Five different categories of new products. 1. New to the world Products 2. New Category entries 3. Addition to products lines 4. Product improvements 5. Repositioning
1. Product superiority/quality2. Economic advantage to user3. Overall company/project fit4. Technological compatibility5. Familiarity to the company6. Market need, growth and size7. Competitive situation8. Define opportunity9. Market-driven process10. Customer service
As emphasized by a top executives at Pillsbury, “In the end, the company with the most new products wins” The head of P&G stated “The core business is innovation. If we innovate well, we will ultimately win”
The largest manufacturer in Minnesota, the 110th largest U.S. company overall, and a member of the Dow Jones "30," 3M Company (known officially as Minnesota Mining and Manufacturing Company from its founding in 1902 until 2002) is Wall Streets epitome of high-tech/low-tech business and solid blue-chip performance. In the years since their successful introduction of the worlds first waterproof sandpaper, they evolved into a diversified technology company with leading positions in a broad range of important markets. Today, they produce thousands of innovative products and have companies in more than 60 countries. In extending their market reach, 3Ms formula for success has remained the same: first, identify customer needs, and second, use 3M technology to pioneer innovative solutions to meet these needs. The company also practices social responsibility by supporting community efforts to improve education as well as to further economic and social development.
Is a statement identifying the role a new product is expected to play in achieving corporate and marketing goals. This strategy can be used to determine which prospective products should receive special attention, which should go on the “back burner,” and which should be scrapped.
A new product is best developed through a series of seven stages that provides benefits such as improved teamwork, less rework, earlier failure detection, shorter development times, and – most important – higher success rates.
First“KNOW THY CUSTOMER,” and the Second is“KNOW THY PRODUCT”
Idea screening Idea Conceptgeneration development & testing PrototypeTest marketing development Business analysis Commercialization
Is the initial stage of the new-product- development. In one study, 80% of companies pointed to customers as their best source for new-product ideas.
1. CUSTOMERS a. Customers requests b. Customer complaints/compliments c. Market surveys d. Focus groups2. COMPETITORS a. Monitoring competitor’s developments b. Monitoring testing of competitors’ products c. Monitoring of industry movements
3. DISTRIBUTION CHANNELS a. Suppliers b. Distributors c. Retailers d. Trade shows4. RESEARCH AND ENGINEERING a. Product testing b. Product endorsement c. Brainstorming meetings d. Accidental discovery
5. OTHER INTERNAL SOURCES a. Management b. Sales force c. Employee suggestions d. Innovation group meeting e. Stockholders6. OTHER EXTERNAL SOURCES a. Consultants b. Academic journals c. Periodicals and other press
L.A. Mitchell, Account Executive for large Business Accounts, Lucent Technologies, discusses sources for new product ideas: “New-product ideas come from just about anywhere. Lucent has entire organizations whose sole functions is to continually explore and develop new-products ideas. Some of the best ideas come from needing to solve a significant customer problem. For example, the increase in automobile accidents due to people talking on cell phones while driving has generated many ideas for new products and features. Some of these include products that allow cell phones to be used “hands free” and new features that make it possible to dial number by simply speaking the name of the person or business you wish to call.”
At this stage, new product ideas are evaluated to determine which ones warrant further study. Typically, a management team relies on experience and judgment, rather than on market or competitive data, to screen the pool of ideas.
1. Develop Product Ideas intoIs the process of Alternative shaping and refining Product Concepts the idea into a more complete product concept. 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One
Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company ObjectivesIf No, EliminateProduct Concept If Yes, Move to Product Development
Means converting the concept into an actual product. The objective is to use the information obtained from the concepts tests to design an actual product that can be further tested.
Involves testing the product prototype Standard and marketing Test Market strategy in Full marketing campaign in a small number of simulated or actual representative cities. Controlled market situations. Test Market Test and marketing A few stores that have can be both Simulated agreed to carry new products for a fee. expensive and Test Market risky. Test in a simulated shopping environment to a sample of consumers.
1. PSEUDO SALES potential buyers are asked to answer survey questions or pick items off a shelf in a make believe store.2. CONTROLLED SALES here the buyer must make a purchase3. FULL SALE the firm has decided to fully market the product, but on a limited basis first, to see if everything is working right4. NATIONAL LAUNCH the firm launches the product on a national scale and make adjustments as needed.
This is the launching step. During this stage, heavy emphasis is place on the organization structure and management talent needed to implement the marketing strategy.
1. No competitive point of difference, unexpected reactions from the competitors or both.2. Poor positioning3. Poor quality of the product4. Non delivery of promised benefits of product5. Too little marketing support6. Poor perceived price/ quality relationship7. Faulty estimates of market potential and other marketing research mistakes8. Faulty estimates of production and marketing costs9. Improper channels of distribution selected10. Rapid change in the market(economy) after the product was introduced