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This presentation discusses the importance of BOTH product and branding as key drivers for commercial success in new product development. It details a best practice staged tollgate new product development process along with an example of how it was used to successfully develop a new product from scratch. Then successful development of effective branding and positioning are also presented along with three live examples of how they were successfully deployed in the marketplace. Rick Steinbrenner - The Global Brand Guy (Note: this presentation includes three you tube videos which shows execution of the presented brands positioning. In order to view the videos, you need to do three things. 1) Must have a live internet connection while viewing 2) Download the presentation 3) Then view the presentation in slide show and enable the content when the security alert for macros and active X comes up - this may or may not happen depending on your computers settings.)
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How To Make Sure New Products Don’t Fail
Rick SteinbrennerChief Marketing Officer
Step #1 – Do You Have The Right Product?
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Most New Products Fail
~22,000 new products are launched each year
75% of new products fail to make $7.5MM in sales in year one of launch
Less than 3% of new products fail to make $50MM in sales in year one of launch – long considered to be benchmark for success.
Source: Trout & Ries
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Why Do Most New Products Fail? No competitive point of differentiation – “me too”
Unanticipated competitive response
Poor positioning and/or overextended brand equity
Product fails to deliver promised claims/benefits
Too little/no marketing support – advertising/promo $’s
Bad estimates of market potential/market share penetration
Marketing research mistakes
Launched into wrong channels and/or channel conflicts
Rapid market changes after launchSource: Allen Weiss
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Examples of New Product Failures
Consumers didn’twant Coke to “mess”with their old Coke.
Premier smokeless cigarettes from R.J. Reynolds:tasted awful.
Is UnderwearReally Disposable?
Like Pens & Lighters?Somehow consumers
couldn’t believe Colgate frozen entrees
wouldn’t taste like toothpaste – ugh!
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How Do One Increase Their Chances Of Success?
Make sure your new product idea is truly innovative and differentiated
Make sure your new product performs as promised
Don’t overextend your brand into adjacent categories that don’t make sense
Do your homework!!
Have straight talk about the issues/opportunities as you go through development
Follow a structured process to facilitate cross-functional communication
Staged Tollgate New Product Development Process
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What Is A New Product Development Process?
It’s a structured framework that helps keep the initiative “on-track” and helps minimize “scope creep” and launches as promised.
Facilitates cross-functional communication & Sr. Mgmt. buy-in (e.g. Tollgates)
Insures good work flow, productivity, good quality designs and product performance.
Goals: Speed to Market - don’t keep designing forever
Commercial Success – both distribution and sales velocities meet expectations
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New Product Types
Not all new products are the same. Some are simpler to develop/launch than others.
Type 1: New product technologies and/or new categories – real innovation
Type 2: Existing technology/new designs – product restages or relaunches
Type 3: Existing products with either performance and/or appearance changes – line extensions
Generally, the type of new product will determine the number of steps and programrigor required to bring an idea to market.
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Phase I: Opportunity Identification/Discovery
Consumer Signals Competitive SignalsConsumer &
Technology/Trends
Product Category Identification Process
Brand Equity Filter
Product Identification Process
Branded Product Concept Checks
Alternative Basis of Interest/Business Proposition (s)
Final New Product Design Guide
New Category
Core Category
The Role of Marketing Research in New ProductsDefining the “Fuzzy Front End”
“Who I Am”
“What ISay”
“How IAct”
“What IFeel”
“How I Think”
High
HighLow
Pot
enti
al M
ark
et S
har
e Im
pac
t
Consumer Behavior Understanding
Demographics and other traditional segmentation methods
Product usage via informal surveys and other qualitative methods
Observing actual usage behaviors
In-depth discussionson emotions/attitudes
Consumer values viacluster analysis
There is a huge difference between what consumers say what they are going to do and how they think throughout the buying process.
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Example: Iron Product Positioning by Attitudinal Segments
Source: 1995 ISS
I Want To Iron
I Have To Iron
Appearance Driven Ironers
Professional Pressing Results
ProFinish
Committed Ironers
Powerful Wrinkle Removal
SurgeXpress
Ironing enhances my appearance
Uninvolved Ironers
Performance Made Simple
Quick ‘N Easy
Ironing is just a task
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Only 5 attitudinal attributes (out of 80) helped to define iron consumer purchase behaviors
Uninvolved Ironers Working couples on the go Time pressed Hate ironing
Appearance Driven Ironers Family’s appearance is key “One Pass” ironing Like to iron
ATTITUDINAL FACTORS NEED GAPS FEATURES
PerformanceMade Simple
ProfessionalPressingResults
Lightweight Sure steam system Auto-clean valve
Maximum steam performance Superior glidability In-use comfort
The study was able to consistently link attitudinal behaviors/thoughts to purchase drivers
Source: 1995 B&D A&U Study12
Committed Ironers Mostly single Personal appearance Ironing is just a task
Powerful Wrinkle Removal
Sleek, lightweight design Maximum steam performance Adjustable steam control
Iron Attitude & Usage Consumer Segmentation
Consumer Segment% of Total Iron
Population% of Ironing“Tonnage”*
Usage Index
Appearance DrivenIroners
19% 40% 211
Committed Ironers 20% 13% 65
Uninvolved Ironers 61% 47% 78
* Ironing tonnage is mean frequency of ironing times # of garments ironed/occasion
Source: 1995 ISS
Iron Consumer Segment Usage Analysis
Appearance driven and committed ironers combined account for 39% of the users, but iron 53% of thetonnage - an usage index of 136!!! These are the heavy users of the category.
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Basis of Interest Example – ProFinish Premium Irons Opportunity: Re-invent Black & Decker household premium irons
Competitive Frame of Reference: Total 1996 Iron Category – 10.5MM units/$240MM in Retail $’s. One of the largest appliance categories. >$30 price point segment – 2.2MM units/$86.4MM in Retails $’s. Higher than average retail prices.
Iron alternative: Dry Cleaners - $10B industry.
Basis of Interest: >$30 segment was fastest growing segment. B&D was #1 brand with almost 50% market share. Black & Decker premium irons had 2X the share of nearest competitor – but losing momentum & distribution. Correctly identified heavy user premium iron consumer segment – “appearance drive ironers”.
ProFinish Concept: Top two box purchase intent score of 62% among target consumers - upper 1/3 ranking.
Barriers to Entry: Black & Decker premium irons had been losing distribution to Rowenta, Sunbeam, Norelco – especially in
higher price points in department stores with better performing products. Black & Decker failed on 4 previous occasions to develop a successful premium iron. CAPEX for developing new tooling was $2MM+ - high risk.
All this & more needs to be translated into a new product design guide
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Phase II: Design/Development Develop capital authorization request: Make vs. Sourcing decisions Launch timelines Profitability/capital/payout projections
Pre-Production Builds/Intellectual Property Protection: Industrial designs/Engineering builds - Prototypes Off-tool prototype confirmation of design Manufacturing scale-up
Consumer in-home use test concept verification:Does the product deliver on product promises with consumers/users?
Develop Marketing Plans: Pricing strategy Distribution strategy/channel management Communications strategy: Advertising/Promotion Public Relations strategy
14%
12%
12%
40%
22%
B&D "ProFinish" Sunbeam Proctor Rowenta Norelco
ProFinish Premium Irons had stronger purchase interest vs. competition (40%).
Source: 1996 BASES Product Designer Study16
Premium Iron Brands Most Likely To Purchase
Q4 Q3Q2Q1Q4Q3Q2Q1
1995 1996 1997
Qual. HomeUse Test:Eng. Build Models$10M
Quant. Home Use Test:Pilot Run Samples$20M
Pro’s Con’s Retain shelf space
7 month advantage over sequential
Address sales oppty. - $22M/day
Launch before Rowenta/Norelco
We can react to poor results
Product not optimized, but wouldbeat competition - parity or better
Research costs still exceedsbudget by $50M
Recommended New Product Launch Critical Path
ID Research U.S./EuropePart II Conjoint Study$11M $55M
Positioning CompetitiveScreener Benchmark$42M Study - $60M
BrandingStudy - $25M
Start 1/96 Ship 7/97
Announce at Housewaresshow in 1/97
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Phase III: Commercialization/Launch Develop packaging: Packaging structure Graphics
Develop/pitch customer presentations/samples:
Production start-up/warehouse builds:
Sales/Customer Service Product feature/benefit briefings Pricing implementation Warehouse availability
Implement Communications Plans: Develop advertising – TV/print Media Website development Public relations – press releases/media events Trade collateral materials – including merchandising/displays
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Maximum Steam Performance:No other premium iron steams more
Professional Pressing Results at Home - just like a dry cleaner!!Professional Pressing Results at Home - just like a dry cleaner!!
Superior Non-Stick Glide:New space age soleplate coatings
Comfortably Designed:Comfort grips & unique control design
(new feature for the category) ProFinish had 21 utility and design patents, the first iron to launch “comfort grips” into the market
Voted a Consumer Digest “best buy”, achieved 100% distribution; $30MM business from zero
Final Premium Iron Product Concept - ProFinish
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“Best Practice” Stage Tollgate New Product Development Process Summary
Phase 1
Business Team
Review/Decision
Phase 2
Business Team
Review/Decision
Phase 3
Opportunity Identification Design/Development Commercialization/Launch
Major Activities:Identify new product concepts (sources):
Consumer/customer ideas New functional technologies Consumer research Competitive product reviews
Brainstorm/develop new concepts
Refine & screen new concepts: Informal customer reviews Qualitative research (focus groups) Quantitative concept screen ranking
Business Proposition Development: New product design guide Technical/engineering feasibility Develop rough prototypes Pricing/volume/profitability analysis Intellectual property reviews Launch timeline - first pass
Major Activities:
Develop capital authorization request: Production make vs. sourcing plan Production tooling plan Finalize launch timeline Profitability/capital financial plan
Pre-production/pilot builds/protection: Off-tool prototype confirmation Advanced manufacturing design/scale-up Intellectual property legal filings
Consumer/In -home use testing Changes to product/positioning as needed
Develop marketing plan/budgets: Communications plans (TV/Print/Online) Distribution strategy Pricing/profitability plans & budgets Final launch timeline – start ship
Major Activities:Final sales/customer presentations:
Customer planogram approvals Confirm year one volumes
Production start/warehouse builds: First piece inspectionsYear one production requirements
Implement pricing – customer service
Implement communication plans: Media placement Press releases/events Packaging structure/graphics Trade marketing collateral
Tollgates
While these steps might look “discrete”; there can be some activity overlaps
Moreover, every company will have their own custom process that fits their business20
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Step #2 – Does The Product Have The “Right” Brand
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What DefinesThe Business:
The DNA
What The ProductsProvide
The Products/Services
The Brand/Sub-Brand Name
What consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
Core Brand DNAUnderstanding How World Class Brands WorkWhat the consumer/customer buys….defines the business(es) the company is in…..
Product Branding ProcessAnalytical Framework
Define Core
Brand DNA
Identify Brand
Potential
Develop Brand Equity Bridges
Marketplace Analysis
Hunting Grounds/New Categories
Who are we? What can we be? Where can we live? How do we get there?
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Branding & Positioning All new products should have a “sustainable competitive advantage” An “SCA” is something:
You exclusively have Your competition doesn’t (or don’t realize they have it) Your consumers/customers want it
However, this is not enough. One needs to make the new product memorable in consumer minds.
Therefore, all new products should have a clear marketplace positioning to create an emotional bond with consumers/customers.
A positioning statement is based on analysis of the competition, consumer problems, product features solving those problems - tying all of this either into a new or existing brand.
A new brand will be harder to establish awareness since there is no prior marketplace equity.
Using an existing brand on a new product is more cost effective, but one must be careful of not over- extending the brand.
Good news is this can be VERY easy assuming you did your brand filtering homework correctly during the NPD process.
How Do You Develop A Positioning Statement?
To target market, X is the brand offrame of reference that benefit/point of
difference.
Support/Reasons Why: #1 #2 #3 etc.
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Positioning Statement Key Elements
1. Target Market: Consumers/customer group(s) having the highest pre-deposition to buy your product. Can be demographic, behavioral, psychographic and attitudinal in nature.
2. Frame of Reference: either the product category or consumer/customer based solution to “THEIR”problems, not yours. (can be direct competitors or non-category substititutes).
3. Benefit/Point of Difference: Single-minded, ownable category benefit relevant to the target market. It’s your product claim or promise to the marketplace – either attribute based or emotional.
4. Support/Reason’s Why: The product based reason to believe and/or claim substantiation.
Remember, the clearer and simpler the positioning, the easier it will be to break through the clutter and become memorable.
The positioning statement is the cornerstone of all your business strategies, it should precede all other strategies (i.e. advertising, pricing, packaging, etc.).
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Actual Positioning Statement
To women and men with busy lives, the Black & Decker line of small household products
offers a better way of doing things because it provides smart, innovative solutions for your
home.
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Successful Examplesof Branding Applications
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What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
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Happiness
Refreshment
Soft Drinks
Happiness Machine
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Eliminates speedbumps of everyday
living
Better way of doing things(Innovation Solutions)
Power tools and home products solutions
What consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
Scumbuster Cordless Wet Scrubber – “Splish Splash”
What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
4-Time NASCAR ChampionJeff Gordon
Miracles ofScience
Better Way Of DoingThings (Innovation
Solutions)
Residential, Agricultural & Automotive Products
“Trunk Crew” – Featuring 4-Time NASCAR Champion – Jeff Gordon
Summary New product development is an effort to better understand fundamental consumer “need
gaps” and then marry those needs with innovative functional technologies resulting in new innovations and marketplace uniqueness.
The “staged tollgate” new product development process aids cross-functional communication due to it’s discipline and structure.
Branding helps distinguish your new product vs. competition and allows you potentially to create a psychological bond with the consumer.
Branding is the cornerstone of ALL marketing strategies and needs to proceed all other strategies.
However, there are limits to brand equity. Not all brands can readily move to new & different categories. Understanding where your brand equity can go is fundamental.
Branding/positioning dovetails new product development and vice-versa. Two of the 4 “P”s
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