Introducing New Market Offerings

LECTURE-29

Chapter Questions What challenges does a company face in developing

new products and services?

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

What are the main stages in developing new products and services?

What is the best way to manage the new-product development process?

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

Categories of New Products

New-to-the-world

Cost reductions

New product lines

Additions

Improvements

Repositionings

The World’s Most Innovative Companies

Apple

Google

Toyota

General Electric

Microsoft

Procter & Gamble

3M

Walt Disney

IBM

Sony

Wal-Mart

Honda

Starbucks

Target

BMW

Samsung

Seven Notions of Innovation

1. See the future through the eyes of your customer

2. Intellectual property and brand power are key assets

3. Use digital technology to create tools for customers

4. Build a championship team

5. Innovation is a state of mind

6. Speed is critical, so push your organization

7. Partner up if you’re not the best Source: Kodak CEO Antonio Porez

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

What is a Venture Team?

A venture team is a cross-functional group charged with developing a specific product or business; intrapreneurs are relieved of other duties and provided a budget and time frame.

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 List the attributes of an object, then modify each object

e.g. Screwdriver handle wooden or metal or plastic etc.

Forced relationships List several ideas & consider each in relation to each

other idea e.g. Office furniture desk, Book case or Filing cabinet etc.

Morphological analysis Start with a problem & start thinking dimensions e.g.

Power generation oil gas, wind, hydro or solar etc.

Idea Generation: Creativity Techniques

Reverse assumption analysis List all the normal assumptions about an entity & then

reverse them e.g. Restaurant menus ……raw material

New contexts Take familiar process & put them in new context e.g.

day care services for pets.

Mind mapping Start with a thought & then think of the next thought.

Link these thoughts e.g. Cars, colours, features etc.

Lateral Mapping

Gas Station Stores = Gas stations + food

Cyber Cafes = Cafeteria + Internet

Cereak Bars = Cereal + snacking

Kinder Surprise = Candy + toy

Sony Walkman = Audio + portable

Variations on Failure

Absolute product failure

Partial product failure

Relative product failure

Concepts in Concept Development

Product idea

Product concept

Category concept

Brand concept

Concept testing

Concept Testing

Communicability and believability

Need level

Gap level

Perceived value

Purchase intention

User targets, purchase occasions, purchasing frequency

Marketing Strategy

Target market’s size, structure, and behavior

Planned price, distribution, and promotion for Year One

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

Product Development

Quality function deployment (QFD) The job of translating targeting customer

requirements into a working prototype. It helped by a set of methods known as Quality Function Deployment (QFD)

Customer attributes

Engineering attributes

Prototype Testing

Alpha testing Testing the product within the firm to see how it

performs in different applications.

Beta testing Testing the product with customers.

Rank-order method Paired-comparison method Monadic-rating method

Market testing

Test Market Decisions

How many test cities?

Which cities?

Length of test?

What information to collect?

What action to take?

Timing of Market Entry

First entry

Parallel entry

Late entry

Criteria for Choosing Rollout Markets

Market potential

Company’s local reputation

Cost of filling pipeline

Cost of communication media

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

Characteristics of an Innovation

Relative advantage The degree to which the innovation appears superior

to existing products.

Compatibility The degree to which the innovation matches the

values & experiences of the individuals.

Complexity The degree to which the innovation is relatively

difficult to understand or use.

Characteristics of an Innovation

Divisibility The degree to which the innovation can be

tried on a limited basis.

Communicability The degree to which the beneficial results of

use are observable or describable to others.

Marketing Management – A South Asian Perspective by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13th Edition, Published by Pearson Education, Inc.

Advertising Principles & Practice by Wells, Moriarty & Burnett Published by Pearson Education, Inc.

Principles of Advertising & IMC by Tom Duncan 2nd Edition, Published by McGraw-Hill Irwin.

Principles of Marketing by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall

Bibliography

The End:

“Never deprive someone of hope;

it might be all they have”