Introduction to Marketing New product Development and Portfolio Analysis
Aim and Learning Objectives <ul><li>Aim </li></ul><ul><ul><li>To understand the importance and role of NPD and Portfolio M...
Different types of new products <ul><li>Innovative Products  - Completely new to the market e.g. CD player, home video </l...
New Product Development <ul><li>Why do we need new products? </li></ul><ul><ul><li>To remain competitive </li></ul></ul><u...
The NPD Process <ul><li>The first attempt at formulising a theory about product development was done by Booz, Allen and Ha...
The Process of New Product Development (NPD) <ul><li>Idea Generation </li></ul><ul><li>Screening </li></ul><ul><li>Concept...
Portfolio Analysis <ul><li>The technique of Portfolio Analysis was pioneered in the USA by the management consultants Bost...
The BCG Matrix Problem Child / Question Mark Star Cash Cow Dog Relative Market Share Market Growth Rate % High Low High Low
The BCG Matrix <ul><li>Question Marks/Problem Child </li></ul><ul><ul><li>Can be problematic.  Mkt growth prospects are go...
The Purpose of Portfolio Analysis <ul><li>To balance the organisation’s portfolio of products. </li></ul><ul><li>To be abl...
Criticisms of BCG Matrix <ul><li>Oversimplification </li></ul><ul><li>Difficult to calculate the stage they are at </li></...
The GE Matrix <ul><li>General Electric (USA) and McKinsey & Co (Mgmt Consultants) developed a business screen matrix that ...
The GE Matrix Competitive Position Strong Medium Weak High Medium Low Mkt Attractiveness SBU1 SBU2 SBU3 SBU4
Three Strategic Alternatives Strong  Medium  Weak Competitive Position High Medium Low Mkt Attractiveness Invest/Grow Sele...
Other Portfolio Models <ul><li>Other models developed for portfolio analysis exist.  Have a look at: </li></ul><ul><ul><li...
Summary <ul><li>NPD is crucial to the success of an organisation </li></ul><ul><li>There are different types of new produc...
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Introduction To Marketing

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Introduction To Marketing

  1. 1. Introduction to Marketing New product Development and Portfolio Analysis
  2. 2. Aim and Learning Objectives <ul><li>Aim </li></ul><ul><ul><li>To understand the importance and role of NPD and Portfolio Management techniques </li></ul></ul><ul><li>Learning Objectives </li></ul><ul><ul><li>To understand the pros and cons of NPD </li></ul></ul><ul><ul><li>To appreciate the NPD process </li></ul></ul><ul><ul><li>To understand the various models within Portfolio Management techniques </li></ul></ul>
  3. 3. Different types of new products <ul><li>Innovative Products - Completely new to the market e.g. CD player, home video </li></ul><ul><li>Replacement Products - new to customers but replace existing products </li></ul><ul><li>Imitative Products - imitating innovative products Dyson v Hoover </li></ul><ul><li>Relaunched Products - product re-launched successfully via a different marketing strategy </li></ul>
  4. 4. New Product Development <ul><li>Why do we need new products? </li></ul><ul><ul><li>To remain competitive </li></ul></ul><ul><ul><li>To satisfy the customer </li></ul></ul><ul><ul><li>To enter new markets / to grow </li></ul></ul><ul><ul><li>To survive!! </li></ul></ul><ul><li>However: NPD can be:- </li></ul><ul><ul><li>Risky - aprox 90% of new products fail!! </li></ul></ul><ul><ul><li>Expensive? </li></ul></ul>
  5. 5. The NPD Process <ul><li>The first attempt at formulising a theory about product development was done by Booz, Allen and Hamilton in 1968 when they conducted a study and found that it took 58 new product ideas to produce 1 successful product. They repeated the study in 1981 and found that companies had in general found out how to screen products. It now only took 7 new product ideas to produce one successful product . </li></ul>
  6. 6. The Process of New Product Development (NPD) <ul><li>Idea Generation </li></ul><ul><li>Screening </li></ul><ul><li>Concept Development and Testing </li></ul><ul><li>Business Analysis </li></ul><ul><li>Product Development </li></ul><ul><li>Test marketing </li></ul><ul><li>Commercialisation and Launch </li></ul><ul><li>Monitoring and evaluation </li></ul>
  7. 7. Portfolio Analysis <ul><li>The technique of Portfolio Analysis was pioneered in the USA by the management consultants Boston Consulting Group (BCG). The methods proposed identified the company’s strategic business units (SBU’s) or product groups and represented them on a matrix. </li></ul>
  8. 8. The BCG Matrix Problem Child / Question Mark Star Cash Cow Dog Relative Market Share Market Growth Rate % High Low High Low
  9. 9. The BCG Matrix <ul><li>Question Marks/Problem Child </li></ul><ul><ul><li>Can be problematic. Mkt growth prospects are good, yet low relative market share. Do Mgmt invest? </li></ul></ul><ul><li>Star </li></ul><ul><ul><li>Have a promising future. Significant investment needed. High Mkt growth & High relative market share </li></ul></ul><ul><li>Cash Cows </li></ul><ul><ul><li>have achieved a high mkt share in a mature mkt. Generate cash which can be invested elsewhere. </li></ul></ul><ul><li>Dogs </li></ul><ul><ul><li>have achieved low market share and low growth in market. </li></ul></ul>
  10. 10. The Purpose of Portfolio Analysis <ul><li>To balance the organisation’s portfolio of products. </li></ul><ul><li>To be able to balance the investment of resources efficiently and effectively </li></ul><ul><li>To remain competitive and survive </li></ul>
  11. 11. Criticisms of BCG Matrix <ul><li>Oversimplification </li></ul><ul><li>Difficult to calculate the stage they are at </li></ul><ul><li>Axis too narrow </li></ul><ul><li>Ignores external influences </li></ul>
  12. 12. The GE Matrix <ul><li>General Electric (USA) and McKinsey & Co (Mgmt Consultants) developed a business screen matrix that attempted to overcome some of the criticisms of the BCG Matrix. It is known as the GE Matrix. </li></ul><ul><li>The axis are Market Attractiveness (size, growth rate, competitive diversity, social impact, legal impact etc) and Competitive position (Mkt share, Product quality, brand reputation, productive capacity etc) </li></ul>
  13. 13. The GE Matrix Competitive Position Strong Medium Weak High Medium Low Mkt Attractiveness SBU1 SBU2 SBU3 SBU4
  14. 14. Three Strategic Alternatives Strong Medium Weak Competitive Position High Medium Low Mkt Attractiveness Invest/Grow Selectivity Earning Harvest/ Divest
  15. 15. Other Portfolio Models <ul><li>Other models developed for portfolio analysis exist. Have a look at: </li></ul><ul><ul><li>Porter’s industry/market evolution model </li></ul></ul><ul><ul><li>AD Little maturity/competitive position matrix </li></ul></ul><ul><ul><li>Shell directional policy matrix </li></ul></ul>
  16. 16. Summary <ul><li>NPD is crucial to the success of an organisation </li></ul><ul><li>There are different types of new products </li></ul><ul><li>The NPD Process helps organisations develop successful organisations </li></ul><ul><li>Portfolio Analysis helps organisations balance their range of products </li></ul>
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