5. Reasons for new product failure
Overestimation of market size
Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition
7. Idea Generation
The systematic search for new-product ideas
Sources of new-product ideas
Internal
External
8. Idea Screening
Identify good ideas and drop poor ideas
R-W-W Screening Framework:
Is it real?
Can we win?
Is it worth doing?
9. Concept Development and Testing
• Product ideais an idea for a possible product that the
company can see itself offering to the market
• Product conceptis a detailed version of the idea stated
in meaningful consumer terms
• Product imageis the way consumers perceive an actual
or potential product
10. Marketing Strategy Development
Marketing strategy statement includes:
Description of the target market
Value proposition
Sales and profit goals
Business analysis involves a review of the
sales, costs, and profit projections to find out whether
they satisfy the company’s objectives
11. Types of Test Markets
Standard test markets
Controlled test markets
Simulated test markets
13. Product Life-Cycle Strategies
Fads are temporary periods of
unusually high sales driven
by consumer enthusiasm
and immediate product or
brand popularity
17. How can great Firms Fail?
The Reason for Failure: The Reason for Success:
• Listen to their customers • Listen to their customers
• Invest in Technology • Invest in Technology
• Satisfy their customers' • Satisfy their customers'
next-generation needs. next-generation needs.
Innovator's Dilemma
25. Reinventing Your Business Model
1. Articulate what makes your existing model successful.
For example, what customer problem does it solve? How
does it make money for your firm?
2. Watch for signals that your model needs changing, such
as tough new competitors on the horizon.
3. Decide whether reinventing your model is worth the
effort. The answer’s yes only if the new model changes
the industry or market.
Johnson, Christensen, and Kagerma
26. Understand Your
Current Business model
1. Customer value proposition.
27. Understand Your
Current Business model
2. Profit formula.
Revenue – Cost = Profit X
Turnover
28. Understand Your
Current Business model
3. Key resources and processes.
29.
30. Take a good technology and
wrapped it in a great business model
31.
32.
33.
34.
35.
36.
37.
38.
39. Modern Business Approach (MBA 2.0)
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Note to InstructorIf you are running a marketing plan project in your class, this is a good time to ask why their project ideas might fail in the real market. You can then ask what they plan to do to prevent failure.
It is not difficult to find examples of companies that are running contests where they ask consumers to send in ideas for new products. Dorito’s recently asked consumers to come up with a new flavor and new advertising. The Classic Mini Cooper brand was running Mini Mania’s the “Awesome New Product” Idea Contest. The grand prize winner received a 25 percent off promo code! Two second place winners will receive 15 percent off promo codes.
Concept testing refers to testing new-product concepts with groups of target consumers
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market
Note to InstructorStandard test markets are small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance. Results are used to forecast national sales and profits, discover product problems, and fine-tune the marketing program.Controlled test markets are panels of stores that have agreed to carry new products for a fee. In general they are less expensive than standard test market, faster than standard test markets, but competitors gain access to the new product. Simulated test markets are events where the firm will create a shopping environment and note how many consumers buy the new product and competing products. Provides measure of trial and the effectiveness of promotion. Researchers can interview consumers.
Note to InstructorDiscussion QuestionName a product at each stage of the PLC.This concept is very new to students. See if they can identify products or product categories that are in each stage of the model. Introduction might include online movie viewing software, growth might include MP3 players, maturity might include bottled water, and decline could include soda (actually in a decline) or videotape players.
Note to InstructorStyle is a basic and distinctive mode of expression.Fashion is a currently accepted popular style in a given field.
Concept testing refers to testing new-product concepts with groups of target consumers
The model helps customers perform a specific “job” that alternative offerings don’t address.Example:MinuteClinics enable people to visit a doctor’s office without appointments by making nurse practitioners available to treat minor health issues.
The model generates value for your company through factors such as revenue model, cost structure, margins, and inventory turnover.Example:The Tata Group’s inexpensive car, the Nano, is profitable because the company has reduced many cost structure elements,•accepted lower-than-standard gross mar- gins, and sold the Nano in large volumes to its target market: first-time car buyers in emerging markets.
Your company has the people, technology, products, facilities, equipment, and brand required to deliver the value proposition to your targeted customers. And it has processes (training, manufacturing, service) to lever- age those resources.Example:For Tata Motors to fulfill the requirements of the Nano’s profit formula, it had to recon- ceive how a car is designed, manufactured, and distributed. It redefined its supplier strategy, choosing to outsource a remark- able 85% of the Nano’s components and to use nearly 60% fewer vendors than normal to reduce transaction costs.
Your company has the people, technology, products, facilities, equipment, and brand required to deliver the value proposition to your targeted customers. And it has processes (training, manufacturing, service) to lever- age those resources.Example:For Tata Motors to fulfill the requirements of the Nano’s profit formula, it had to recon- ceive how a car is designed, manufactured, and distributed. It redefined its supplier strategy, choosing to outsource a remark- able 85% of the Nano’s components and to use nearly 60% fewer vendors than normal to reduce transaction costs.