Introducing New
Market Offerings
Prof. S.Garimella, IMI, New Delhi
Chapter Questions
„
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What challenges does a company face in
developing new products?
What organizational structures are used to
manage
g new-product
p
development?
p
What are the main stages in developing new
products?
What is the best way to set up the new-product
development process?
What factors affect the rate of diffusion and
consumer adoption of newly launched products?
Prof. S.Garimella, IMI, New Delhi
3M Emphasizes
New Product Development
Prof. S.Garimella, IMI, New Delhi
1
Categories of New Products
New-to-the-world
New product lines
Additi
Additions
Improvements
Repositionings
Cost reductions
Prof. S.Garimella, IMI, New Delhi
Innovations
Prof. S.Garimella, IMI, New Delhi
Factors That Limit New Product
Development
Shortage of ideas
„ Fragmented markets
„ Social and governmental constraints
„ Cost of development
„ Capital shortages
„ Faster required development time
„ Shorter product life cycles
„
Prof. S.Garimella, IMI, New Delhi
2
Finding One Successful New
Product
Prof. S.Garimella, IMI, New Delhi
Venture Team
Cross-functional g
group
p charged
g with
developing a specific product or business;
intrapreneurs are relieved of other duties
and provided a budget and time frame.
Prof. S.Garimella, IMI, New Delhi
Criteria for Staffing Venture
Teams
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Desired team leadership style
Desired level of leader
expertise
Team member skills and
expertise
Level of interest in concept
Potential for personal reward
Diversity of team members
Prof. S.Garimella, IMI, New Delhi
3
The New Product-Development
Decision Process
Prof. S.Garimella, IMI, New Delhi
Idea Generation:
Creativity Techniques
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Attribute listing
Forced relationships
M h l i l
Morphological
analysis
Reverse assumption
analysis
New contexts
Mind mapping
Prof. S.Garimella, IMI, New Delhi
Lateral Mapping
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Gas stations + food
Cafeteria + Internet
Cereal + snacking
Candy + toy
Audio + portable
Prof. S.Garimella, IMI, New Delhi
4
Variations on Failure
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Absolute product failure
Partial product failure
Relative product failure
Prof. S.Garimella, IMI, New Delhi
Product-Idea Rating Device
Prof. S.Garimella, IMI, New Delhi
Concepts in Concept Development
Product idea
„ Product concept
„ Category concept
„ Brand concept
„ Concept testing
„
Prof. S.Garimella, IMI, New Delhi
5
Concept Testing
Communicability and believability
„ Need level
„ Gap level
„ Perceived value
„ Purchase intention
„ User targets, purchase occasions,
purchasing frequency
„
Prof. S.Garimella, IMI, New Delhi
Utility Functions Based on
Conjoint Analysis
Prof. S.Garimella, IMI, New Delhi
Airlines Use Conjoint Analysis
Prof. S.Garimella, IMI, New Delhi
6
Marketing Strategy
Target market’s size, structure, and
behavior
„ Planned price
price, distribution
distribution, and promotion
for Year 1
„ Long-run sales and profit goals and
marketing-mix strategy over time
„
Prof. S.Garimella, IMI, New Delhi
PLS Sales for Three Product
Types
Prof. S.Garimella, IMI, New Delhi
Projected 5-year Cash-Flow
Statement (in thousands $)
Prof. S.Garimella, IMI, New Delhi
7
Product Development
„
Quality function
deployment (QFD)
Customer
attributes
attributes
Engineering
Prof. S.Garimella, IMI, New Delhi
Prototype Testing
Alpha testing
„ Beta testing
„
Rank-order
method
Paired-comparison method
Monadic-rating method
„
Market testing
Prof. S.Garimella, IMI, New Delhi
Consumer Goods Market Testing
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Sales-Wave
Research
Simulated Test
Marketing
Controlled Test
Marketing
Test Markets
Prof. S.Garimella, IMI, New Delhi
8
Test Market Decisions
How many test cities?
„ Which cities?
„ Length of test?
„ What information?
„ What action to take?
„
Prof. S.Garimella, IMI, New Delhi
Timing of Market Entry
First entry
„ Parallel entry
„ Late entry
„
Prof. S.Garimella, IMI, New Delhi
Criteria for Choosing Rollout
Markets
Market potential
„ Company’s local reputation
„ Cost of filling pipeline
„ Cost of communication media
„
Prof. S.Garimella, IMI, New Delhi
9
Consumer-Adoption Process
Adoption is an individual’s decision
to become a regular user
of a product.
Prof. S.Garimella, IMI, New Delhi
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Prof. S.Garimella, IMI, New Delhi
Adopter Categorization
Prof. S.Garimella, IMI, New Delhi
10
Characteristics of an Innovation
Relative advantage
„ Compatibility
„ Complexity
„ Divisibility
„ Communicability
„
Prof. S.Garimella, IMI, New Delhi
Marketing Debate
9 Who should you target with new
products?
Take a position:
1. New products should always target new
adopters.
2. New products should target the broadest
market possible.
Prof. S.Garimella, IMI, New Delhi
Marketing Discussion
9 Think about the last new product
you bought.
b
ht H
How d
do you thi
think
k
its success will be affected by
the five characteristics of an
innovation?
Prof. S.Garimella, IMI, New Delhi
11