CH-20-Introducing New Market Offerings
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Marketing Manage ment 1 Marketing Management Chapter-20 Introducing New Market Offerings
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Marketing Management
Transcript of CH-20-Introducing New Market Offerings
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Marketing Management
Chapter-20
Introducing New Market Offerings
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MARKETING MANAGEMENT12th edition
20 Introducing New Market Offerings
Kotler Keller
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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?
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Categories of New Products
New-to-the-World
Cost reductions
New Product Lines
Additions
Improvements
Repositionings
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Categories of New Products We can identify six categories of new products.
1. New-to-the world Products : New products that create an entirely new market; like Blackberry.
2. New Product Lines : New products that allow a company to enter an established market for the first time; like Nestle juices.
3. Additions to Existing Product Lines : New products that supplement established product lines; like new package sizes, flavors etc.
4. Improvements and Revisions of Existing Products : New products that provide improved performance or greater perceived value and replace existing products; like new models of lab-tops and desktops.
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Categories of New Products
5. Repositionings : Existing products that are targeted to new markets or market segments; like repositioning of Mountain Dew by linking it with adventure.
6. Cost Reductions : New products that provide similar performance at lower cost.
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Categories of New Products
Note : As per research, less than 10% of all new products are truly innovative and new to the world. These products involve the greatest cost and risk because they are new to both the company and the marketplace.
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Categories of New Products
Blackberry A New-to-the-World Product
Mountain Dew An example of successful Repositioning
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New Product Development Process
Commercialization
MarketTests
PrototypeDevelopment
BusinessAnalysis
Idea Screening
IdeaGeneration
New ProductDevelopment
Process
Start
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Managing New Product Development Process
A new product is best developed through a series of six stages.
1. Idea Generation2. Idea Screening3. Business Analysis4. Prototype Development5. Market Tests6. Commercialization
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New-Product Development Process
1. Idea Generation : New-product development starts with an idea. New-product ideas can come from interacting with various groups (like customers, suppliers, employees etc.) and from using creativity-generating techniques.
2. Idea Screening : At this stage mew-product ideas are evaluated to determine which ones to be studied further. The company sorts the proposed ideas into three groups : promising ideas, marginal ideas, and rejects.
3. Business Analysis : The stage in new-product development in which the new product is reviewed from all organizational perspectives to determine performance criteria and likely profitability. It includes both qualitative (listing of product features, resources needed to produce the product, and a basic marketing plan) and quantitative (market demand, cost projections, investment requirements, and competitive activity) means of evaluation.
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New Product Development Process
4. Prototype Development : If the results of the business analysis are favorable, then a prototype (a trial model) of the product is developed and tested internally. In case of services, the facilities and procedures necessary to produce and deliver the new product are designed and tested. The prototype can be a digital as well; like Boeing designed its 777 aircraft on a totally digital basis.
5. Market Tests : Unlike the internal tests conducted during prototype development, market tests involve actual consumers. A new tangible product may be given to a sample of people for use in their households (in case of consumer good) or their organizations (a business good). Following the trials, users are asked to evaluate the product. This stage often entails Test Marketing (see next slide). Following market tests, the management must make a final decision about introducing the product.
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New Product Development Process
Boeing 777 Cock-pit Simulator
Boeing 777
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New Product Development Process
6. Commercialization : In this stage, the decision is made to launch a new product’s full-scale production and marketing.
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Test Marketing
Test Marketing : A controlled experimental procedure in which a new product is tested under realistic market conditions in a limited geographical area.
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Consumer-Adoption Process
Adoption is an individual’s decision
to become a regular user
of a product.
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New-Product Adoption Process Adoption is an individual’s decision to become a
regular user of a product. Adopters of new products have been observed to
move through five stages.
1. Awareness : The consumer becomes aware of the innovation but lacks information about it.
2. Interest : The consumer is stimulated to seek information about the innovation.
3. Evaluation : The consumer considers whether to try the innovation.
4. Trial : The consumer tries the innovation.
5. Adoption : The consumer decides to make full and regular use of the innovation.
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New-Product Adoption Process
AdoptionAdoption
TrialTrial EvaluationEvaluation
InterestInterest
AwarenessAwareness
New-ProductAdoptionProcess
New-ProductAdoptionProcess
Start
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Adopter Groups
Laggards
LateMajority
EarlyMajority
EarlyAdopters
Innovators
AdopterGroups
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Adopter Groups There are five Adopter Groups which differ in their
value orientations and their motives for adopting or resisting the new product.
1. Innovators (They represent only 2.5% of the market. They are venturesome consumers who are the first to adopt an innovation)
2. Early Adopters (They represent 13.5% of the market. They are opinion leaders and purchase after innovators but sooner than other consumer groups)
3. Early Majority (The represent 34% of the market. They adopt new product when its benefits are proven and a lot of adoption has already taken place)
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Adopter Groups
4. Late Majority (They represent another 34% of the market. They are a skeptical group pf consumers who adopt an innovation to save money or in response to social pressure)
5. Laggards (They comprise 16% of the market and are tradition bound, hence are last to adopt an innovation)
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Adopter Groups
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Innovation
Innovation : The process of taking a creative idea and turning it into a useful good, service or method of operation.
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Assignment
