New Product Development
Introducing New market offerings
Marketing Framework
New Products
Companies seek to improve their current products for the following reasons: a simple point of corporate pride to be consistent with an innovative
image as an effort to better satisfy current
customers or attract new customers to stave off competition
Discussion Questions
Can you name any “new to the world”
products?
Can you name any “incrementally new”
products?
Categories of New Products
New to the World
Additions
Improvements
Repositionings
Cost reductions
The Innovation of Chotukool
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
New-Product DevelopmentReasons for new product failure
Which of the following is not a reason that a new product might fail?
1. The product is priced too high.2. The product is poorly designed.3. The estimated market for the product
is too large.4. All of the above are reasons that a new
product might fail.
Which of the following is not a reason that a new product might fail?
1. The product is priced too high.2. The product is poorly designed.3. The estimated market for the
product is too large.4. All of the above are reasons that a
new product might fail.
New-Product Development Process
Major Stages in New-Product Development
New-Product Development Decision Process
What is a Venture Team?
A venture team is a cross-functional group charged with developing a specific product or business.
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
Ways to Find Great New Ideas
Run informal sessions with customers Allow time off for technical people to
putter on pet projects Make customer brainstorming a part of
plant tours Survey your customers Undertake “fly on the wall” research to
customers
More Ways to Find Great Ideas
Use iterative rounds with customers Set up a keyword search to scan trade
publications Treat trade shows as intelligence
missions Have employees visit supplier labs Set up an idea vault
Drawing Ideas from Customers
Observe customers using product
Ask customers about problems with products
Ask customers about their dream products
Use a customer advisory board or a brand community of enthusiasts to discuss product
Idea Generation: Creativity Techniques
Attribute listing
Forced relationships
Morphological analysis
Reverse assumption analysis
New contexts
Mind mapping
Lateral Mapping
Gas stations + food Cafeteria + Internet Cereal + snacking Candy + toy Audio + portable
Idea Screening- Forces Fighting New Ideas
Source: With permission of Jerold Panas, Young & Partners Inc.
Concept Development and Testing
Concept Development-Product and Brand Positioning
Concept Testing
Communicability and believability Need level Gap level Perceived value Purchase intention User targets, purchase occasions,
purchasing frequency
Conjoint Analysis- Measures Consumer preferences for alternative product concepts
Utility Functions Based on Conjoint Analysis
Marketing Strategy Development-Issues to be addressed in 3 stages1. TG MKT Size, Structure, behavior AND
Planned Pdt Positioning, sales, Market Share and profit goals for first few years
2. Panned Price, Dtbn Strategy and Mktg budget for first year
3. Long run sales and profit goals and mktg-mix strategy over time
Product Life-Cycle Sales for 3 Types of Products
Projected Five-Year Cash Flow Statement (in Rupees Million)
Prototype Testing
Alpha testing
Beta testing
Market testing
Consumer Goods Market Testing
Sales-Wave Research Simulated Test Marketing Controlled Test Marketing Test Markets
Test Market Decisions
How many test cities? Which cities? Length of test? What information to collect? What action to take?
Which of the following is not a form of test marketing?
1. Standard test markets2. Controlled test markets3. Simulated test markets4. Perceptual test markets
Which of the following is not a form of test marketing?
1. Standard test markets2. Controlled test markets3. Simulated test markets4. Perceptual test markets
Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the company’s new ideas.
1. standard2. controlled 3. simulated4. Internet
Some of the drawbacks of ________ test markets are that they can be very costly, and they can give competitors a chance to look at the company’s new ideas.
1. standard2. controlled3. simulated 4. Internet
Commercialization
Decisions
When? Timing Where? Geographic Strategy To Whom? Target Market
Prospects How? Introduction Market Strategy
Timing of Market Entry
First entry Parallel entry Late entry
What is Adoption?
Adoption is an individual’s decision to become a regular user of a product.
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Adopter Categorization on the Basis of Relative time of Adoption
Source: Tungsten, http://en.wikipedia.ord/wiki/Everett_Rogers. Based on Rogers, E. (1962) Diffusion of Innovations. Free Press, London, NY, USA.
Characteristics of an Innovation
Relative advantage Compatibility Complexity Divisibility Communicability
The Product Life CycleFour stages:
1. Introduction
2. Growth
3. Maturity
4. Decline
Customer Types
Stage I: Introduction
Slow sales growth Few competitors Innovative customers Nonexistent profit
Stage I: Introduction- Strategic Focus
Expand market Increase product awareness
Stage II: Growth
Rapid market acceptance Substantial profit improvement Increasing competition Mass Market Profits Peak?
Stage II: Growth- Strategic Focus Market penetration Build brand preference
Stage III: Maturity Slow down in sales growth Profit peaks (if didn’t in
growth) Mass market Many competitors
Stage III: Maturity-Strategic Focus Defend market share! Retain brand loyalty Product differentiation
Stage IV: Decline
Sales decline Customers are laggards May be fast or slow Low profits Competitors decline
Extending the PLC Increase frequency of use by present
customers Find new uses Increase number of users Change package size/label Encourage trial
Practical Problems of PLC
Hard to identifywhich stage of the
PLC the product is in
Hard to pinpointwhen the product
moves to next stage
Hard to identifyfactors that affect
product’s movementthrough stages
Hard to forecastsales level, length of
each stage, andshape of PLC
Strategy is both acause and result of
the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
LowLow
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Use cost-plus formulaUse cost-plus formula
DistributionDistribution Build selective distributionBuild selective distribution
PromotionPromotion Heavy to entice product trialHeavy to entice product trial
Summary of Characteristics, Objectives, & Strategies
Introduction Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly risingRapidly rising
Average cost per customerAverage cost per customer
RisingRising
Maximize market shareMaximize market share
Offer extension, service, warrantyOffer extension, service, warranty
Penetration strategyPenetration strategy
DistributionDistribution Build intensive distributionBuild intensive distribution
PromotionPromotion Reduce to take advantage of demandReduce to take advantage of demand
Summary of Characteristics, Objectives, & Strategies
Growth Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
PeakPeak
Low cost per customerLow cost per customer
HighHigh
Maximize profits while defending market share
Maximize profits while defending market share
Diversify brand and models Diversify brand and models
Match or beat competitorsMatch or beat competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
PromotionPromotion Increase to encourage brand switchingIncrease to encourage brand switching
Summary of Characteristics, Objectives, & Strategies
Maturity Stage of the PLC
Maturity Stage of the PLC
Modifying the Market: Increase the consumption of the current product.
How? Look for new users and market
segments Reposition the brand to appeal to
larger or faster-growing segment Look for ways to increase usage
among present customers
Maturity Stage of the PLC
Modifying the Product: Changing characteristics such as quality, features, or style to attract new users and to inspire more usage.
How? Improve durability, reliability, speed,
taste Improve styling and attractiveness Add new features Expand usefulness, safety, convenience
Maturity Stage of the PLC
Modifying the Marketing Mix: Improving sales by changing one or more marketing mix elements.
How? Cut prices Launch a better ad campaign
New ads and promotions to reposition and revitalize mature product.
Move into larger market channels Offer new or improved services to
buyers
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
DecliningDeclining
Low cost per customerLow cost per customer
DecliningDeclining
Reduce expenditures and milk the brandReduce expenditures and milk the brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Selective: phase out unprofitable outletsSelective: phase out unprofitable outlets
PromotionPromotion Reduce to minimum levelReduce to minimum level
Summary of Characteristics, Objectives, & Strategies
Decline Stage of the PLC
________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.
1. Market strategy development2. Product development3. Business analysis4. Forecasting
________ is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.
1. Market strategy development2. Product development3. Business analysis4. Forecasting
The systematic search for new-product ideas is called ________.
1. idea generation2. idea search3. idea screening 4. concept development
The systematic search for new-product ideas is called ________.
1. idea generation2. idea search3. idea screening 4. concept development
Once the new product ideas have been screened, the next step in the new product development process is ________.
1. marketing strategy2. concept development and testing3. product development4. none of the above
Once the new product ideas have been screened, the next step in the new product development process is ________.
1. marketing strategy2. concept development and testing3. product development4. none of the above
Which of the following is not a stage in the product life cycle (PLC)?
1. Idea screening2. Growth3. Maturity4. Decline
Which of the following is not a stage in the product life cycle (PLC)?
1. Idea screening2. Growth3. Maturity4. Decline
Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers?
1. Introduction 2. Growth 3. Maturity 4. Decline
Which stage of the product life cycle (PLC) is characterized by slow growth because the product has achieved acceptance by most of its potential buyers?
1. Introduction2. Growth3. Maturity 4. Decline
________ tend to grow slowly, remain popular for a while, and then decline slowly.
1. Fads2. Styles3. Fashions4. Designs
________ tend to grow slowly, remain popular for a while, and then decline slowly.
1. Fads2. Styles3. Fashions4. Designs
Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________.
1. social responsibility2. positioning3. marketing mix4. commercialization
Marketers should consider public policy issues involving product safety, environment, and warranties. This is referred to as ________.
1. social responsibility2. positioning3. marketing mix4. commercialization
Top Related