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Marketing management-by-philip-kotler-719-slides-1234238345990514-2 untitled9-9_untitled3_3


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Marketing management-by-philip-kotler-719-slides-1234238345990514-2 untitled9-9_untitled3_3

  1. 1. Chapter 12Developing NewMarket Offeringsby PowerPoint by Milton M. Pressley University of New Orleans 11-357
  2. 2. Kotler onMarketingWho shouldultimately design theproduct? Thecustomer, of course. 11-358
  3. 3. Chapter ObjectivesIn this chapter, we focus on the followingquestions: What challenges does a company face in developing new products? What organizational structures are used to manage new-product development? new- What are the main stages in developing new products, and how can they be managed better? What factors affect the rate of diffusion and consumer adoption of newly launched products? 11-359
  4. 4. Developing New Market Offerings Six categories of new products1. New-to-the-world products2. New product lines3. Additions to existing product lines4. Improvements and revisions of existing products5. Repositioning6. Cost reductions 11-360
  5. 5. Challenges in New-Product Development Incremental innovation Disruptive technologiesWhy do new products fail? A high-level executive pushes a favorite idea high- through in spite of negative research findings. The idea is good, but the market size is overestimated. The product is not well designed. 11-361
  6. 6. Challenges in New-Product Development The product is incorrectly positioned in the market, not advertised effectively, or overpriced. The product fails to gain sufficient distribution coverage or support. Development costs are higher than expected. Competitors fight back harder than expected. 11-362
  7. 7. Challenges in New-Product DevelopmentFactors that tend to hinder new-product new-development Shortage of important ideas in certain areas Fragmented markets Social and governmental constraints Cost of development Capital shortages Faster required development time Shorter product life cycles 11-363
  8. 8. Organizational ArrangementsNew-New-product deployment requires specificcriteria – one company established thefollowing acceptance criteria The product can be introduced within five years The product has a market potential of at least $50 million and a 15 percent growth rate. The product would provide at least 30 percent return on sales and 40 percent on investment. The product would achieve technical or market leadership. 11-364
  9. 9. Organizational Arrangements Budgeting For New Product Development 3M’s approach: 15% rule Each promising idea gets an “executive champion” Expect some failures Golden Step awards handed out each year 11-365
  10. 10. 3M online: The 3M Innovation Network 11-366
  11. 11. Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas) Number Pass Cost perStage of Ideas Ratio Product Idea Total Cost1. Idea screening 64 1:4 $ 1,000 $ 64,0002. Concept testing 16 1:2 20,000 320,0003. Product 8 1:2 200,000 1,600,000development4. Test marketing 4 1:2 500,000 2,000,0005. National launch 2 1:2 5,000,000 10,000,000 $5,721,000 $13,984,000 11-367
  12. 12. Organizational Arrangements Organizing New-Product Development New- Product managers New- New-product managers High- High-level management committee New product department Venture teams 11-368
  13. 13. Organizational Arrangements Stage- Stage-gate system Gatekeepers make one of four decisions: Go Kill Hold Recycle 11-369
  14. 14. Managing the Development Process: Ideas Idea Generation Interacting with Others Sales representatives Intermediaries Product champion 11-370
  15. 15. Managing the Development Process: Ideas Techniques for stimulating creativity in individuals and groups Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind- Mind-mapping 11-371
  16. 16. Managing the Development Process: Ideas Idea Screening Idea manager Idea committee Two types of errors in screening ideas DROP- DROP-error GO- GO-error 11-372
  17. 17. Some of the most notable “drop-errors” have “drop-come from the most recognizable names inAmerican business. Xerox saw the potentialof the copy machine, IBM and EastmanKodak did not. IBM thought the personalcomputer market would be miniscule.Can you think of any“drop-“drop-errors” that thecompany didn’t survive? 11-373
  18. 18. Table 12.2 Product-Idea Rating Device Relative Product Product Weight Score RatingProduct Success Requirements (a) (b) (c = a x b)Unique or superior product .40 .8 .32High performance to cost ratio .30 .6 .18High marketing dollar support .20 .7 .14Lack of strong competition .10 .5 .05Total 1.00 .69σσ .00- Rating scale: .00-.30 poor; .31-.60 fair; .61-.80 good. Minimum acceptance rate: .61 .31- .61- 11-374
  19. 19. Managing the DevelopmentProcess: Concept to Strategy Concept Development and Testing Product idea Product concept Concept development Category concept Product– Product–positioning map Brand concept 11-375
  20. 20. Figure 12.3:ProductandBrandPositioning 11-376
  21. 21. Sometimes a new product is developed, likethe felt-tip pen and the “walkman” style felt-personal music device. Consumers weren’tclamoring for either of these products beforethey came to market. Most people hadn’teven conceived of such an item. Carefulplanning developed marketsfor these new lines. Can youthink of more recentexamples? 11-377
  22. 22. Managing the DevelopmentProcess: Concept to Strategy Concept Testing Rapid prototyping Virtual reality Customer- Customer-driven engineering Questions to measure product dimensions Communicability and believability Need level Gap level Need- Need-gap score 11-378
  23. 23. Managing the DevelopmentProcess: Concept to Strategy Perceived value Purchase intention User targets, purchase occasions, purchasing frequency Conjoint Analysis Example: five design elements Three package designs Three brand names Three prices Possible Good Housekeeping seal Possible money-back guarantee money- 11-379
  24. 24. Managing theDevelopment Process: Concept to Strategy Marketing Strategy Business Analysis Estimating Total Sales 11-380
  25. 25. Managing the DevelopmentProcess: Concept to Strategy Survival- Survival-age distribution Estimating Cost and Profits 11-381
  26. 26. Table 12.3 Projected Five-Year-Cash-Flow Statement (in thousands of dollars) Year 0 Year 1 Year 2 Year 31. Sales revenue $ 0 $11,889 $15,381 $19,6542. Cost of goods sold 0 3,981 5,150 6,5813. Gross margin 0 7,908 10,231 13,0734. Development costs -3,500 0 0 05. Marketing costs 0 8,000 6,460 8,2556. Allocated overhead 0 1,189 1,538 1,965 See text for complete table 11-382
  27. 27. Managing the DevelopmentProcess: Concept to Strategy Break- Break-even analysis Risk analysis 11-383
  28. 28. Managing The Development Process: Development to Commercialization Product Development Quality Function Deployment (QFD) Customer attributes (CAs) Engineering attributes (EAs) Lands’ End Japan Web site 11-384
  29. 29. Managing The Development Process: Development to Commercialization Customer tests Alpha testing Beta testing Consumer preference measures Rank- Rank-order Paired- Paired-comparison Monadic- Monadic-rating 11-385
  30. 30. Managing The Development Process: Development to CommercializationMarket Testing Consumer- Consumer-Goods Market Testing Seeks to estimate four variables Trial First repeat Adoption Purchase frequency Sales wave research 11-386
  31. 31. Managing The Development Process: Development to Commercialization Simulated Test Marketing Controlled Test Marketing Test Markets How many test cities? Which cities? Length of test? What information? What action to take? Business- Business-Goods Market Testing 11-387
  32. 32. Managing The Development Process: Development to Commercialization Commercialization When (Timing) 1. First entry 2. Parallel entry Philips’ Pronto Web site 3. Late entry Where (Geographic Strategy) 11-388
  33. 33. Managing The Development Process: Development to Commercialization To Whom (Target-Market Prospects) (Target- How (Introductory Market Strategy) Critical path scheduling (CPS) The iMac, launched with a dramatic countdown campaign 11-389
  34. 34. The Consumer-Adoption Process Adoption Consumer- Consumer-adoption process Consumer- Consumer-loyalty process Mass- Mass-market approach Heavy- Heavy-usage target marketingStages in the Adoption Process Innovation Innovation diffusion process 11-390
  35. 35. The Consumer-Adoption Process Adopters of new products move through five stages Awareness Interest Evaluation Trial AdoptionFactors Influencing the Adoption Process Readiness to Try New Products and Personal Influence 11-391
  36. 36. Figure 12.7: Adopter Categorization on the Basis of Relative Time of Adoption of Innovation 11-392
  37. 37. The Consumer-Adoption Process Personal influenceCharacteristics of the Innovation Relative advantage Compatibility Complexity Divisibility CommunicabilityOrganizations’ Readiness to AdoptInnovations 11-393