BA 315 CHAPTER 8
NEW PRODUCT PLANNING
LPC
Many new products that are
developed never reach the
market!!!!!!
MOST NEW PRODUCTS FAIL!!!
The definition of product
"newness"
• depends on who is making the
assessment: the buyer or the seller.
product "newness"
• The degree of newness to both the
buyer and the seller impacts the amount
of risk taken and influences the way the
new product development process is
managed.
Essentially there are six types
of new products.
• New to the world products are products that create
entirely new markets.
•
New product lines are products that represent
entries into existing markets that are new to the firm.
•
Line extensions are new products that allow the
firm to' extend its served market by offering different
benefits.
NEW PRODUCTS(CONT)
•
Cost reductions are versions of
existing products that provide
comparable performance at lower cost.
NEW PRODUCTS
• Improvements to existing products are usually
designed as replacements for existing product
offerings.
•.
Repositionings are modest technical
improvements that allow a product to offer new
applications and serve new needs.
1
ABSOLUTELY FAILED!!!!
• Because of the high probability of new
product failure and its consequences, most
organizations have developed some
formalized system or structure for managing
the new product development process. Firms
use either a staged (phased)approach or
parallel development approach in new
product development and. the use of teams is
widespread.
There are seven, not six
stages in new product
development
•
•
•
•
•
•
•
Idea Generation
Idea Screening
Conceptual Testing
Business Analysis
Product Development
Test Marketing
Commercialization
Idea Generation
• Idea generation stage includes alternative
specifications for product concepts utilizing end
user analysis or problem analysis. Focus
groups and direct observation provide
insights for product development.
Idea Screening
BEGIN TO CONFIRM a new product concept.
Product candidates are evaluated on initial
estimates of potential demand and the
chances/barriers to success. Market potential
studies, concept tests, and scoring models
such as NewProd are used to evaluate the
product concept.
Conceptual Testing
REMEMBER CHEW’S EXAMPLES ………
AIR ONE
MINUTE MAID
STORY BOARD
QUESTIONAIRE
INTERVIEW
ANALYSIS
Business Analysis
•
•
•
•
RUN THE NUMBERS
CHECK OUT THE PRODUCEABILITY
MAKE RECOMMENDATIONS
comprehensive view of the financial
consequences of introducing a new
product.
Product Development
• converts the concept into a working product
by developing the product architecture;
design function, value, and appearance of the
product; create and develop product
specifications; and consider manufacturing
and operational costs and operational
constraints or tradeoffs (POLITICS)
Product and Market Testing
• provides a more detailed assessment of a
new product's chances for success technical
testing, preference and satisfaction testing,
simulated test markets and test markets can
be used to evaluate potential success/failure
and define important marketing elements.
COMMERCIALIZATION
• planning and launch strategy for introducing the product
to the marketplace. Timing of the introduction, the
selection of a branding strategy, and coordinating the
marketing program activities are all components of the
launch strategy.
• CHEW SAY’S FULL LAUNCH!!!
portrayed in Fig. 8-5
• Is the relationship between product
development programs other marketing
programs and corporate, and marketing
strategy
WATER BABY by Dan Lauer
• The worlds most popular doll of the 1990’s.
• A blend of condoms and water balloons
were sighted in room 206 ssb where DAN
studied marketing at UMSL
Why do most new products fail??
• ABSOLUTE
• RELATIVE
• 80%+ FAIL
• POOR PRODUCT POSITIONING
• VAGUE CONSUMER DIFFERENCE
NEW PRODUCTS
HAVE YOU COMPLETED YOUR NET
PRESENT VALUE ASSIGNMENT????
OPPORTUNITYISNOWHERE!!
ARE WE GOING TO ACHIEVE
OUR PAYOUT AND ROI????
90
80
70
60
East
West
North
50
40
30
20
10
0
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
TIME WILL TELL!!!
LPC IS FINISHED
• WE NOW
CONCLUDE
CHAPTER 8 …..
• ANY
QUESTIONS????
????????????????????????????
•
•
LINDELL PHILLIP CHEW
LPC1@UMSL.EDU