New product Offer

Developing New Market Offerings

Objectives

Challenges in New Product Development (NPD)

Organizational Structure & NPD

Stages & Management of NPD

Diffusion & Adoption of New Products

Why New Products Fail

“ Over Championing”

Overestimated Demand

Poor Design

Poor Marketing Execution

High Development Costs

Strong Competitive Reaction

Challenges in NPD

Idea Shortage

Fragmented Markets

Social & Governmental Constraints

Cost

Capital Shortage

Need for Speed

Shorter Product Life Cycles

New Product Development Process Idea Generation Concept Development and Testing Marketing Strategy Development Idea Screening Business Analysis Product Development Market Testing Commercialization

Probability of Success Probability of technical completion Overall probability of success = Probability of commercialization given technical completion X Probability of economic success given commercialization X

Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

A research technique that enables marketers to plot graphically consumers’ perceptions concerning product attributes of specific brands. Perceptual Mapping

Product & Brand Positioning (a) Product-positioning map (breakfast market) b) Brand-positioning map (instant breakfast market) High price/oz. Low in calories Low price/oz. High in calories Expensive Slow Inexpensive Quick Bacon and eggs Pancakes Instant breakfast Cold cereal Hot cereal Brand C Brand B Brand A

Perceptual Map Pain Relievers (perceptual map) Gentleness Effectiveness

Tylenol

Private-label

Aspirin

Anacin

Bayer

Excedrin

Nuprin

Advil

Perceptual Map 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 1.0 0.8 0.6 0.4 0.2 -0.2 -0.4 -0.6 -0.8 Magic Mountain Japanese Deer Park Busch Gardens Knott’s Berry Farm Lion Country Safari Marineland of the Pacific Disneyland Economical Fun rides Exercise Fantasy Good food Easy to reach Educational, animals Little waiting Live shows

A research technique that enables marketers identify idea products by attribute and attribute level. Conjoint Analysis

Conjoint Analysis Brand name -- -- -- -- -- Utility 1.0 0 | | | K2R Glory Bissell Retail Price Utility -- -- -- -- -- 1.0 0 | | | $1.19 $1.39 $1.59 Good Housekeeping Seal? Utility 1.0 -- -- -- -- -- 0 | | No Yes Utility Money-Back Guarantee? 1.0 -- -- -- -- -- 0 | | No Yes

Consumer-Goods Market Testing Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Standard Test Market Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee.

Commercialization When Where Whom Product Price Place Promotion

Adopter Categorization of the Basis of Relative Time of Adoption of Innovations Time of adoption innovations 2 1 /2% Innovators 13 1 /2% Early adopters 34% Early majority 34% Late majority 16% Laggards

Sales & Profit Life Cycles Introduction Growth Maturity Decline Time Sales & profits ($)

Characteristics of the Innovation Rate of Adoption