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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-1

Chapter Questions

• What challenges does a company facein developing new products and

services?

• What are the main stages in developingnew products and services?

• What is the best way to manage the

new-product development process?




Johnson & Johnson Emphasizes

New Product Development

http://www.jnj.com/innovations/index.htm




Categories of New Products

New-to-the-world

Cost reductions

New product lines

Additions

Improvements

Repositionings




Moser Baer has moved from

making optical storage media to

selling home entertainment




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




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.




Figure 20.2 The New Product

Development Decision Process




Mahindra and Mahindra followed a

thorough product development

process for ‘Scorpio’




Ways to Find Great New Ideas

• Run informal sessions with customers

• Allow time off for technical people to

explore pet projects

• Make customer brainstorming a part of

plant tours

• Survey your customers




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 abrand community of enthusiasts to

discuss product




Idea Generation: Creativity Techniques

• Attribute listing

• Forced relationships

• Morphological

analysis

• Reverse assumption

analysis

• New contexts• Mind mapping




Lateral Mapping

• Gas stations + food

• Cafeteria + Internet• Cereal + snacking

• Candy + toy

• 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




Figure 20.6 Utility Functions Based on

Conjoint Analysis




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




Figure 20.7 Product Life Cycle Sales

for Three Product Types




Prototype Testing

• Alpha testing

• Beta testing

• Rank-order method

• Paired-comparison method

• Monadic-rating method

• Market testing




Consumer Goods Market Testing

• Sales-Wave Research

• Simulated Test Marketing

• Controlled Test Marketing

• Test Markets




Test Market Decisions

• How many test cities?

• Which cities?

• Length of test?• What information to collect?

• What action to take?




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




Figure 20.8 Adopter

Categorization




Characteristics of an Innovation

• Relative advantage

• Compatibility

• Complexity• Divisibility

• Communicability




Marketing Debate

Who should you target with new products?

Take a position:1. Consumer research is critical to new-product

development.

or

2. Consumer research may not be all thathelpful in new-product development.




Marketing Discussion

Think about the last new product

you bought. How do you think its success will be

affected by the five characteristics

of an innovation?

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