chapter developing new products twelve copyright © 2015 mcgraw-hill education. all rights reserved....
TRANSCRIPT
chapter
developing new products
twelve
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12-2
LEARNING OBJECTIVES
LO 12-1 Identify the reasons firms create new products.
LO 12-2 Describe the different groups of adopters articulated by the diffusion of innovation theory.
LO 12-3 Describe the various stages involved in developing a new product or service.
LO 12-4 Explain the product life cycle.
12-3
Innovation and Value
WHY DO FIRMS
CREATE NEW
PRODUCTS?
Changing Customer
Needs
Market Saturation
Managing Risk
through Diversity
Fashion Cycles
Improving Business
Relationships
check yourself
12-4
1.What are the reasons firms innovate?
12-5
Diffusion of Innovation
12-6
Using the Diffusion of Innovation Theory
Factors Affectin
g Product Diffusio
n
Relative Advantage
Compatibility Observability
Complexity and
Trialability
check yourself
12-7
1.What are the five groups on the diffusion of innovation curve?
2.What factors enhance the diffusion of a good or service?
12-8
How Firms Develop New Products
IDEA GENERATION• Development of
viable new product ideas.
CONCEPT TESTING• Testing the new
product idea among a set of potential customers.
PRODUCT DEVELOPMENT• Development of
prototypes and/or the product.
MARKET TESTING• Testing the actual
products in a few test markets.
PRODUCT LAUNCH• Full-scale
commercialization of the product.
EVALUATION OF RESULTS• Analysis of the
performance of the new product and making appropriate modifications.
12-9
Idea Generation
Source of
ideas
Internal R&D
R&D consortia
Licensing
Brainstorming
Outsourcing
Competitor’ products
Customer input
12-10
Concept Testing
• Concept is a brief written description of the product
• Customers reactions determine whether or not it goes forward
• Triggers the marketing research process
Stockbyte/Getty Images
12-11
Product Development
Prototype
Alpha testing
Beta testing
Project Glass: One day...
12-12
Market Testing
Premarket tests
Customers exposed
Customers surveyed
Firm makes decision
Test marketing
Mini product launch
More expensive
than premarket
tests
Market demand is estimated
Dig
ital V
isio
n/G
ett
y Im
ag
es
12-13
How do firms know what market tests need to be performed to ensure a successful product?
Market Testing
Getty Images/PHotodisc
12-14
Product Launch
Kellogg’s Drink’n Crunch
Portable Cereals
• An inner cup contains the cereal and the outer cup contains the milk
©2
00
6 K
ello
gg
Nort
h
Am
eri
ca C
om
pany
Minute Maid
Premium Heart Wise
Orange Juice
• Each 8 oz. serving of the juice contains 1 gram of plan sterols that can reduce cholesterol levels
Court
esy
The C
oca
-Cola
Com
pany
Aquafresh Floss ‘N’
Cap Fluoride
Toothpaste
• The cap of the toothpaste contains floss
©The Arbor Strategy Group, Inc
12-15
New Product Marketing Mix
Promotion
PlacePrice
12-16
Evaluation of Results
Satisfaction of technical requirements
Customer acceptance
Satisfaction of the firm’s financial requirementsGetty Images.
©Stockbyte/Getty Images.
Ingram Publishing.
check yourself
12-17
1.What are the steps in the new product development process?
2.Identify different sources of new product ideas.
12-18
Product Life Cycle
12-19
Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Sales Low Rising Peak Declining
Profits Negative or low
Rapidly rising Peak to declining
Declining
Typical consumers
Innovators Early adopters and early majority
Late majority Laggards
Competitors (number of firms and products)
One or few Few but increasing
High number of competitors and competitive products
Low number of competitors and products
12-20
Strategies Based on the Product Life Cycle: Some Caveats
Bell shaped, but can take many shapes.
Challenging to know precisely the stage of the PLC.
check yourself
12-21
1.What are the stages in the product life cycle?
2.How do sales and profits change during the various stages?