week 16 introducing new market offerings.ppt

7/29/2019 Week 16 Introducing New Market Offerings.ppt

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Week XVI

Introducing New Market Offerings

New Product Options Challenges in New-Product Development Organizational Arrangements Managing the Development Process: Ideas Managing the Development Process: ConceptStrategy Managing the Development Porcess:Development to Commercialization The Consumer-Adoption Process


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New Product Options

Make or Buy

3 forms of acquision route:

1) Company can buy other companies

2) Can acquire patents from other companies

3) Can buy a license or franchise from anothercompany

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Challenges in New-Product Development

Vulnerabilities of existing products include:

1) Changing customers needs & tastes2) New technologies

3) Shortened PLC

4) Increase in domestic & foreign competition

Innovative firms should:

1) Create a positive attitude towards innovation & risktaking

2) Routinize the innovation process

3) Practice teamwork

4) Allow their people to experiment & fail

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New-Product Success

1) Incremental innovation used by more

established companies1) Allow companies to enter new markets by tweaking

products for new customers

2) Use variations on a core product to stay one stepahead of the market

3) Create interim solutions for industry wide problems

2) Disruptive technologies used more by newcompanies

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New-Product Failure Reasons:

(1) Ignored or misinterpreted market research

(2) Overestimares of market size(3) High development cost

(4) Poo design

(5) Incorrect positioning

(6) Ineffective advertising

(7) Insufficient distribution support

(8) Competitors who fight back hard

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Factors hindrance for new product development:

(1) Shortage of important ideas incertain areas

(2) Fragmented markets(3) Social & govermental constrains

(4) Cost of development

(5) Capital shortage

(6) Shorter required development time

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Organizational Arrangements

New Product Development Decisions:

I. Idea generationII. Idea screening

III. Concept development & training

IV. Marketing strategy developmentV. Business analysis

VI. Product development

VII. Market testing

VIII. Commercialization

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Managing the Development Process: Ideas

I. Idea Generation

7 ways to draw new ideas from your customers:(1) Observe how customers are using your product

(2) Ask customers about their problems w/ yourproducts

(3) Ask your customers about their dream products

(4) Use a customer advisory board to comment onyour companys idea

(5) Use web site for new ideas(6) Form a brand community of enthusiasts who

discuss your product

(7) Encourage or chanllenge your customers to

change or improve your product


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Some techniques for stimulating creativity inindividuals/groups:

(1) Attribute listing

(2) Forced relationship

(3) Morphological analysis

(4) Reverse assumption analysis

(5) New contexts

(6) Mind mapping

II. Idea Screening

2 types of eror in idea screening:

(1) DROP error

(2) GO error

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Managing the Development Process: ConceptStrategy

Product Idea a possible product the company might

offer to the market

Product Concept is an elaborate version of the ideaexpressed inconsumer terms

III. Concept Development & TrainingQuestions to asnwer to turn a product idea into a

concept:

(1) Who will use this product?(2) What primary benefit should this product provide?

(3) When will people start consuming/buying?

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After answering these questions, we move to:

Category concept defines the productscompetition

Brand concept use the brand positioning map

Concept Testing presenting the product concept,

symbolically or physically to target consumers &getting their reactions

IV. Marketing Strategy Development

Prelimenary 3 part strategy plan(1) Describe target market size, structure & bahavior

(2) Planned product positioning

(3) Sales, market share & profit goals


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V. Business Analysis

Estimated total sales

Sum od estimated first-time sales, replacementsales & repeat sales

Sales estimation methods depend on whether theproduct is purchased once, infrequentlyor often

Estimated cost & profits

Costs are estimated by the R&D, manufacturing,marketing& finance departments

Breakeven analysis estimates how many units thecompany must sell to break even w/ the given price

& cost structure Risk analysis using this we obtain 3 estimates

(optimistic, pessimistic, & most likely)

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Managing the Development Porcess:Development to Commercialization

VI. Product Development

Is the job in translating target customerrequirements into a working prototype is helped bya set of methods known as quality functiondeployment (QFD)

2 steps:

(1) Physical prototypes building the products

(2) Customer test inviting target market customers

to rate/measure product(1) Rank-order method

(2) Paired-comparison method

(3) Monadic-rating method

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VII. Market Testing

Business-goods Market Testing

Consumer-goods Market Testing4 variables:

(a) Trial

(b) First repeat(c) Adoption

(d) Purchase frequency

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4 methods of consumer-goods market testing:

(1) Sales-wave Research consumers who initially trythe product at no cost are reoffered it, or a

competitors product at slightly reduced price

(2) Simulated test Marketing finding 30 to 40qualified shoppers & questioning them about brandfamiliarity & preferences in a specific product

category(3) Controlled Test Marketing a research firm

manages a panel of stores that will carry newproducts for a fee

(4) Test Market

fill deployment

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VIII. Commercialization

Sequence for new products for commercialization:

(1) When (Timing)(1) First entry

(2) Parallel entry

(3) Late entry

(2) Where (Geographic Strategy)(3) To Whom (Target-Market Prospect)

(4) How (Introductory Market Strategy)

(1) Critical Path Scheduling a master chart showingthe simultaneous & sequential activities that musttake place to launch the product

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The Consumer-Adoption ProcessAdoption the individuals decision to become a

regular user of the product

Consumer-Adoption Process the mental stepsthrough which an individual passes from hearing

about innovation to final adoptionInnovation is any good, service or idea that

someone perceives as new, no matter how longits history

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5 stages in Adoption:

(1) Awareness consumers are aware of theinnovation but lacks informattion about it

(2) Interest

consumer is stimulated to seekinformation about the innovation

(3) Evaluation consumers consider whether to trythe innovation

(4) Trial consumer tries the innovation to improvehis or her estimate of its value

(5) Adoption consumer decides to make full &

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F i fl i h Ad i P


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Factors influencing the Adoption Process

(1) Differences in individual readiness to try newproducts

(2) Effect of personal influence

(3) Differing rates of adoption

(4) Differences in organizations readiness to try new

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1) diff i i di id l di t t


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1) differences in individual readiness to try newproducts

Adoptor categories:

a) innovators techonoly enthusiasts; venturesome & enjoytinkering w/ new products & mastering their intricacies; forlow prices they are happy to conduct aplha & beta testing& report early weaknesses

b) early adopters are opinion leaders who carefully searchfor new technologies that might give them a dramaticcompetitive edge; less price sensitive

c) early majority

deliberate pragmatist who adopt the newtechnology when its benefits are proven & a lot of adoptionhas already taken place; they make up the mainstreammarket

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d) l t j it k ti l ti h i k


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d) late majority are skeptical conservatives who are riskaverse, technology shy & price sensitive

e) laggards are tradition-bound & resist the innovation until

they find that the status quo is no longer defensible

2) personal influence the effect one person has onanother's attitude or purchase probability

3) rate of adoption

a) relative advantage degree to which the innovationappears superior to existing products

b) compatibility

degree to which the innovation matchesthe values & experiences of the individual

c) complexity degree to which the innovation is difficultto understand or use

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d) di i ibilit d t hi h th i ti b


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d) divisibility degree to which the innovation can betried on a limited basis

e) communicability degree to which the benefits of use

are observable or describabale to others4) organization's readiness to adopt innovation

Variable for organizations adoption:

(1) Organizations environment (communityprogressiveness & income)

(2) The organization itself (size, profits,pressure to change)

(3) Administrators (education level, age,sophistication)

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week 16 introducing new market offerings.ppt

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