The document discusses new product development and innovation. It covers topics such as challenges in developing new products, organizational structures for managing development, stages of development including concept testing and prototyping, factors that influence consumer adoption of new products, and characteristics that determine an innovation's success. Examples are provided throughout, including lists of the world's most innovative companies and techniques for generating new product ideas.

1. 20
Introducing
New Market Offerings
Marketing Management, 13th ed

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Chapter Questions
• What challenges does a company face
in developing new products and
services?
• What organizational structures and
processes do managers use to manage
new-product development?
• What are the main stages in developing
new products and services?

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Chapter Questions (cont.)
• What is the best way to manage the
new-product development process?
• What factors affect the rate of diffusion
and consumer adoption of newly
launched products and services?

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Johnson & Johnson Emphasizes
New Product Development

5. New product lines
Additions
Improvements
Repositionings
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Categories of New Products
New-to-the-world
Cost reductions

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The World’s
Most Innovative Companies
• Apple
• Google
• Toyota
• General Electric
• Microsoft
• Procter & Gamble
• 3M
• Walt Disney
• IBM
• Sony
• Wal-Mart
• Honda
• Starbucks
• Target
• BMW
• Samsung

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Seven Notions of Innovation
• See the future through the eyes of your
customer
• Intellectual property and brand power are key
assets
• Use digital technology to create tools for
customers
• Build a championship team
• Innovation is a state of mind
• Speed is critical, so push your organization
• Partner up if you’re not the best

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Factors That Limit
New Product Development
• Shortage of ideas
• Fragmented markets
• Social and governmental constraints
• Cost of development
• Capital shortages
• Faster required development time
• Shorter product life cycles

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Table 20.4 Finding One Successful
New Product

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What is a Venture Team?
A venture team is a cross-functional
group charged with developing a
specific product or business;
intrapreneurs are relieved of other
duties and provided a
budget and time frame.

11. Criteria for Staffing Venture Teams
• Desired team leadership style
• Desired level of leader
expertise
• Team member skills and
expertise
• Level of interest in concept
• Potential for personal reward
• Diversity of team members
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Figure 20.2 The New Product
Development Decision Process

13. Ways to Find Great New Ideas
• Run informal sessions with customers
• Allow time off for technical people to
putter on pet projects
• Make customer brainstorming a part of
plant tours
• Survey your customers
• Undertake “fly on the wall” research to
customers
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14. More Ways to Find Great Ideas
• Use iterative rounds with customers
• Set up a keyword search to scan trade
publications
• Treat trade shows as intelligence
missions
• Have employees visit supplier labs
• Set up an idea vault
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15. Drawing Ideas from Customers
• Observe customers using product
• Ask customers about problems with
products
• Ask customers about their dream
products
• Use a customer advisory board or a
brand community of enthusiasts to
discuss product
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16. Idea Generation: Creativity Techniques
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• Attribute listing
• Forced relationships
• Morphological
analysis
• Reverse assumption
analysis
• New contexts
• Mind mapping

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Lateral Mapping
• Gas stations + food
• Cafeteria + Internet
• Cereal + snacking
• Candy + toy
• Audio + portable

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Variations on Failure
• Absolute product failure
• Partial product failure
• Relative product failure

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Table 20.5 Product-Idea
Rating Device

20. Concepts in Concept Development
• Product idea
• Product concept
• Category concept
• Brand concept
• Concept testing
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Concept Testing
• Communicability and believability
• Need level
• Gap level
• Perceived value
• Purchase intention
• User targets, purchase occasions,
purchasing frequency

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Figure 20.6 Utility Functions Based on
Conjoint Analysis

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Marketing Strategy
• Target market’s size, structure, and
behavior
• Planned price, distribution, and
promotion for year one
• Long-run sales and profit goals and
marketing-mix strategy over time

24. Figure 20.7 Product Life Cycle Sales
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for Three Product Types

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Table 20.6 Projected Five-Year
Cash-Flow Statement (in thousands $)

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Product Development
• Quality function
deployment (QFD)
• Customer attributes
• Engineering attributes

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Prototype Testing
• Alpha testing
• Beta testing
• Rank-order method
• Paired-comparison method
• Monadic-rating method
• Market testing

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Consumer Goods Market Testing
• Sales-Wave Research
• Simulated Test Marketing
• Controlled Test Marketing
• Test Markets

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Test Market Decisions
• How many test cities?
• Which cities?
• Length of test?
• What information to collect?
• What action to take?

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Timing of Market Entry
• First entry
• Parallel entry
• Late entry

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Criteria for
Choosing Rollout Markets
• Market potential
• Company’s local reputation
• Cost of filling pipeline
• Cost of communication media

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What is Adoption?
• Adoption is an individual’s decision to become
a regular user of a product.

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Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption

34. Figure 20.6 Adopter Categorization
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Characteristics of an Innovation
• Relative advantage
• Compatibility
• Complexity
• Divisibility
• Communicability

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Marketing Debate
 Who should you target with new products?
Take a position:
1. Consumer research is critical to new-product
development.
or
2. Consumer research may not be all that
helpful in new-product development.

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Marketing Discussion
 Think about the last new product
you bought.
 How do you think its success will be
affected by the five characteristics
of an innovation?