New Product Development

New Product Development - New Product Development New...

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Unformatted text preview: New Product Development New Product Development Dr. Kenneth N. Thompson University of North Texas Marketing Foundations 3/9/2008 University of North Texas 1 Objectives & Overview Marketing Foundations What is a new product? Types of new products Importance of new products Why new products fail New product development New product adoption & diffusion 3/9/2008 University of North Texas 2 3/9/2008 University of North Texas 1 New Product Development What is a new product? It depends..... Marketing Foundations 3/9/2008 University of North Texas 3 Types of New Products Marketing Foundations Discontinuous Innovations Dynamically Continuous Innovations Continuous Innovations 3/9/2008 University of North Texas 4 3/9/2008 University of North Texas Degree of Consumer e Learning L 2 New Product Development Discontinuous Innovation Marketing Foundations New Learning & Consumption Patterns Television Personal Computers Cell Phones Digital photography 3/9/2008 University of North Texas 6 Dynamically Continuous Innovation Marketing Foundations Di t Normal R ti Does Not Require l Routine; D N tR i Disrupts N Total New Learning & Consumption Patterns Electric toothbrush Notebook computer I Phone DVRs derived from VCR, DVD 3/9/2008 University of North Texas 7 3/9/2008 University of North Texas 3 New Product Development Continuous Innovation Marketing Foundations No New Learning & No Change in N N L i N Ch i Consumption Patterns Line Extensions, Brand Extensions, Co-brands Repositioned Products Improved Products (New & Improved Tide) Lower Priced products 3/9/2008 University of North Texas 8 Importance of New Products Marketing Foundations New product development recognizes that products have life cycles New products can foster differential advantage New products can enhance firm s image and firm's market position New products may reduce risk via diversity All products "die" die Must have replacements Technologically superior Greater customer utility Company on the `cutting edge' Google Portfolio is diverse and continuously rejuvenated University of North Texas 9 3/9/2008 3/9/2008 University of North Texas 4 New Product Development New Product Failures Marketing Foundations 3/9/2008 University of North Texas 10 Why Do New Products Fail? Types of Failures Marketing Foundations Absolute failure Relative failure 3/9/2008 Product loses money Does not achieve breakeven The most drastic form of loss Profitable, but... Does not achieve profit objectives Really a failure? University of North Texas 11 3/9/2008 University of North Texas 5 New Product Development Robert McMath's Product Museum Marketing Foundations 3/9/2008 University of North Texas 13 Robert McMath's Product Museum Marketing Foundations 3/9/2008 University of North Texas 14 3/9/2008 University of North Texas 6 New Product Development Factors Underlying Failure Marketing Foundations Inadequate Product Superiority or Uniqueness Inadequate or Inferior Planning Relative advantage lacking Insignificant `point of difference' Lack of well-defined target market Ill defined position Low market `attractiveness' Poor Execution Marketing program Timing Technical Problems Consumer abuse or misuse Logistics failures 3/9/2008 University of North Texas 15 New Product Development Marketing Foundations 3/9/2008 University of North Texas 21 3/9/2008 University of North Texas 7 New Product Development Many New Product Ideas, Few Successes Marketing Foundations 3/9/2008 University of North Texas 22 The Development Process Marketing Foundations 3/9/2008 University of North Texas 23 3/9/2008 University of North Texas 8 New Product Development Idea Generation Marketing Foundations An ongoing search for product ideas that are consistent with target market needs and company objectives. The goal is to generate as many new ideas as possible Sources of new ideas Customers Competitors Employees 3/9/2008 University of North Texas 24 Techniques for Generating Ideas Marketing Foundations Brainstorming Encourage ideas Don't criticize Problem analysis Focus group application Customers react to product Problems encountered with actual use Attribute listing 3/9/2008 University of North Texas 25 3/9/2008 University of North Texas 9 New Product Development Attribute Listing An Example Marketing Foundations What are attributes of a simple screwdriver? How does the screwdriver function? What can be changed to improve functionality? 3/9/2008 University of North Texas 26 Idea Screening Marketing Foundations An A analysis of l i f new ideas to determine which are reasonable, fit organization's g goals, and are , appropriate for the target market. 3/9/2008 The Th goal is to li t eliminate risky alternatives and to focus resources on those ideas with g the highest probability of success 27 University of North Texas 3/9/2008 University of North Texas 10 New Product Development Product Screening Checklist Factors Market Size M k Si Growth Potential Bought by customer we already know Product has competitive p advantage Uses existing sales force & channels Etc. 3/9/2008 University of North Texas 28 Very Poor Poor Average Good Marketing Excellent Foundations Product Screening Checklist Factors Market Size M k Si Growth Potential Bought by customer we already know Product has competitive p advantage Uses existing sales force & channels Etc. 3/9/2008 University of North Texas 29 Very Poor Poor Average Good Marketing Excellent Foundations 3/9/2008 University of North Texas 11 New Product Development Weighted Point Screening Model Factors Market Size Growth Bought by customer we already know Product has competitive advantage Uses existing sales force & channels Total 3/9/2008 University of North Texas Weight 5 4 3 Very Poor (1) Marketing Foundations Poor (2) Avg (3) Good (4) Execell (5) 5 Contribution 25 12 6 3 2 5 3 15 2 2 4 62 30 Concept Development & Testing Marketing Foundations Identify Identif product's desired `position' What do consumers think of idea? 3/9/2008 Target market Image, benefits & specific attributes Simple surveys where concept is presented as a picture, written description, or verbal description Conjoint analysis University of North Texas 31 3/9/2008 University of North Texas 12 New Product Development Panel Surveys Can Assist With Concept Development & Testing Marketing Foundations 3/9/2008 University of North Texas 32 Business Analysis Marketing Foundations Identify preliminary marketing strategy t t Forecast demand Market & sales potential Competitor reactions Project costs Development, production, marketing Estimate profits 3/9/2008 University of North Texas 33 3/9/2008 University of North Texas 13 New Product Development Prototype Development Marketing Foundations A product prototype is built Allows : functional, use, & safety testing specification of a marketing strategy costing Additional concept testing & mix changes are common Test marketing may be used 3/9/2008 University of North Texas 34 Test Market Marketing Foundations 3/9/2008 University of North Texas 35 3/9/2008 University of North Texas 14 New Product Development Factors Favoring Test Marketing Marketing Foundations Acceptance of product very uncertain Sales potential difficult to estimate Cost of developing consumer interest & trial uncertain Major investment required 3/9/2008 University of North Texas 36 Reasons Not to Test Market Marketing Foundations Risk of failure is low Product will have a brief life cycle Beating competition to market is important Basic product, package, promotional appeal well established 3/9/2008 University of North Texas 37 3/9/2008 University of North Texas 15 New Product Development Commercialization Marketing Foundations A decision to launch the product Full-scale production and sales Serious commitment of resources / effort Last chance to stop the project. Considerations Timing Resources Roll-out 3/9/2008 University of North Texas 38 Geographic Roll-Out RollMarketing Foundations 3/9/2008 University of North Texas 39 3/9/2008 University of North Texas 16 New Product Development New Product Adoption N P d Ad i & Diffusion Marketing Foundations 3/9/2008 University of North Texas 43 New Product Adoption Process Marketing Foundations A areness Awareness Interest Evaluation Trial Adoption 3/9/2008 University of North Texas 45 3/9/2008 University of North Texas 17 New Product Development New Product Diffusion N P d Diff i Process Marketing Foundations 3/9/2008 University of North Texas 46 Diffusion results from... Marketing Foundations People adopting products at different rates The different rates at which people adopt results in "spread" or "diffusion" of the product over time Process is represented by a "normal distribution" when plotted over time 3/9/2008 University of North Texas 47 3/9/2008 University of North Texas 18 New Product Development Factors Influencing Diffusion Marketing Foundations R l ti advantage t Relative d Compatibility Trialability Communicability Complexity 3/9/2008 Does the product really do anything new or better? Compatible with customer usage expectations? Societal norms and values? How easy to sample on a limited basis? Social visibility How complex to understand? Use? University of North Texas 48 The Diffusion Process Marketing Foundations Noncumulative diffusion pattern 34% Early 34% Late majority majority Cumulative proportion of adopters Percentag of adopters ge Cumulative pattern (A typical diffusion curve) 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 13.5% Early adopters 2.5% Innovators 16% Laggards Time 3/9/2008 University of North Texas Time 49 3/9/2008 University of North Texas 19 New Product Development Innovators Marketing Foundations Percent tage of adopters The first to buy new products Typically described as venturesome, educated, financially stable, and willing to take risks. N oncum ulativediffusionpattern 34%Early 34%Late m ajority m ajority t 16% Laggards 51 Marketing Foundations 13.5%Early adopters 2.5% Innovators Do not contribute significantly to WOM Tim e 3/9/2008 University of North Texas Early adopters Local opinion leaders -responsible for WOM ibl f Characteristics include: high on socio-economic socioladder respond to promotions read magazines, newspapers solicit information N oncum ulativediffusionpattern Percenta of adopters age 34%E arly 34%Late m jority a m ajority t 16% La ggards 52 13.5%E arly adopters 2.5% Innovators This group is a key target for new product developers. 3/9/2008 Tim e University of North Texas 3/9/2008 University of North Texas C l ti ti f d C l ti ti f d 20 New Product Development Gimme an Ad! Brands Lure Cheerleaders At a recent camp at her high school, Ms. Bertke tried new scents from P&G's Secret body spray. On another occasion, at a Florida championship, she could have had her hair done at a lounge sponsored by P&G's Herbal Essences. Both were available as part of a deal struck between P&G and Varsity Spirit, a Memphis, Tenn., concern that organizes cheerleading camps and competitions. 3/9/2008 University of North Texas 53 Marketing Foundations Early majority First category of "mass market" Typically are solid, middle-class middleconsumers average in socioeconomic status more deliberate and cautious in purchase decisions 3/9/2008 Marketing Foundations N oncum ulative diffusion pattern Percentage of adopters 34%Early 34%Late m ajority m ajority t 16% gg Laggards 54 13.5%Early adopters 2.5% Innovators Tim e University of North Texas 3/9/2008 University of North Texas C l ti ti f d 21 New Product Development Late majority Marketing Foundations Percenta of adopters age Reluctantly adopt when newness of product has worn off 3/9/2008 T e im 55 University of North Texas Laggards Marketing Foundations resist challenges to tradition, remain oriented toward the past, may be older lower in socioeconomic status than other groups. Percentage of adopters Last group to adopt a new product. N oncum ulativediffusionpattern te 34%E rly 34%La a m jo a rity m jo a rity t 16% La rds gga 56 13.5%E rly a a pte do rs 2.5% Inno to va rs Product often obsolete before adopt 3/9/2008 T e im University of North Texas 3/9/2008 University of North Texas C l ti ti f d C l ti older, more conservative, traditional, and skeptical of new products. 13.5%E rly a a pte do rs 2 .5% Inno a rs v to 16% La rds gga ti f d Second part of mass market Similar to early majority but consumers are N oncum ulativediffusionpattern a 34%E rly 34%L te a m jo a rity m jo a rity t 22 New Product Development END Marketing Foundations 3/9/2008 University of North Texas 57 3/9/2008 University of North Texas 23 ...
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This note was uploaded on 03/27/2008 for the course MKTG 3650 taught by Professor Thompson during the Spring '08 term at North Texas.

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