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Introducing New Market Offerings

Marketing Management
A South Asian Perspective, 13th ed

Chapter Questions
What challenges does a company face in developing new products and services? What organizational structures and processes do managers use to manage new-product development? What are the main stages in developing new products and services?
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Chapter Questions (cont.)

What is the best way to manage the new-product development process? What factors affect the rate of diffusion and consumer adoption of newly launched products and services?

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Johnson & Johnson Emphasizes New Product Development

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Categories of New Products

New-to-the-world New product lines Additions Improvements Repositionings Cost reductions
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Moser Baer has moved from making optical storage media to selling home entertainment

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The Worlds Most Innovative Companies

Apple Google Toyota General Electric Microsoft Procter & Gamble 3M Walt Disney IBM Sony Wal-Mart Honda Starbucks Target BMW Samsung
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Seven Notions of Innovation

See the future through the eyes of your customer Intellectual property and brand power are key assets Use digital technology to create tools for customers Build a championship team Innovation is a state of mind Speed is critical, so push your organization Partner up if youre not the best
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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
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What is a Venture Team?

A venture team is a cross-functional group charged with developing a specific product or business; intrapreneurs are relieved of other duties and provided a budget and time frame.

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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

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Figure 20.2 The New Product Development Decision Process

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Mahindra and Mahindra followed a thorough product development process for Scorpio

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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
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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

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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
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Idea Generation: Creativity Techniques

Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind mapping

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Lateral Mapping

Gas stations + food Cafeteria + Internet Cereal + snacking Candy + toy Audio + portable

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Variations on Failure
Absolute product failure Partial product failure Relative product failure

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Concepts in Concept Development

Product idea Product concept Category concept Brand concept Concept testing

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Concept Testing
Communicability and believability Need level Gap level Perceived value Purchase intention User targets, purchase occasions, purchasing frequency
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Figure 20.6 Utility Functions Based on Conjoint Analysis

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Marketing Strategy
Target markets size, structure, and behavior Planned price, distribution, and promotion for year one Long-run sales and profit goals and marketing-mix strategy over time

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Figure 20.7 Product Life Cycle Sales for Three Product Types

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Prototype Testing
Alpha testing Beta testing
Rank-order method Paired-comparison method Monadic-rating method

Market testing

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Consumer Goods Market Testing

Sales-Wave Research Simulated Test Marketing Controlled Test Marketing Test Markets

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Test Market Decisions

How many test cities? Which cities? Length of test? What information to collect? What action to take?

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Timing of Market Entry

First entry Parallel entry Late entry

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Criteria for Choosing Rollout Markets

Market potential Companys local reputation Cost of filling pipeline Cost of communication media

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What is Adoption?
Adoption is an individuals decision to become a regular user of a product.

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Stages in the Adoption Process

Awareness Interest Evaluation Trial Adoption
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Figure 20.8 Adopter Categorization

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Characteristics of an Innovation
Relative advantage Compatibility Complexity Divisibility Communicability

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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.
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Marketing Discussion

Think about the last new product you bought. How do you think its success will be affected by the five characteristics of an innovation?

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