1
20
Introducing New Market
Offerings
Chapter Questions





What challenges does a company face in
developing new products?
What organizational structures are used to
manage new-product development?
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?
20-2
The World’s
Most
Innovative
Companies
(@ Business
Week & BCG)
2010 Rank
2009 Rank
Company
HQ Country
1
1
Apple
US
2
2
Google
US
3
4
Microsoft
US
4
6
IBM
US
5
3
Toyota Motor
Japan
6
11
Amazon.com
US
7
27
LG Electronics
South Korea
8
NR
BYD
China
9
17
General Electrics
US
10
14
Sony
Japan
11
16
Samsung Electronics
South Korea
12
33
Intel
US
13
31
Ford Motor
US
14
8
Research In Motion
Canada
15
18
Volkswagen
Germany
16
7
Hewlett-Packard
US
17
13
Tata Group
India
18
20
BMW
Germany
19
24
Coca Cola
US
20
5
Nintendo
Japan
21
10
Wal Mart Stores
US
22
NR
Hyundai Motor
South Korea
23
9
Nokia
Finland
24
34
Virgin Group
Britain
20-3
Having New Products

Acquisition
- Buy other companies
- Acquire patents from other companies

Development
- Develop new products in its own laboratories
- Contact with independent researchers or new-product
development firms to develop specific new products.
20-4
Categories of New Products
New-to-the-world
 New product lines
 Additions to product lines
 Improvements to products
 Repositionings
 Cost reductions

20-5
The early mobile phones
20-6
20-7
20-8
20-9
Principles to guide new-product
development
1. Work with potential customers
2. Let employees choose projects
3. Give employees “dabble” time
4. Know when to let go
20-10
Continuous Innovation
 Brand extensions: broadening brand
meaning into related product
categories
 Positive attitude towards continuous
innovation
 Established companies – incremental
innovation
 Newer companies – disruptive
technologies
20-11
Demand Media’s
Value Proposition:
Identifying and Filling a
big lack in human
being’s collective
knowledge
Bryon Reese from
Demand Media
20-12
New Product Development
12-13
Demand Media’s New Product
20-14
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
20-15
Table 20.4 Finding One Successful New
Product
20-16
New-product Failure (-+ 95%)









Ignoring or misinterpreting market research
Overestimating market size
High development costs
Poor design
Incorrect positioning
Ineffective advertising
Wrong price
Insufficient distribution support
Competitors who fight back hard
20-17
20-18
New-product Success Factors



Unique, superior product
Well-defined product concept
Technological & marketing
synergy, quality execution in all
stages, & market attractiveness.
20-19
Organizing New-Product Development
 Product managers
 New product managers
 High-level management committee
 New product department
 Venture team
Venture Team
Cross-functional group charged with
developing a specific product or business;
Intrapreneurs are relieved of other duties
and provided a budget and time frame.
20-20
Criteria for Staffing Venture Teams
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

20-21
Managing the Development Process

Idea generation:
- from interacting with various
groups.
- from using creativity-generating
techniques.

Idea screening
20-22
Figure 20.2 The New Product Development
Decision Process
20-23
Ways to Find Great New Ideas
Run informal sessions with customers
 Allow time off for technical people to putter
on pet projects
 Make customer brainstorming a part of
plant tours
 Survey your customers
 Undertake “fly on the wall” research to
customers

20-24
Idea Generation: Creativity Techniques
Attribute listing
 Forced relationships
 Morphological analysis
 Reverse assumption analysis
 New contexts
 Mind mapping

20-25
More Ways to Find Great Ideas
Use iterative rounds with customers
 Set up a keyword search to scan trade
publications
 Treat trade shows as intelligence missions
 Have employees visit supplier labs
 Set up an idea vault

20-26
Drawing Ideas from Customers
Observe customers using product
 Ask customers about problems with
products
 Ask customers about their dream products
 Use a customer advisory board or a brand
community of enthusiasts to discuss
product

20-27
Idea Generation: Creativity Techniques






Attribute listing
Forced relationships
Morphological analysis
Reverse assumption
analysis
New contexts
Mind mapping
20-28
Lateral Marketing for new product
ideas: Combining two product concepts





Gas station stores = gas station + food
Cyber cafés = cafetaria + internet
Cereal bars = cereal + snacking
Kinder surprise = candy + toy
Sony walkman = audio + portable
Figure 20.2 The New Product Development
Decision Process
20-30
Variations on Failure



Absolute product failure
Partial product failure
Relative product failure
20-31
Concepts in Concept Development





Product idea
Product concept
Category concept
Brand concept
Concept testing
20-32
Concept Testing






Communicability and believability
Need level
Gap level
Perceived value
Purchase intention
User targets,
purchase occasions,
purchasing frequency.
20-33
Marketing Strategy



Target market’s size, structure, and behavior,
product positioning, the sales, market share,
and profit goals sought in the first ten years.
Planned price, distribution, and promotion for
Year 1
Long-run sales and profit goals and
marketing-mix strategy over time
20-34
Business Analysis
Estimating total sales
 Estimating Costs & Profits

20-35
Product Development

Quality function deployment
(QFD)
 Customer
attributes
 Engineering attributes
20-36
Prototype Testing
Alpha testing
 Best testing

 Rank-order
method
 Paired-comparison method
 Monadic-rating method

Market testing
20-37
Consumer Goods Market Testing
Sales-Wave Research
 Simulated Test Marketing
 Controlled Test Marketing
 Test Markets

20-38
Test Market Decisions
How many test cities?
 Which cities?
 Length of test?
 What information?
 What action to take?

20-39
Timing of Market Entry
First entry
 Parallel entry
 Late entry

20-40
Criteria for Choosing Rollout Markets
Market potential
 Company’s local reputation
 Cost of filling pipeline
 Cost of communication media
 The influence of the area on other areas
 Competitive penetration

20-41
Consumer-Adoption Process
Adoption is an individual’s decision
to become a regular user
of a product.
20-42
Innovation & Diffusion: Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
20-43
Adopter Categorization
Innovators
 Early adopters
 Early majority
 Late majority
 Laggards

20-44
Characteristics of an Innovation
 Relative
advantage
 Compatibility
 Complexity
 Divisibility
 Communicability
20-45
Marketing Debate
 Who should you target with new products?
Take a position:
1. Consumer research is critical to new-product
development.
or
2. Consumer research may not be all that
helpful in new-product development.
20-46
Ancient Indian Medical
System
Duration
1 Week / 2 Weeks / 1 Month
Venue
"Prashanthi Kutiram" (S-VYASA University
Campus), Bangalore.
Skill Level
Beginner / Moderate
Group Size
Min-02 / Max-12
Overview
India, the land of ancient culture, tradition and customs, has made innumerable
contributions to the world in the fields of medicine and wellness. The ancient and
popular practice of yoga, the physical and mental disciplines, has its deepest
roots in our very own country. Ayurveda, a system of traditional medicine is a
native to India. Learn the history and fundamentals of these forms of medicine,
wellness and upkeep of the body and mind from our Ancient Indian Medical
System. Relax your body, mind and soul with our programs designed for you.
Absorb yourself in the Indian philosophy of satsang, release your apprehensions
with melodious bhajans sounding in the milieu and self induce a mode of
consciousness through meditation. Ranging from one week to one month, you
can select a deal that best suits your requirements and interest
Airport weddings
•
•
New at Amsterdam Airport Schiphol: weddings to go. Whether a
couple met on a flight to Bangkok or just wants to be able to go
straight from ceremony to runway for their honeymoon, Schiphol
offers travellers the opportunity to get married at the airport.
Brides and grooms to be can pick from several packages, from the
all-out ‘Ticket to Paradise’: get hitched and leave for a tropical
destination together with your wedding guests; to ‘Say Yes & Go’,
the budget alternative for couples who want a quick and simple
ceremony before flying off together. Schiphol Weddings works with a
dedicated wedding planner, who can also help couples plan and
arrange their honeymoons.
Funky kiwi campers
•
•
•
•
In keeping with today’s mobile theme, Escape Rental is a New Zealand camper rental
company that sets itself apart by letting artists turn camper vans into art on wheels.
Taking something slightly dull – a camper – and turning it into something fresh, Escape
Rentals is attracting travellers who are tired of mass tourism and looking for a more unique
experience.
Each of their nearly 100 campers is given an aerosol overhaul by a New Zealand artist. Paint
jobs draw from the whole spectrum of visual art and pop culture, from kiwiana to Far Side
comics and Maurice Sendak to Pablo Picasso. Rental rates are competitive, at around NZD 59
(USD 37/EUR 29) per day, with optional extras like mobile phones and solar showers charged
separately.
Another delightful example of innovation through design. Find something run-of-the-mill,
and make it special!
Digital fuel for travel
Fuel for Travel lets consumers download travel guides, music, audio books,
tv shows and movies to their MP3 players and other digital devices.
Located in Schiphol’s Departure Lounges 1 and 2, the Fuel for Travel
features listening and viewing stations for travellers to browse digital content.
Once they’ve found what they want, they can dock their device, pay by credit
or debit card, and download the material. Pricing is similar to that of online
music and video downloads.
Checking into another dimension | aloft
in Second Life
•
•
The hotel’s virtual developers, Electric Sheep, started off with 64 acres of raw
virtual land, and are working their way up to a beautifully landscaped island
featuring a full-fledged aloft hotel. Each step of the design and building process
can be followed, both in Second Life, and via a dedicated blog: virtualaloft.com.
Aloft is the world’s first hotel brand to place a replica inside a virtual world, and
will open its virtual doors this September. If well-executed, a three-dimensional
metaverse outpost can be valuable in conveying the feel of a new product or
concept, in this case the transformation of the mid-scale, business hotel segment
from drab to delightful. At least that’s what aloft is aiming for
Tribewanted
•
•
•
Launched by two young British entrepreneurs, TRIBEWANTED is creating a global tribe that
will develop a sustainable eco-community on an island in Fiji.
In what seems like a hippie dream crossed with an episode of Survivor, tribewanted is
looking for 5000 people from around the world to become part of a tribe that will not only
exist online, but will also settle, 100 at a time, on ‘Adventure Island’. On the map,
Adventure Island is known as Vorovoro, and is being leased to tribewanted by the local
tribal chief.
There are three types of membership to choose from: Nomads get 1 years membership
and 7 nights on the island for GBP 120 / USD 210; Hunters are members for 2 years and
can stay for 14 nights (GBP 240 / USD 420); and Warriors are member for 3 years and can
stay for 21 nights (GBP 360 / USD 630). When the 5000th member joins, the tribe will be
formed and will start to make tribal decisions by voting through the online community at
tribewanted.com, on issues such as the name of the tribe, type of infrastructure that will
be required, and how to build an island community in an environmentally friendly way.
Minipreneur travel agents
• Joining the customer made revolution, Belgium tour operator Wasteels
has set up a division called CLUB TOUR, which allows amateurs to create
travel packages that are sold to the company’s customers.
• Every demographic group has its own needs and wants when it comes to
travel, and travel agents have long catered to the demand for specialized
tours for everyone from senior citizens and rock climbers to military buffs
and amateur biologists. Club Tours takes it one step further by allowing
non-professionals to create vacation packages for their own niche market.
So far, that includes gays, seniors, singles and art lovers.
Tripadvisor for gay travellers
Pink Choice is a review website for gay and lesbian travellers. The
company was founded by the owners of two successful gay
guesthouses in Massachusetts, who were frustrated by the lack of
relevant information when planning their own holidays. While Trip
Advisor and other online travel review communities feature a
wealth of user-generated information about hotels and holiday
destinations, no such website exists specifically for a non-straight
audience.
Seri Wisata Sejarah dan Museum di Yogyakarta
Pilih Sendiri Petualanganmu!
History Community (1-day tour for each theme)
1. Trail of the Lost Kingdom of Mataram .
2. Trail of the Kingdom of Mataram Islam.
3. Colonial Legacy.
Friends of Museum (1-day tour for each theme)
1. Museum Seni dan Budaya
(Museum Ullen Sentalu, Museum Sonobudoyo, & Museum Affandi)
2. Museum Sejarah dan Perjuangan Bangsa Indonesia
(Museum Sejarah Perjuangan Bangsa, Monumen Jogja Kembali, & Benteng
Vredeburg).
3. Museum Ilmu Pengetahuan
(Museum Biologi dan Museum Geothermal)
Additional:
Kaliurang (dikombinasikan dengan kunjungan ke Museum Seni & Budaya)
Malioboro (bisa dikombinasikan dengan semua paket)