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Strategies
Introduction: Refer Case study given at page 238
Strategies for obtaining new-product ideas:
Design problems
Development costs
Competition
IDEA GENERATION
New product development starts with Idea generation-The systematic search for new
product ideas. A company typically has to generate many ideas in order to find a few
good ones. For example, one brainstorming session for Prudential insurance company
came up with 1500 ideas and only 12 were considered even usable.
Major sources for new ideas include Internal sources and external sources such as
customers, competitors, distributors, and suppliers, and others.
INTERNAL IDEA SOURCES
Internal sources include company employees at all levels. Companies can pick the brains
of its executives, scientists, engineers, manufacturing staff, and sales people.
EXTERNAL IDEA SOURCES
Customers
Good new product ideas also come from watching and listening to customers. Company
engineers or sales people can meet with and work alongside to get suggestions and ideas.
Competitors
Companies watch competitors adds to get clues about their new products. They buying
competing new products, take them apart to see how they work, analyze their sales, and
decide whether they should bring out a new product of their own.
Distributors and suppliers can also contribute many good and new product ideas.
Resellers are those close to the market and can pass along information about customer
problems and new product possibilities. Suppliers can tell company about new concepts,
techniques, and materials that can be used to develop new products.
Outsourcing
Many companies are now outsourcing some of their new product innovation to outside
developers. Companies such as Dell, Motorola sometimes buy new designs from Asian
developers and then market under their own brand names.
Other idea sources include Trade magazines, shows, seminars, government agencies, new
product consultants, advertising agencies, marketing research firms, university and
commercial laboratories, and inventors.
IDEA SCREENING:
Process used to spot good ideas and drop poor ones.
The purpose of idea generation is to create a large number of ideas. The purpose of the
succeeding stages is to reduce that number. The first idea reducing stage is the Idea
screening.
For example, at Kao company, the large Japanese consumer products company, the new
product committee asks questions such as Is the product truly useful to the consumers
and society?, Do we have the people, skills, resources, to make it proceed? etc.
CONCEPT DEVELOPMENT AND TESTING
An attractive idea must be developed into a product concept. It is important to distinguish
between product idea, product concept, and a product image.
Product Idea:
Product Concept:
idea for a possible product that the company can see itself offering.
detailed version of the idea stated in meaningful consumer terms.
Product Image:
For example, after more than 10 years of development, Daimler Chrysler is getting ready
to commercialize its experimental cell powered electric car into the market. This cars
non polluting fuel system runs directly on Hydrogen.
Daimler Chrysler is currently testing more than 100 F cell cars under varying weather
conditions, traffic situations, and driving styles in world wide.
Now Daimlers task is to develop this into alternative product concept, find out each how
attractive each concept to its customers, and choose the best one.
Concept one: A moderately priced sub compact designed as a second family car to be
used around town.
Concept two: A medium cost sporty compact appealing to the young people.
Concept three: An inexpensive subcompact green car appealing to environmentally
conscious people.
CONCEPT TESTING:
Testing the new product concepts with a group of target consumers to find out if the
concepts have strong consumer appeal is called concept testing. After being exposed to
the concept, consumers then may be asked to react to it by answering questions such as
those in table 8.1
Part One:
Part Two:
Part Three:
Describes the long-run sales and profit goals, marketing mix strategy.
BUSINESS ANALYSIS
Involves a review of the sales, costs, and profit projections to assess fit with
company objectives.
PRODUCT DEVELOPMENT
Product development involves developing the product concept into physical product in
order to ensure that the product idea can be turned into a workable product.
Eg: Gillette uses employee volunteers to test new shaving products. Every working day at
Gillette, 200 volunteers from various departments come to work unshaven. The
volunteers are given razors, shaving cream or after shave to use. The volunteers evaluate
razors for sharpness of blade, smoothness of glide, ease of handling. In a nearby shower
room, woman performs the same ritual on their legs, underarms, and what the company
delicately refers to as Bikini area.
TEST MARKETING
If the product passes functional and a consumer test, the next step is Test marketing, the
stages of product development in which the product and marketing program are tested in
more realistic market settings.
Can be expensive and time consuming, but better than making major marketing
mistake.
COMMERCIALIZATION
Test marketing gives the management the information needed to make final decision
about whether to .launch a new product. Commercialization means introducing the new
product into the market. The company may have to build or rent a manufacturing facility.
It may have to spend, in the case of a new consumer-packaged good, between $10 million
and $200 million for advertising, sales promotion, and other marketing efforts in the first
year.
The company launching of a new product
Must decide on where to introduce the product (e.g., single location, state,
region, nationally, internationally).
Hard to forecast sales level, length of each stage, and shape of PLC.