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New product develop New product develop Presentation Transcript

  • NEW PRODUCT DEVELOPMENT
  • What Is A New Product?
    • New to the world
    • New to the company
    • Flankers
      • Line extensions
      • Brand extensions
    • Repositioning
    • Model changes
  • New Product Development
    • New product development is the most important strategic activity of any firm
    • However, it is the most risky venture
    • Most new products fail!
  • New Product Development Risks
    • Study by Assoc. of National Advertisers (1984) --across all types of industries
      • 27% of line extensions failed
      • 31% of new brands introduced in categories where company already had a product failed
      • 46% of new products introduced to new categories failed
    • Only 1 in 7 new product ideas are carried to the commercialization phase
  • Why New Products Fail
    • Poor planning and strategy
      • Market is not attractive
    • Poor concept
    • Poor execution
    • Poor use of research
    • Poor technology
    • Poor timing
      • Changes in tastes/environment
    • Bad support from channel
  • Why New Products Succeed
    • Top-management commitment
    • Start with the consumer -- not the factory
    • Intelligent use of research
    • Find a competitive advantage
    • Move quickly
    • Know when to get out
    • Accept, but manage risk
  • New Product Success Factors
    • Be close to the market
    • Set a strategic direction
    • Play to your strengths
    • Strong organizational support
    • Speed to market
  • Why Speed to Market?
    • Markets are getting more specialized
    • Intensified competition
    • Changing technology
    • Changing tastes
    • Rampant copying
    • Gaining shelf space early
  • New Product Development Process Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization Idea Generation
  • New Product Development Process IDEA GENERATION
    • Gaps
      • Are there unfilled current consumer needs?
    • Growth
      • Are there unfilled future needs?
    • Synergies
      • Is there unfilled potential in the firm’s existing product portfolio?
  • New Product Development Process SOURCES OF NEW IDEAS
    • Technology
    • Market needs and user solutions
    • Competitors and other firms
    • Channels of distribution and suppliers
    • Management and employees
    • Environmental changes
  • New Product Development Process CONCEPT TESTING
    • Goal
      • Use primary market information to better define the product, forecast likely demand, and clarify target buyer
    • Common tools
      • Focus Groups
      • Conjoint Analysis
      • Information Accelerator
  • New Product Development Process BUSINESS ANALYSIS Review Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If Yes, Move to Product Development If No, Eliminate Product Concept Source: Prentice Hall
  • Business Analysis WHEN TO STOP A BAD IDEA
    • Rule 1: Remember the sunk cost fallacy
    • Rule 2: Set benchmarks for success beforehand and stick to them
    • Rule 3: Be sure to plan research so that it will allow you to diagnose the cause of problems
  • Product Development TESTING NEW PRODUCTS
    • Advertising testing
    • Product quality testing
    • Laboratory tests
    • Expert evaluation
    • Customer tests
      • Single-product evaluation
      • Blind tests
      • Experimental variations
  • New Product Development Process TEST MARKETING Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test Market Test in a simulated shopping environment to a sample of consumers Controlled Test Market A few stores that have agreed to carry new products for a fee Source: Prentice Hall