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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
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”
