product management and new products business marketing dawne martin, ph.d. october 16, 2012
TRANSCRIPT
Learning Objectives Schedule
Exam 2: Thursday, October 25, Chap 5-10 Case: Makrolan – Due Nov. 1 Project 2 – Due Nov 8 Case: Dow Chemical – Due: Nov. 15 For Next Time: Chap 9 & 10
Learning Objectives To apply the principles of the product life cycle to high
and low learning product commericialization To investigate the product development process To apply product management concepts
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
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Business New Product Development New Product Approaches
Technology Push - When perceived value of particular technology is great; firm has only a vague notion of possible applications, and usually not much more.
Market Pull - Primarily the result of marketing research methodologies of interviewing potential users about their needs, then developing solutions to those perceived market needs.
Keys To Product Innovation
Entrepreneurial Marketing Innovation Proactivity Controlled Risk Taking Opportunity Seeking
Corporate Culture that Supports Innovation – a desire for growth, improvement
Focus on Opportunity Risk not Investment Vision of What the New Product Should Accomplish A Structured Development Process A Long-term Perspective
8-4
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
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Rugged Tablet Computer runs Microsoft® Windows 7 or WES 7.AAEON Technology Inc Taipei TaiwanOct 15, 2012 Powered by 1.5 GHz Intel® Atom™ Z670 processor, 7 in. Model RTC-700T features 1 GB DDR2 SDRAM and 400 nits TFT LCD with anti-scratch Gorilla™ glass and 5-point projected capacitive multi-touch panel. Unit includes G-sensor, light sensor, GPS navigation, front and rear camera, optional barcode scanner, and micro SD card slot. Connectivity options include 802.11b/g/n WiFi, Bluetooth™ 2.1, and 3G. Operating from -20 to +60°C, IP65-rated unit is suited for field operations in harsh environments.
Low Learning Product
Introduction
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Horizon's HydroFill is made to convert water into hydrogen, and hydrogen into juice for your gadgets. CNET explains: "The HydroFill extracts hydrogen gas from water and stores it in Hydrostik cartridges with a metal alloy that absorbs the hydrogen. To then charge electronic devices, people use a pocket-size fuel cell charger, called a MiniPak, which pulls hydrogen from the cartridges and a produces an electrical current."
High Learning Product
Introduction
The Product Adoption-Diffusion Process Awareness - Buyer learns of new product or service, but
lacks information. Interest - Buyer seeks out or requests additional
information. Evaluation - Buyer (or member of buying team)
considers/evaluates usefulness of product/s Trial - Buyer adopts product or service on limited basis. Adoption - If trial purchase worked, then buyer decides to
make regular use of product/service. Diffusion Process – goes beyond the adoption process
and represents the spread of a new product, innovation, or service throughout an industry over time.
Redirect focus and promotion
Invest in expanding production
Build inventory
Expand distributor network
Train expanded sales force
Institute marketing controls
Invest heavily in advertising
Target best prospect: innovators and enthusiasts
Use most loyal distributors
Use free samples
Public demonstrations and trade shows
Publicity and endorsements
Quality control
Product/service modifications
Specialist media and catalogs
Freeze investment in plant
Productivity review
Special trade promotions to keep channels happy
Focused attacks on vulnerable competitors
Long-term price reduction or at least a short-term price promotion
Keep plant at maximum capacity and subcontract excess
Strongly defend home-market niches
Prune product lines
Emphasize gross contribution rather than market share and sales volume
Review logistics: prune costs
Reduce pioneering sales force effort, more telemarketing
More trade than consume promotion
Introduce flankers, private labels, generics
Reinvest in market research and R&D
Use promotions to increase heavy-user loyalty
Cut low gross margin products from the line
Withdraw from channels in order of their unprofitability
Freeze R&D and product modifications
Freeze advertising and promotions
Attempt to maintain price to the end
Buy back remaining stock and redistribute
Maintain spare parts and service
Consider divesting while it is still a going concern
Rapid expansion of distributors
Product line expansion
Niche marketing
Heavy promotion
Sales incentives and management
Encourage referrals
Search for new sources of supply
Need to balance supply and demand
Stock out and back order damage control
Product Life-Cycle Stages and Marketing Tactics
Sales
Launch Takeoff Rapid Growth Shakeout Maturity Decline Time
Winning The New Product Contest
Focus On Core Competency(What You Do Best For A Competitive Advantage)
PLUS
Provide Greatest Value To Customer
EQUALS
Successful Product
8-10
Determinants of the Product Mix
Technology Competition Changes in Levels of Business Activity Operating Capacity Market Factors
GE Matrix Measuring Market Attractiveness And Business Strength
Market Attractiveness Growth Diversity Competitive Structure
Change Technology Change Social Environment
Business Strength• Size of Market &
Share• Company Growth Rate• Profit• Margins• Technology Platform• Image• People
GE Matrix
Exhibit 8-3
Unattractive
Weak
Strong
Attractive
8-13
Key Product Management Decisions
1. Which Product To Introduce
2. Which Products To Keep
3. Which Products To Promote
4. What Level Of Promotion To Provide (Low To High)
5. What Products To Continue Or Delete
8-14
Product Positioning & Differentiation Customer’s perceptions of product’s price and
benefits relative to competitor’s products – target market specific
Goal of Positioning Create product/price position that is attractive to target
market and creates good cash flow and profitability for the company.
Goal of Positioning – Create competitive advantage to gain market share
Differentiation strategies Based on customer needs and value placed on
differentiation Goal of Differentiation – create customer value.
Product Management Levels of Analysis Product Category-- Major grouping of
related products in industry Product Technology Platform -- Core
technology that is basis for product line Product Line -- Grouping of related
products within a company – technology platform
Product -- Evaluation of a single product
Differentiation and Product Positioning Strategies
Product Differentiation Service Differentiation Brand Differentiation Low Cost of Purchase Low-Price Position Lower Transaction Costs
Dimensions of Product Quality
Killers:Reliability Conformance
Drivers:PerformanceDurability
Enhancers:FeaturesServiceability
Aesthetics:AppearanceReputation
Product Line Management & Positioning
Plus One Product Positioning – equal competitor’s on all areas of product & service quality – find one area for clear superiority – Volvo
Product Line Positioning Broad line allows more ways to attract & satisfy
potential customers Narrow line is more focused & cost effective.
Question – When is a broad product line most profitability?
Product Line Management & Positioning
Product Line Extensions New brands, extensions of existing brands or flanking brands Economies of scale in sales force and manufacturing – New
brands or extensions of existing brands Umbrella Branding – core product – leverage
awareness & image of flagship Product Bundling – create complete customer
solutions and value to attract customers Pure Product Bundling – sale of two or more products at an
overall price lower then individual elements Mixed Bundling – choose of purchasing products separately
at sale price, or together at lower price
Product Management Strategies
Product Positioning & Differentiation
Product Line Positioning and Extension Strategies New Product
Development
Low Price/cost of purchase
Product Differentiation
Service/Brand
Product Line Positioning
Product Line Extensions
Product Bundling
New Product Sales
New Product Innovation
Development Process
Question
Hewlett-Packard is working on a health monitoring system. The product features sensors and devices to measure a patient’s vital signs in a hospital – or home – and relay data directly to a doctor’s computer. What steps can HP take to ensure that the new product is responsive to customer needs and will be adopted?