20

Introducing
New Market Offerings

Marketing Management, 13th ed

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

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 Chapter Questions (cont.)
What is the best way to manage the
new-product development process?
What factors affect the rate of diffusion
and consumer adoption of newly
launched products and services?

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 Johnson & Johnson Emphasizes
New Product Development

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 Categories of New Products

New-to-the-world

New product lines

Additions

Improvements

Repositionings

Cost reductions

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 The Worlds
Most Innovative Companies
Apple IBM
Google Sony
Toyota Wal-Mart
General Electric Honda
Microsoft Starbucks
Procter & Gamble Target
3M BMW
Walt Disney Samsung

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 Seven Notions of Innovation
See the future through the eyes of your
customer
Intellectual property and brand power are key
assets
Use digital technology to create tools for
customers
Build a championship team
Innovation is a state of mind
Speed is critical, so push your organization
Partner up if youre not the best

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 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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 Table 20.4 Finding One Successful
New Product

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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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 Criteria for Staffing Venture Teams

Desired team leadership style

Desired level of leader
expertise
Team member skills and
expertise
Level of interest in concept
Potential for personal reward
Diversity of team members

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 Figure 20.2 The New Product
Development Decision Process

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 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
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 More Ways to Find Great Ideas

Use iterative rounds with customers

Set up a keyword search to scan trade
publications
Treat trade shows as intelligence
missions
Have employees visit supplier labs
Set up an idea vault

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 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

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 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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 Table 20.5 Product-Idea
Rating Device

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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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 Marketing Strategy

Target markets 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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 Table 20.6 Projected Five-Year
Cash-Flow Statement (in thousands $)

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 Product Development
Quality function
deployment (QFD)
Customer attributes
Engineering attributes

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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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 Test Market Decisions

How many test cities?

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

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 Timing of Market Entry
First entry
Parallel entry
Late entry

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 Criteria for
Choosing Rollout Markets
Market potential
Companys local reputation
Cost of filling pipeline
Cost of communication media

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 What is Adoption?

Adoption is an individuals 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 20.6 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 that
helpful 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?

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