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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-1
Chapter Questions
• What challenges does a company facein developing new products and
services?
• What are the main stages in developingnew products and services?
• What is the best way to manage the
new-product development process?
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-2
Johnson & Johnson Emphasizes
New Product Development
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-3
Categories of New Products
New-to-the-world
Cost reductions
New product lines
Additions
Improvements
Repositionings
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-4
Moser Baer has moved from
making optical storage media to
selling home entertainment
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The World’s
Most Innovative Companies
• Apple
• Toyota
• General Electric
• Microsoft
• Procter & Gamble
• 3M
• Walt Disney
• IBM
• Sony
• Wal-Mart
• Honda
• Starbucks
• Target
• BMW
• Samsung
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-6
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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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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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-10
Ways to Find Great New Ideas
• Run informal sessions with customers
• Allow time off for technical people to
explore pet projects
• Make customer brainstorming a part of
plant tours
• Survey your customers
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-11
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 abrand community of enthusiasts to
discuss product
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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-12
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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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-18
Marketing Strategy
• Target market’s 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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Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-22
Test Market Decisions
• How many test cities?
• Which cities?
• Length of test?• What information to collect?
• What action to take?
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Criteria for
Choosing Rollout Markets
• Market potential
• Company’s local reputation
• Cost of filling pipeline• Cost of communication media
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What is Adoption?
• Adoption is an individual’s 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 thathelpful 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?