Chapter 20Introducing New Market Offerings

Kelompok 6Riskha Tri BudiartiSiti ChasanahSyarifuddin

Acquisition or developmentNew Product OptionsMake or Buy Types of New Products Modifying and improving existing productsMany high tech firms strive for radical innovationFewer than 10-15% of all new products are truly innovative and new to the worldProduct innovation and effective marketing programs have allowed these firms to expand their market footprintContinuous innovation to better satisfy consumer needs can force competitors to play catch-up. Continually launching new products as brand extensions into related product categories can also broaden the brand meaning

1. The innovation ImperativeChallenges in New Product DevelopmentNew Product SuccessInnovative firms create a positive attitude toward innovation and risk taking, toutinize the innovation process, practice teamwork, and allow their people to experiment and even failIncremental innovationUnique, superior product conceptWell-defined product conceptOther success factors: technological and marketing synergy, quality of execution in all stage, and market attractiveness.

Some additional factors hindering new product development are:Shorting of important ideas in certain areasFragmented marketsSocial and governmental constraintsCost of developmentCapital shortagesShorter required development timeShorter product life cycles2. New Product Failure

Organizational ArrangementsOne company established the following acceptance criteria:Many companies today use customer driven engineering to design new productsNew product development requires senior management to define business domains, product categories, and specific criteriaThe product can be introduced within 5 yearsThe product has a market potential of a least $50 million and a 15% growth rateThe product ca provide at least 30% return on sales and 40% on investmentThe product can achieve technical or market leadership

Budgeting for New Product DevelopmentSenior management must decide how much to budget for new product developmentCompanies must decide how many successful new products they need and work backward to estimate the required investment

Managing the Development Process: Ideas IDEA GENERATIONInteraction with othersCreativity TechniquesIDEA SRCEENING

Interaction with otherCustomerEmployeeCompetitors/other companiesTop managementInvestors, patent attorneys, marketing research firms, industrial publications

Creativity TechniquesForced RelationshipAttribute ListingMorphological AnalysisReverse Assumption AnalysisNew Context Mind Mapping(More..)

Successful examples Gas station storesCyber cafesCereal barsKinder surpriseSony walkmanKids centre in mallFolding bike

Managing the Development Process: IdeascontIDEA SCREENINGOverall Probability success=Probability of technical completionXProbability of commercialization given technical completionXProbability of economic success given commercialization

Managing the Development Process: Ideascont

Managing the Development Process: Concept to StrategyConcept Development & TestingConcept TestingCategory conceptProduct positioning mapBrand positioning mapRapid PrototypeVirtual RealityConcept Development(More..)

Concept developmentProduct idea product conceptWho will use this product?What primary benefit should this product provide?When will people consume this product? Category conceptProduct positioning mapBrand positioning map

Managing the Development Process: Concept to Strategycont

Concept testingPresenting the product concept, symbolically or physically to target customer and getting their reactionRapid PrototypeVirtual Reality

Managing the Development Process: Concept to Strategy...contCommunicating and believabilityNeed levelGap levelPerceived valuePurchase intentionUse targets, purchase occasions, purchasing frequency

Question to Measure Product Dimension

Managing the Development Process: Concept to Strategy

Conjoint AnalysisMeasure consumer preferences for alternative product concepts

Managing the Development Process: Concept to StrategycontMarketing Strategy DevelopmentDescribes the target market size, structure, and behavior, the planned product positioning, sales, market share, profit goals sought in the first The planned price, distribution strategy, and marketing budgetDescribes the long run sales and profit goals

Marketing Strategy Development

Managing the Development Process: Concept to Strategy

Business AnalysisEstimating Total SalesSurvival age distribution

Estimating Cost and ProfitsBreak even analysisRisk analysis

Managing The Development Process : Development to CommercializationProduct DevelopmentThe job of translating target customer requirement into a working, prototype is helped by a set of methods known as quality function deployment (QFD). A mayor contribution of QFD is improved communication between marketers, engineers and manufacturing peopleMarket Testing1. Consumer good market testing Consumer product test seek to estimate four variables : trial, first repeat, adoption, purchase frequency. Four major methods of customer good market testing:a. Sales-Wave Researchb. Simulated Test Marketingc. Controlled Test Marketingd. Test Markets

Test MarketsThe ultimate way to test a new consumer product is to put it into full-blown test markets. Management faces several decisions:a. How many test cities ?b. Which cities ?c. Length of test ?d. What information to collect ?e. What action to take ?

2. Business-Good Market TestingTest method for business goods is to introduce the new product at trade shows, the company can observe:a. How much interest buyers show in the nw productb. How they react to various feature & termc. How many express purchase intentions or place orders

CommercializationWhen (Timing), the company faces three choices:1. First entry2. Parallel entry3. Late entryWhere (Geographic Strategy)To whom (Target-market Prospects)How (Introductory Market Strategy)

The Consumer-Adoption ProcessAdoption is individuals decision to become a regular user of a productThe consumer-adoption process is followed by the consumer-loyalty process

Stages in the Adoption Process Adopters of new product move through 5 stages: 1. Awareness 2. Interest 3. Evaluation 4. Trial 5. Adoption

Factors Influencing the Adoption ProcessCharacteristic the adoption process:Differences in individual readiness to try new productThe effect of personal influence Differing rate of adoptionDifferences of organization's readiness to try new productReadiness to Try New Product The five adopters group differ in their value orientations and their motives for adopting or resisting the new product :1. Innovators2. Early Adopters3. Early Majority4. Late Majority5. Laggards

Adopter Categorization on the Basis ofRelative Time of Adoption of Innovation

Characteristics of the Innovation 1. Relative advantage2. Compatibility3. Complexity4. Divisibility5. Communicability

Organizations Readiness to Adopt Innovations Adoption is associated with variables in: 1. The organizations environmentCommunity progressivenessCommunity income2. The organization it selfSizeProfitPressure to change3. The AdministratorEducation levelAgeSophistication