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NPD

Chapter Questions

What challenges does a company face in developing new products and services? What organizational structures and processes do managers use to oversee new-product development? What are the main stages in developing new products and services?

Chapter Questions

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

Categories of New Products

New to the World Additions

Improvements
Repositionings Cost reductions

The Innovation of Nintendo Wii

Sony Reader

Sony Playstation 3

Additions in Horlicks Product Line

Sony-Improvements-From B&W to 3D

Repositioning

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

NPD Decision Process

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

More Ways to Find Great Ideas

Use iterative rounds with customers Treat trade shows as intelligence missions Have employees visit supplier labs Set up an idea vault

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

Forces Fighting New Ideas

Idea Screening
Retain the successful ideas and eliminate the ideas which could be failures - much easier to write than to carry out in practice!

A clear description of the product The use of the product The target market segment The relationship to the company's present products The relationship to competing products

Concept Development
From Idea to Concept Idea-A drink to increase stamina and energy Concept: A Fruit juice with energy contents for adults A malt based energy drink with all vitamin contents for children in between 5- 16 or 18 A health supplement for elderly people

Concept Testing

Communicability and believability Need level Gap level Perceived value Purchase intention User targets, purchase occasions, purchasing frequency

Marketing Strategy Development

Target Market Value Propositions Sales Market Share Profit Goals Price Distribution Marketing Budget Long run Sales Long Run Profit Goals Marketing Mix Startegy

Business Analysis
Business Attractiveness Involves a review of the sales, costs, and profit projections

Product Development
Developing Product Concept into a physical Product

Prototype Testing

Alpha testing Beta testing Rank-order method Paired-comparison method Monadic-rating method Market testing

Consumer Goods Market Testing

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

Test Market Decisions

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

Timing of Market Entry

First entry Parallel entry Late entry

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

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-26

Stages in the Adoption Process

Awareness Interest

Evaluation
Trial Adoption

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-27

Figure 20.7 Adopter Categorization on the Basis of Relative time of Adoption

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-28

Characteristics of an Innovation

Relative advantage Compatibility Complexity Divisibility Communicability

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-29

For Review

What challenges does a company face in developing new products and services? What organizational structures and processes do managers use to oversee new-product development? What are the main stages in developing new products and services?

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-30

For Review

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

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20-31