INTRODUCING NEW
MARKET OFFERINGS
AGNES C. CONTRERAS
NEW PRODUCT DEVELOPMENT
SHAPES THE COMPANY’S
FUTURE
Improved or replacement products and
services can maintain or build sales;
new-to-the-world products and services
can transform industries and companies
and change lives. But the low success
rate of new products and services points
to the many challenges they face.
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NEW PRODUCT OPTIONS
There are a variety of types of new products and ways to create them.
MAKE OR BUY
A company can add new products through acquisition or development.
When acquiring , the company can buy other companies, patents from
other companies, or a license or franchise from another company.
NEW PRODUCT OPTIONS…
But firms can successfully make only so
many acquisitions. At some point, they
need organic growth – the development
of new products from within. Praxair,
worldwide provider of industrial gases,
achieved an ambitious goal of $200
million per year of double-digit new
annual sales growth only through a
healthy dose of organic growth and a
large number of smaller but significant $5
million projects.
TYPES OF NEW PRODUCTS
New products range from new-to-the-world products that create an entirely
new market to minor improvements or revisions of existing products. Most
new-product activity is devoted to improving existing products.
Some of the most successful recent new consumer products have been brand
extensions.
Examples: Tide Total Care, Gillette Venus Embrace, Always Infinity, and
Secret Flawless Deodorant.
It is increasingly difficult to identify blockbuster products that will transform a
market, but continuous innovation can force competitors to play catch-up and also
broaden the brand meaning. Once a running-shoe-manufacturer, Nike now
competes with makers of all types of athletic shoes, clothing and equipment.
Categories of New Products
THE INNOVATION IMPERATIVE
In an economy of rapid change, continuous innovation is a
necessity. Highly innovative firms are able to identify and
quickly seize new market opportunities. They create a positive
attitude toward innovation and risk taking, routinize the
innovation process, practice teamwork, and allow their people
to experiment and even fail.
One such firm is W.L.Gore.
W.L.Gore
W. L. Gore & Associates, Inc. is an American
manufacturing
company
specializing
in
products derived from fluoropolymers. It is a
privately held corporation headquartered in
Newark, Delaware. It is best known as the
developer of waterproof, breathable Gore-Tex
fabrics.
Companies that fail to develop new
products leave their existing
offerings vulnerable to changing
customer needs and tastes, new
technologies, shortened product
life cycles, increased domestic and
foreign competition, and especially
new technologies.
Innovation is about “creating new
choices” the competition doesn’t
have access to, says IDEO’s CEO
Tim Brown . It isn’t about brilliant
people spontaneously generating
new ideas, he argues, but about
finding hidden assumptions and
ignored processes that can change
the way a company does business.
NEW-PRODUCT SUCCESS
Most established companies focus on
incremental innovation, entering new
markets by tweaking products for new
customers, using variations on a core
product to stay one step ahead of the
market, and creating interim solutions
for industry-wide problems.
NEW-PRODUCT FAILURE
New products continue to fail at estimated rates
as high as 50% or even 95% in the United States
and 90% in Europe. They fail for many reasons:
ignored or misinterpreted market research;
overestimates of market size; high development
costs; poor design or ineffectual performance;
incorrect positioning, advertising or price;
insufficient distribution support; competitors
who fight back hard; inadequate ROI or payback.
Factors that hinder new-product
development:
 Shortage of important ideas in certain areas.
 Fragmented markets.
 Social, economic and governmental constraints.
 Cost of development.
 Capital shortages.
 Shorter required development time.
 Poor launch timing.
 Shorter product life cycles.
 Organizational support.
BUDGETING FOR A NEWPRODUCT DEVELOPMENT:
Financing as many projects as possible
Conventional percentage-of-sales figure
Spend what the competition spends
Working backwards
ORGANIZING NEW PRODUCT
DEVELOPMENT
 Use of new product managers (cross-functional teams)
 Use of stage gate system
Managing New Product
Development Process
Eight stages are involved in the new product
development process:
1. idea generation
2. screening
3. concept development and testing
4. market strategy development
5. business analysis
6. product development
7. market testing
8. commercialization.
Generating Ideas
Idea Screening
Concept Development and Testing
Marketing strategy development
Business Analysis
Prototype
Development
Market Tests
Commercialization
The New Product Development
Decision Process
The Consumer-Adoption
Process
STAGES IN THE CONSUMER-ADOPTION PROCESS
Influencing Factors
• Buyer Readiness
• Personal Influence
• Innovation Characteristics
• Organizations Readiness
Buyer Readiness
Early Majority
Innovators
Laggards
Early Adopters
Late Majority
Personal Influence
 It is the effect one person has on another’s attitude
or purchase probability.
 It has greater significance in some situations and
for some individuals than others and it is more
important in evaluation than the other stages.
 It has more power over late than early adopters
and in risky situations.
Characteristics of the
Innovation:
1.
2.
3.
4.
5.
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
ORGANIZATIONS’ READINESS TO
ADOPT INNOVATIONS
The creator of a new teaching method would want to
identify innovative schools. The producer of a new piece
of medical equipment would want to identify innovative
hospitals. Adoption is associated with variables in the
organization’s environment (community progressiveness,
community income), the organization itself (size, profits,
pressure to change), and the administrators (education
level, age, sophistication). Other forces come into play in
trying to get a product adopted into organizations that
receive the bulk of their funding from the government,
such as public schools. A controversial or innovative
product can be squelched by negative public opinion.
SUMMARY:
1.Once a company has segmented the market,
chosen its target customer groups and identified
their needs, and determined its desired positioning,
it is ready to develop and launch appropriate new
products and services. Marketing should participate
with other departments in every stage of newproduct development.
2.Successful new-product development requires the
company to establish an effective organization for
managing the development process. Companies can
choose to use product managers, new-product
managers, new-product committees, new-product
departments, or new-product venture teams.
Increasingly, companies are adopting crossfunctional teams, connecting to individuals and
organizations outside the company, and developing
multiple product concepts.
3.Eight stages take place in the new-product development
process:
idea
generation,
screening,
concept
development
and
testing,
marketing
strategy
development, business analysis, product development,
market testing, and commercialization. At each stage, the
company must determine whether the idea should be
dropped or moved to the next stage.
4.The consumer-adoption process is the process by which
customers learn about new products, try them, and adopt
or reject them. Today, many marketers are targeting heavy
users and early adopters of new products, because both
groups can be reached by specific media and tend to be
opinion leaders.
The consumer-adoption process is
influenced by many factors beyond the marketer’s control,
including consumers’ and organizations’ willingness to try
new products, personal influences, and the characteristics
of the new product or innovation.
Thank you 