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12 1 Chapter12DevelopingNewMarketOfferingsby PowerPointbyMiltonM PressleyUniversityofNewOrleans 12 2 Whoshouldultimatelydesigntheproduct Thecustomer ofcourse KotleronMarketing 12 3 ChapterObjectives Inthischapter wefocusonthefollowingquestions Whatchallengesdoesacompanyfaceindevelopingnewproducts Whatorganizationalstructuresareusedtomanagenew productdevelopment Whatarethemainstagesindevelopingnewproducts andhowcantheybemanagedbetter Whatfactorsaffecttherateofdiffusionandconsumeradoptionofnewlylaunchedproducts 12 4 DevelopingNewMarketOfferings SixcategoriesofnewproductsNew to the worldproductsNewproductlinesAdditionstoexistingproductlinesImprovementsandrevisionsofexistingproductsRepositioningCostreductions 12 5 ChallengesinNew ProductDevelopment IncrementalinnovationDisruptivetechnologiesWhydonewproductsfail Ahigh levelexecutivepushesafavoriteideathroughinspiteofnegativeresearchfindings Theideaisgood butthemarketsizeisoverestimated Theproductisnotwelldesigned 12 6 ChallengesinNew ProductDevelopment Theproductisincorrectlypositionedinthemarket notadvertisedeffectively oroverpriced Theproductfailstogainsufficientdistributioncoverageorsupport Developmentcostsarehigherthanexpected Competitorsfightbackharderthanexpected 12 7 ChallengesinNew ProductDevelopment Factorsthattendtohindernew productdevelopmentShortageofimportantideasincertainareasFragmentedmarketsSocialandgovernmentalconstraintsCostofdevelopmentCapitalshortagesFasterrequireddevelopmenttimeShorterproductlifecycles 12 8 OrganizationalArrangements New productdeploymentrequiresspecificcriteria onecompanyestablishedthefollowingacceptancecriteriaTheproductcanbeintroducedwithinfiveyearsTheproducthasamarketpotentialofatleast 50millionanda15percentgrowthrate Theproductwouldprovideatleast30percentreturnonsalesand40percentoninvestment Theproductwouldachievetechnicalormarketleadership 12 9 BudgetingForNewProductDevelopment3M sapproach 15 ruleEachpromisingideagetsan executivechampion ExpectsomefailuresGoldenStepawardshandedouteachyear OrganizationalArrangements 12 10 3Monline The3MInnovationNetwork 12 11 Table12 1FindingOneSuccessfulNewProduct Startingwith64NewIdeas 12 12 OrganizationalArrangements OrganizingNew ProductDevelopmentProductmanagersNew productmanagersHigh levelmanagementcommitteeNewproductdepartmentVentureteams 12 13 Stage gatesystemGatekeepersmakeoneoffourdecisions GoKillHoldRecycle OrganizationalArrangements 12 14 IdeaGenerationInteractingwithOthersSalesrepresentativesIntermediariesProductchampion ManagingtheDevelopmentProcess Ideas 12 15 TechniquesforstimulatingcreativityinindividualsandgroupsAttributelistingForcedrelationshipsMorphologicalanalysisReverseassumptionanalysisNewcontextsMind mapping ManagingtheDevelopmentProcess Ideas 12 16 IdeaScreeningIdeamanagerIdeacommitteeTwotypesoferrorsinscreeningideasDROP errorGO error ManagingtheDevelopmentProcess Ideas 12 17 Someofthemostnotable drop errors havecomefromthemostrecognizablenamesinAmericanbusiness Xeroxsawthepotentialofthecopymachine IBMandEastmanKodakdidnot IBMthoughtthepersonalcomputermarketwouldbeminiscule Canyouthinkofany drop errors thatthecompanydidn tsurvive DiscussionQuestion 12 18 Table12 2Product IdeaRatingDevice 12 19 ManagingtheDevelopmentProcess ConcepttoStrategy ConceptDevelopmentandTestingProductideaProductconceptConceptdevelopmentCategoryconceptProduct positioningmapBrandconcept 12 20 Figure12 3 ProductandBrandPositioning 12 21 Sometimesanewproductisdeveloped likethefelt tippenandthe walkman stylepersonalmusicdevice Consumersweren tclamoringforeitheroftheseproductsbeforetheycametomarket Mostpeoplehadn tevenconceivedofsuchanitem Carefulplanningdevelopedmarketsforthesenewlines Canyouthinkofmorerecentexamples DiscussionQuestion 12 22 ManagingtheDevelopmentProcess ConcepttoStrategy ConceptTestingRapidprototypingVirtualrealityCustomer drivenengineeringQuestionstomeasureproductdimensionsCommunicabilityandbelievabilityNeedlevelGaplevelNeed gapscore 12 23 ManagingtheDevelopmentProcess ConcepttoStrategy PerceivedvaluePurchaseintentionUsertargets purchaseoccasions purchasingfrequencyConjointAnalysisExample fivedesignelementsThreepackagedesignsThreebrandnamesThreepricesPossibleGoodHousekeepingsealPossiblemoney backguarantee 12 24 ManagingtheDevelopmentProcess ConcepttoStrategy MarketingStrategyBusinessAnalysisEstimatingTotalSales 12 25 ManagingtheDevelopmentProcess ConcepttoStrategy Survival agedistributionEstimatingCostandProfits 12 26 Table12 3ProjectedFive Year Cash FlowStatement inthousandsofdollars Seetextforcompletetable 12 27 ManagingtheDevelopmentProcess ConcepttoStrategy Break evenanalysisRiskanalysis 12 28 ManagingTheDevelopmentProcess DevelopmenttoCommercialization ProductDevelopmentQualityFunctionDeployment QFD Customerattributes CAs Engineeringattributes EAs Lands EndJapanWebsite 12 29 ManagingTheDevelopmentProcess DevelopmenttoCommercialization CustomertestsAlphatestingBetatestingConsumerpreferencemeasuresRank orderPaired comparisonMonadic rating 12 30 ManagingTheDevelopmentProcess DevelopmenttoCommercialization MarketTestingConsumer GoodsMarketTestingSeekstoestimatefourvariablesTrialFirstrepeatAdoptionPurchasefrequencySaleswaveresearch 12 31 ManagingTheDevelopmentProcess DevelopmenttoCommercialization SimulatedTestMarketingControlledTestMarketingTestMarketsHowmanytestcities Whichcities Lengthoftest Whatinformation Whatactiontotake Business GoodsMarketTesting 12 32 ManagingTheDevelopmentProcess DevelopmenttoCommercialization Philips ProntoWebsite CommercializationWhen Timing FirstentryParallelentryLateentryWhere GeographicStrategy 12 33 ToWhom Target MarketProspects How IntroductoryMarketStrategy Criticalpathscheduling CPS ManagingTheDevelopmentProcess DevelopmenttoCommercialization TheiMac launchedwithadramaticcountdowncampaign 12 34 TheConsumer AdoptionProcess
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