The document discusses the new product development process. It is comprised of three major activities: identifying product opportunities by generating and screening new ideas; defining the product opportunity by defining the concept, creating a marketing strategy, and conducting a business case analysis; and developing the product through testing, launch, and market tests. It also discusses how consumers adopt new products through five stages and how products diffuse through different groups from innovators to laggards over time.

1. 12THE PRODUCT EXPERIENCE:NEW PRODUCT DEVELOPMENTCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights reservedMcGraw-Hill/Irwin

2. LEARNING OBJECTIVESRecognize the importance of new product development to long term successUnderstand the new product development processComprehend the process consumers use in adopting a new productIdentify how new products become diffused in a market12-2

3. NEW PRODUCTS – CREATING LONG TERM SUCCESS“New” DefinedCompany PerspectiveNew-to-the-World Disruptive InnovationSustaining InnovationsReposition Existing Products Cost Reduction12-3

4. NEW PRODUCTS – CREATING LONG TERM SUCCESS“New” DefinedCustomer’s PerspectiveThe customer’s perspective is much more narrow and self directed.The customer is most interested in an answer to the fundamental question, is this new product new to me?12-4

5. NEW PRODUCTS – CREATING LONG TERM SUCCESS12-5

6. NEW PRODUCT DEVELOPMENT PROCESS The three major activities in new product development are: Identify Product OpportunitiesDefine the Product OpportunityDevelop the Product Opportunity12-6

7. NEW PRODUCT DEVELOPMENT PROCESS Identify Product OpportunitiesGenerate New Ideas12-7

8. NEW PRODUCT DEVELOPMENT PROCESS Identify Product OpportunitiesScreen And Evaluate IdeasGo-to-Market MistakeStop-to-Market Mistake12-8

9. NEW PRODUCT DEVELOPMENT PROCESS Define the Product OpportunityDefine and Test Product ConceptProduct definition has three objectives:Defines the product’s value proposition; what customer needs are being addressed and, in broad terms, at what price. The definition briefly identifies the target market(s) (who is the target market(s), what is the purchase frequency). The definition delineates the product’s characteristics (look, feel, physical elements, and features of the product).12-9

10. NEW PRODUCT DEVELOPMENT PROCESS Define the Product OpportunityCreate Marketing StrategyMarketingProgramTargetMarketPromotionProductPricePlace12-10

11. NEW PRODUCT DEVELOPMENT PROCESS Define the Product OpportunityConduct Business Case AnalysisTotal DemandNew purchasesRepeat purchasesReplacement purchasesProfitability Analysis12-11

12. NEW PRODUCT DEVELOPMENT PROCESS Develop the Product OpportunityDevelop The ProductProduct TestingTest the MarketConsumer Product Market Tests Business Product Market TestsProduct Launch12-12

13. Summary of Decision Criteria in Market TestsEXHIBIT 12.5Source: www.emeraldinsight.com.12-13

14. CONSUMER ADOPTION AND DIFFUSION PROCESSConsumer Product Adoption ProcessInnovation diffusion process is how long it takes a product to move from first purchase to last purchase (the last set of users to adopt the product).12-14

15. CONSUMER ADOPTION AND DIFFUSION PROCESSConsumer Product Adoption ProcessAn individual moves through five stages before adopting a product:12-15

16. CONSUMER ADOPTION AND DIFFUSION PROCESSThe Diffusion Of New InnovationsInnovators (2.5%)Early Adopters (13.5%)Early Majority (34.5%)Late Majority (34%)Laggards (16%)12-16

17. Consumer Product Adoption ChartEXHIBIT 12.7Source: www.rubiconconsulting.com.12-17

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