Marketing’s Role in
New Product Development
October 4, 2006
Agenda
Why is marketing important?
Product development costs and risks.
Situation Analysis (Uncontrollable
Variables): “YourWay” cereal.
10 Minute Break
Marketing Strategy (Controllable Variables)
Pepsi One’s product launch.
New Product Development Video:
IDEO develops a new shopping cart.
Q&A: After class.

Marketing’s Role in
New Product Development
Prof. Bill Robinson
Krannert School of Management
Purdue University

Why is Marketing
Important?
Profits = Revenues – Costs
Some Examples
Advertising & personal selling.
Product development.
Pricing.
Start your own business.
Smarter shopper.

Why Will Our Discussion Focus on
Consumer Goods, Like Soft
Drinks and Breakfast Cereal?
Easy to understand.
Marketing principles apply to both high- tech and low-tech businesses.

Product Development Costs &
Risks

“YourWay” Self-Serve Cereal
Key Problems
Key Opportunities
Overall Situation
Very Favorable?
Somewhat Favorable?
Neutral?
Somewhat Unfavorable?
Very Unfavorable?

Situation Analysis
1) Nature of Demand
Unmet need?
Health conscious consumers?
2) Extent of Demand
Huge market!
Breakeven market share of 1% -2%.
3) Competition
Kellogg’s, General Mills, etc.
Supermarket bulk foods.
4) Environmental Climate
Political, economic, social, technological issues?

Situation Analysis (cont.)
5) Product Life Cycle
Difficult to enter a mature market.
6) Costs
Higher costs versus competition.
7) Firm Skills
Only Ed.
8) Financial Resources
Only Ed.
9) Distribution Structure
Is Payless ideal?
Floor space?

Situation Analysis (cont.)
Overall Situation
Very Favorable?
Somewhat Favorable?
Neutral?
Somewhat Unfavorable?
Very Unfavorable?

One
Managerial Problem
How to launch Pepsi One?
Situation Analysis
Key Problems:
Key Opportunities:
Overall Situation
Very Favorable?
Somewhat Favorable?
Neutral?
Somewhat Unfavorable?
Very Unfavorable?

Pepsi One’s Marketing
Strategy
Target Market: Young men.
Product Positioning: Only One has it all.
Marketing Mix
Product: Superior sweetener.
Avoid word diet.
Distribution: Priority versus Diet Pepsi?
Promotion: $100 million launch.
Trial Repeat Purchase
Price: Similar to other Pepsi products.

IDEO’s New Product
Development
Strengths?
Weaknesses?
Overall Evaluation?