MM: Chapter 12
Developing New Market Offerings
Warin Chotekorakul
Is it a new product or not?
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Yes!!!!! As long as the marketing action
affects target and marketing strategies of
the company.
Marketing action can be Repackaging, or
Repositioning, or Pdt improvement, etc.
Challenges in New Product
Development
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Develop or not develop
Shortage of idea for commodities
Fragmented market
Social and governmental constraints: cloning
Costliness of development
Capital shortage
Faster development time: same idea at the
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Shorter PLC: due to successfully new pdt
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same time
Steps in New Product
Development
1.
2.
3.
4.
5.
6.
7.
8.
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Market testing
Commercialization
Step 1 : Idea Generation
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Coordinate, stimulate, and search for
ideas in external environment and
among company personnel
Identifying needs and wants through
1. Lead users
2. Competitors
3. Sales reps and intermediaries
4. Inventors, comm labs, universities
Step 1 : Idea Generation (2)
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Idea-Generating techniques:
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Attribute listing: listing all attributes and try to
improve them
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Forced relationships: combining several objects
to create a new product
Morphological analysis: finding the main
structure of the product, then look for the
relationships among them
Step 1 : Idea Generation (3)
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Idea-Generating techniques:
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Need/problem identification: bringing cust to
lab to ask whether they like or not like pdt
Brainstorming: brainstorming to get as many
ideas as possible
Synectics: no letting the participants know
the specific problem
Step 2 : Idea Screening
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Setting up criteria
May encounter errors:
-Drop error: losing good ideas
-Go error: permitting poor ideas go
3 levels of failures from Go error:1. Absolute product failure: loss to the
firm, FC & VC can’t be covered
2. Partial product failure: cover all VC, not
all FC
3. Relative product failure: not achieve obj
Step 2: Idea Screening (2)
Success Formula
Overall
Probability
of
Success
=
Probability
of
Technical
Completion
X
Probability
of
Economics'
Given
Commercialization
Probability
of
Commercialization
Given
Technical
Completion
X
Step 3: Concept
development and Testing

Concept development: try to make
particular ideas to become more
tangible
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Concept testing:
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Conjoint analysis
Step 4: Marketing strategies
development
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Preliminary design marketing
strategy
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1. Describe target, pdt positioning,
sales, mkt share, profit in the first few
years
2. Plan price, distn strategy, mkting
budget for the first year
3. Describe long-run sales, profit
goals, 4P’s over time
Step 5: Business Analysis
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Estimating sales and product life cycles
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One-time purchased pdt (ring, home, etc)
Infrequently purchased pdt (durables,
autos, etc.)
Frequently purchased pdt (nondurables)
Estimating cost and profit
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Dragalong Income
Cannibalized Income
Step 6 : Product Development
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Functional test (Alpha testing)
Customer test (Beta testing) : bringing
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Consumer preference testing:
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cust to lab to let them use sample
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Rank-order: X>Y>Z
Paired-comparison: XY, XZ, YZ; X>Y>Z
Monadic rating: rating liking of each pdt on
a scale; X=8, Y=6, Z=3
Step 7: Market Testing (2)
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Consumer-goods market testing
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Sales-waves research: reoffer the pdt
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Simulated test marketing: stimulate
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at slightly reduced prices
cust to try pdt in given outlet
Controlled test marketing: control
some store factors
Test markets
Business-goods market testing
Step 8: Commercialization
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When
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First entry
Parallel entry
Late entry
Where
To whom (Target Market)
How (Marketing strategy)
Consumer Adoption Process
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Awareness
Interest
Evaluation
Trial
Adoption
5 Groups of Consumers
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Innovator
Early adopter
Early majority
Late majority
laggards
Factors Influencing Adoption
Process
1.
2.
3.
Difference in readiness
Personal influence
Characteristics of innovation
1.
2.
3.
4.
5.
6.
4.
Relative advantage: seeing benefits
Compatibility: going well with cust belief
Complexity: how complex the pdt is
Divisibility: trying out pdt easily or not
Communicability: communicating benefits
to others or not
Cost, risk
Organizations vary in readiness