst part of mass market Outgoing, communicative, and attentive to Outgoing, communicative, and attentive to information cuesinformation cues
InnovatorsEarly
Adopters LaggardsEarly
MajorityLate
Majority
34.0%34.0%
The Product Diffusion Process
Late Majority:Late Majority: Second part of mass marketSecond part of mass market Less cosmopolitan and responsive to changeLess cosmopolitan and responsive to change Include lower economic and social brackets, those Include lower economic and social brackets, those past middle age, and skepticspast middle age, and skeptics
InnovatorsEarly
Adopters LaggardsEarly
MajorityLate
Majority
34.0%34.0%
The Product Diffusion Process
Laggards:Laggards: Last to purchaseLast to purchase Price conscious, suspicious of change, low income Price conscious, suspicious of change, low income and status, tradition bound, and conservativeand status, tradition bound, and conservative Often difficult to market to this small groupOften difficult to market to this small group
InnovatorsEarly
Adopters LaggardsEarly
MajorityLate
Majority
16.0%16.0%
Determinants of Rate-of-Adoption
• Relative Advantage• Relative Advantage
• Compatibility
• Complexity
• Triability
• Observability
• The degree to which the innovation appears superior to previous ideas
• Directly related to adoption rates
• Relative Advantage
• Compatibility• Compatibility
• Complexity
• Triability
• Observability
• The degree to which innovation is consistent with the values and experiences of potential adopters
• The higher, the faster the rate-of-adoption
Determinants of Rate-of-AdoptionDeterminants of Rate-of-Adoption
• Relative Advantage
• Compatibility
• Complexity• Complexity
• Triability
• Observability
• The relative difficulty understanding the innovation
• In most cases, the more difficult, the longer it will take to gain general acceptance
Determinants of Rate-of-AdoptionDeterminants of Rate-of-Adoption
• Relative Advantage
• Compatibility
• Complexity
• Triability• Triability
• The degree to which the innovation can be tried on a limited basis
• First adopters face financial loss and ridicule from others lessened by limited trials
• Observability
Determinants of Rate-of-AdoptionDeterminants of Rate-of-Adoption
• Relative Advantage
• Compatibility
• Complexity
• Triability
• Observability• Observability
• The degree to which the results of using the product are observable to others
• Tangible superiority will increase the adoption rate
Determinants of Rate-of-AdoptionDeterminants of Rate-of-Adoption
MANAGING THE PRODUCT PORTFOLIO
• Product Mix – the full set of products across all markets served
• Product Line – the set of products a firm targets to one general market
• Insert Figure 8.11
MANAGING THE PRODUCT PORTFOLIO
Product Growth OpportunitiesP
rod
uct
sP
rod
uct
s
MarketsMarkets
Ex
isti
ng
Ex
isti
ng
Ne
wN
ew
ExistingExisting NewNew
Product DevelopmentProduct
Diversification
Market Penetration
Market Development
• Market Penetration
• Strategy of increasing sales of existing products in existing markets
Product Growth OpportunitiesProduct Growth Opportunities
Product Growth OpportunitiesProduct Growth OpportunitiesP
rod
uct
sP
rod
uct
s
MarketsMarkets
Ex
isti
ng
Ex
isti
ng
Ne
wN
ew
ExistingExisting NewNew
Product Development
Product Diversification
Market Penetration Market Development
Product Growth OpportunitiesProduct Growth Opportunities
• Product Development
• Introduction of new products into established markets
Product Growth OpportunitiesProduct Growth OpportunitiesP
rod
uct
sP
rod
uct
s
MarketsMarkets
Ex
isti
ng
Ex
isti
ng
Ne
wN
ew
ExistingExisting NewNew
Product DevelopmentProduct
Diversification
Market PenetrationMarket
Development
Product Growth OpportunitiesProduct Growth Opportunities
• Market Development
• Strategy of identifying new markets for existing products
Product Growth OpportunitiesProduct Growth OpportunitiesP
rod
uct
sP
rod
uct
s
MarketsMarkets
Ex
isti
ng
Ex
isti
ng
Ne
wN
ew
ExistingExisting NewNew
Product DevelopmentProduct
Diversification
Market Penetration Market Development
• Product Diversification
• Strategy of offering new products to new markets
Product Growth OpportunitiesProduct Growth Opportunities
Supplemental Material
Alternate Process
Idea GenerationIdea Generation
Screening
Business Analysis
Development
Testing
Commercialization
Sources of ideas:Sources of ideas: sales forcesales force customerscustomers competitorscompetitors supplierssuppliers company personnelcompany personnel retailersretailers wholesalerswholesalers
Alternate Process
Idea Generation
ScreeningScreening
Business Analysis
Development
Testing
Commercialization
Screening criteria:Screening criteria: company objectivescompany objectives production capabilityproduction capability marketing capabilitymarketing capability product riskproduct risk product fitproduct fit
Alternate Process
Idea Generation
Screening
Business AnalysisBusiness Analysis
Development
Testing
Commercialization
Business analysis Business analysis assessment:assessment: financial budgetsfinancial budgets potential marketpotential market growth rategrowth rate
Alternate Process
Idea Generation
Screening
Business Analysis
DevelopmentDevelopment
Testing
Commercialization
Development activities:Development activities: prototypeprototype feasibility testingfeasibility testing preliminary marketpreliminary market strategies strategies
Alternate Process
Screening
Business Analysis
Development
TestingTesting
Commercialization
Testing:Testing: consumer testingconsumer testing test marketingtest marketing simulated testsimulated test marketing marketing
Idea Generation
Alternate Process
Screening
Business Analysis
Development
Testing
CommercializationCommercialization
Commercialization:Commercialization: full-scale productionfull-scale production full-scale marketingfull-scale marketing integration into firmintegration into firm
Idea Generation