LHM
Marketing
Charles W. Lamb, Jr.
Joseph F. Hair, Jr.
Carl McDaniel
Slides Created and Designed by
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© 1997 South-Western College Publishing
11 - 1
LHM
Categories of New Products
New-To-The-World
New Product Lines
Six
Categories
of
New
Products
Product Line Additions
Improvements/Revisions
Repositioned Products
Lower-Priced Products
© 1997 South-Western College Publishing
11 - 2
New Product Introductions
LHM
Technology
1.1%
Positioning
New Formulation
39.1%
47.8%
Packaging
8.6%
Source: Statistical Abstract of the United States (1996), p. 548.
© 1997 South-Western College Publishing
New Market
3.4%
11 - 3
New Product Development Process
LHM
New Product Strategy
Idea Generation
Idea Screening
Business Analysis
Development
Test Marketing
Commercialization
New Product
© 1997 South-Western College Publishing
11 - 4
New Product Introductions in 1994
Food
Source: Statistical Abstract of the United
States (1996), p. 548.
© 1997 South-Western College Publishing
LHM
3,883
Beverages
807
Health and
Beauty
2,655
Household
Products
378
Pet Products
161
Miscellaneous
87
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Why Some New Products Succeed
Success Factors
Failure Factors
Good match between product
and market needs
Poor match between
product and market
needs
Adequate target market size
Offers a clear, meaningful
benefit
Distinguishable from substitute
products
Offers unique, superior value
Organizational commitment to
new product development
© 1997 South-Western College Publishing
LHM
Overestimation of
market size
Incorrect positioning
Inappropriate price
Inadequate
distribution
Poor promotion
11 - 6
Organization for New Product Development
LHM
New Product
Committee
Structures
Used to
Facilitate
New Product
Development
New Product
Department
Venture Teams
Simultaneous
Product Development
© 1997 South-Western College Publishing
11 - 7
LHM
The Product Life Cycle
Growth
Stage
Maturity
Stage
Dollars
Introductory
Stage
Decline
Stage
Product
Category Sales
Product
Category Profits
0
Time
© 1997 South-Western College Publishing
11 - 8
LHM
The Importance of New Products
New product 1
New product 2
Sales volume
Dollars
Sales volume
Profits
Profits
+
0
–
Time
© 1997 South-Western College Publishing
11 - 9
LHM
Adopters’ Categories
Percentage of Adopters
ADOPTERS’ CATEGORIES BASED ON INNOVATIVENESS
Early
Innovators Adopters
13.5%
2.5%
Early
Majority
34%
Late
Majority
34%
Laggards
16%
Time
© 1997 South-Western College Publishing
11 - 10
LHM
The Diffusion Process
Relationship of the Diffusion Process to the
Product Life Cycle
Cumulative Percentage of Adoption
Introduction
Growth
Decline
Maturity
100
Product
life cycle
curve
90
80
70
Early majority
60
Late majority
50
40
30
Early adopters
Innovators
Laggards
20
Diffusion
curve
10
0
Time of Adoption of Innovations
© 1997 South-Western College Publishing
11 - 11
LHM
Rate of Adoption
Complexity
Compatibility
Characteristics
Affecting
New Product
Diffusion
Relative Advantage
Observability
Trialability
© 1997 South-Western College Publishing
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