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
“Over Championing”
 Overestimated Demand
 Poor Design
 Poor Marketing Execution
 High Development Costs
 Strong Competitive Reaction

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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
Marketing
Strategy
Development
Concept
Development
and Testing
Idea
Screening
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Idea
Generation
Business
Analysis
Product
Development
Market
Testing
Commercialization
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
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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Expensive
High price/oz.
Bacon
and
eggs
Pancakes
Hot
cereal
Cold
cereal
Instant
breakfast
Inexpensive
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Low in calories
b) Brand-positioning
map
(instant breakfast market)
Brand C
Brand B
Brand A
Low price/oz.
High in calories
(a) Product-positioning
map
(breakfast market)
Quick
Slow
Product & Brand
Positioning
Conjoint Analysis
Brand name
Utility
1.0 -----|
|
|
|
0 $1.19 $1.39
Glory Bissell
Good Housekeeping Seal?
1.0-----|
|
0
No
Yes
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|
Money-Back
Guarantee?
1.0-----|
|
0 No
Yes
$1.59
Utility
Utility
Utility
1.0 -----0 K2R|
Retail Price
Consumer-Goods Market
Testing
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
Sales- consumers.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
Wave
Research
Standard
Test Market
Test offering trail to
a sample of
consumers in
successive
periods.
Full marketing campaign
in a small number of
representative cities.
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Commercialization
Whom
When
Where
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Product
Price
Place
Promotion
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 of adoption innovations
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Characteristics of the
Innovation Rate of Adoption
Relative advantage
 Compatibility
 Complexity
 Divisibility
 Communicability

©2000 Prentice Hall
Review
Challenges in New Product
Development (NPD)
 Organizational Structure & NPD
 Stages & Management of NPD
 Diffusion & Adaption of New Products

©2000 Prentice Hall