2000 Prentice Hall

Objectives
Challenges in New Product
Development (NPD)
Organizational Structure & NPD
Stages & Management of NPD
Diffusion & Adaption of New Products

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Why New Products Fail
Over Championing
Overestimated Demand
Poor Design
Poor Marketing Execution
High Development Costs
Strong Competitive Reaction
2000 Prentice Hall
Challenges in NPD
Idea Shortage
Fragmented Markets
Social & Governmental Constraints
Cost
Capital Shortage
Need for Speed
Shorter Product Life Cycles
2000 Prentice Hall
New Product Development
Process
Idea
Generation
Concept
Development
and Testing
Marketing
Strategy
Development
Idea
Screening
Business
Analysis
Product
Development
Market
Testing
Commercialization
2000 Prentice Hall
Probability of Success
Probability
of technical
completion
Overall
probability
of success
=
Probability of
commercialization
given technical
completion
X
Probability of
economic
success given
commercialization
X
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Concept Development &
Testing
1. Develop Product Ideas into
Alternative Product Concepts
2. Concept Testing - Test the Product
Concepts with Groups of Target Customers
3. Choose the Best One
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High price/oz.
L
o
w

i
n

c
a
l
o
r
i
e
s

Low price/oz.
H
i
g
h

i
n

c
a
l
o
r
i
e
s

Product & Brand
Positioning
(a) Product-positioning
map
(breakfast market)
Expensive
S
l
o
w

Inexpensive
Q
u
i
c
k

Bacon
and
eggs
Pancakes
Instant
breakfast
Cold
cereal
Hot
cereal
b) Brand-positioning
map
(instant breakfast market)
Brand C
Brand B
Brand A
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Conjoint Analysis
Brand name
--

--

--

--

--
U
t
i
l
i
t
y

1.0
0
| | |
K2R Glory Bissell
Retail Price
U
t
i
l
i
t
y

--

--

--

--

--
1.0
0
| | |
$1.19 $1.39 $1.59
Good Housekeeping Seal?
U
t
i
l
i
t
y

1.0
--

--

--

--

--
0
| |
No Yes
U
t
i
l
i
t
y

Money-Back
Guarantee?
1.0
--

--

--

--

--
0
| |
No Yes
2000 Prentice Hall
Consumer-Goods Market
Testing
Sales-
Wave
Research

Test offering trail to
a sample of
consumers in
successive
periods.
Simulated
Test Market

Test in a simulated
shopping environment
to a sample of
consumers.


Standard
Test Market

Full marketing campaign
in a small number of
representative cities.



Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
2000 Prentice Hall
Commercialization
When
Where
Whom
Product
Price
Place
Promotion
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2
1
/2%
Innovators
13
1
/2%
Early
adopters
34%
Early
majority
34%
Late
majority
16%
Laggards
Time of adoption innovations
Adopter Categorization of the Basis of
Relative Time of Adoption of Innovations
2000 Prentice Hall
Characteristics of the
Innovation Rate of Adoption
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
2000 Prentice Hall
Review
Challenges in New Product
Development (NPD)
Organizational Structure & NPD
Stages & Management of NPD
Diffusion & Adaption of New Products