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
customer2. Intellectual property and brand power are key
assets3. Use digital technology to create tools for
customers4. Build a championship team5. Innovation is a state of mind6. Speed is critical, so push your organization7. 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”
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