B2 B CHAPTER 11 - BA 303 sup
Objectives
Challenges in New Product
Development (NPD)
 Organizational Structure & NPD
 Stages & Management of NPD
 Diffusion & Adaption of New Products

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Why New Products Fail

Poor Product Positioning
Vague Consumer Difference
“Over Championing”
Overestimated Demand
Poor Design
Poor Marketing Execution
High Development Costs
Strong Competitive Reaction

Remember the 20 clues to NPS
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Challenges in NPD
Idea Shortage
 Fragmented Markets
 Social & Governmental Constraints
 Cost
 Capital Shortage
 Need for Speed
 Shorter Product Life Cycles

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New Product Development
Process
Concept
Development
and Testing
Marketing
Strategy
Development
(sometimes
concurrent
with product
development)
Idea
Screening
Idea
Generation
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Business
Analysis
Product
Development
Market
Testing
Commercialization
Sales & profits ($)
Sales & Profit Life Cycles
Introduction
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Growth
Maturity
Time
Decline
20% Probability of Success
Overall
probability
of success
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=
Probability
of technical
completion
X
Probability of
commercialization
given technical
completion
Probability of
economic
success given
commercialization
X
EXPLORE FIRST, INNOVATION
TEAM- SESSION
SUCCESSFUL
NEW PRODUCTS
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=
ACUMEN
+
CREATIVITY
IDEAS EXPLORE FIRST,
INNOVATION TEAM- SESSION
A’S
& B’S NO C’S OR D’S
DECISION MAKERS
DRIVER
FACILITATOR
NO LAME DUCKS
NO NOMINAL TITLE HOLDERS
INSIDER V OUTSIDER
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IDEAS EXPLORE FIRST,
INNOVATION TEAM- SESSION
AWAY
FROM CAMPUS
ROUND TABLE
AUDIO VISUAL
TAPE RECORD
6-8 PLAYERS & POSITIONING
BETTER PART OF THE DAY
EARLY IN THE MORNING
NEVER ON MONDAY
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IDEAS EXPLORE FIRST,
Explore- NO Rules
No
idea is a bad idea
Be creative
Take risks
No criticism allowed
JOHN
HEFELY
KNOWN ELEMENT A + KNOWN ELEMENT B
= NEW PRODUCT C =
ACUMEN + CREATIVITY
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DON’T SQUELCH CREATIVITY,
Explore- NO Rules
THOMAS
EDISON
CHRISTOPHER COLUMBUS
HENRY FORD
STATE HOSPITAL ON ARSENAL ST.
NATIONAL ACADEMY OF SCIENCE
ADMIRAL HULSEY
JOHN HEFELY
KNOWN ELEMENT A + KNOWN ELEMENT B
= NEW PRODUCT C
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Concept Development &
Testing
1. Develop Product Ideas into
Alternative Product Concepts
2. Concept Testing - Test the Product
Concepts with Groups of Target Customers
3. Choose the Best One
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Consumer-Goods Market
Testing
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
Sales- consumers.
Wave
Research
Test offering trail to
a sample of
consumers in
successive
periods.
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Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
Standard
Test Market
Water Baby St. Louis
Full marketing campaign
in a small number of
representative cities.
Commercialization
(Introductory Life Cycle)
Whom
When
Where
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Product
Price
Place
Promotion
Politics
Adopter Categorization of the Basis of
Relative Time of Adoption of Innovations
34%
Early
majority
2 1/2%
Innovators
13 1/2%
*Early
adopters
34%
Late
majority
16%
Laggards
Time (speed) of adoption, diffusion, innovations
*opinion leader
Remember our chapter 3 ©2000
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OPTHALMOLIC (EYE) EXAMPLE
Characteristics of the
Innovation Rate of Adoption
Relative advantage
 Compatibility
 Complexity
 Divisibility
 Communicability

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Remember B2B Product
POSITIONING
is the act of
designing the company’s
offering and image to occupy a
distinctive place in the the
target market’s mind.
 Positioning
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Remember B2B COMPETIITIVE
ADVANTAGE: SOURCE,
POSITION, OUTCOMES
AND REINVEST
 US
AEROSPACE AND
BOEING EXAMPLES
 UNDERSTANDING CORE
COMPETENCIES
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Sales & profits ($)
Sales & Profit Life Cycles
*Introduction Growth
Maturity
Decline
Time
*Corresponds with full commercialization
(NPD)
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Four Introductory
Marketing Strategies
Promotion
High
Low
High
Rapidskimming
strategy
Slowskimming
strategy
Low
Rapidpenetration
strategy
Slowpenetration
strategy
Price
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Maturity Stage
Market Modification
 Product Modification
 Marketing-Mix Modification

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Decline Stage
Increase investment
 Resolve uncertainties - stable
investment
 Selective niches
 Harvesting
 Divesting

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Market Evolution
Emergence
 Growth
 Maturity
 Decline

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Review
Challenges in New Product
Development (NPD)
 Organizational Structure & NPD
 Stages & Management of NPD
 Diffusion & Adaption of New Products

©2000 Prentice Hall