New Product Innovation

National Correctional Industries

Association Enterprise 2004
March 23, 2004
 Agenda

 Product Development
 Market Research
 Concept Testing
 Prototype Development
 Market Testing
 Product Launch
 Discussion
 Why New Products?

 New product development is critical to

long-term success
 Approximately one-third of the revenue a
business generates is coming from
products they did not sell five years ago
 Changing environment creates new
demands and needs
 Product Development

 Must be alert to quickly develop

opportunities
 Focus on markets or product categories
consistent with organization’s objectives,
resources, capabilities and strengths
 Securing a competitive advantage
 Industrial New Product Ideas

 Company sources other than R&D 36.2%

 Analysis of the competition 27.0%
 Research & Development 24.3%
 Product users 15.8%
 Supplier suggestions 12.5%
 Product user research 10.5%
 Published information 7.9%
 New Products

 A way of getting new and keeping old

customers
 Effective way of obtaining a competitive
advantage
 Source of growth and excitement
 New Product Categories

 New to the world products

 New product lines
 Product line extensions
 Improvements and revisions to existing
products
 Repositionings
 Cost reductions
 Product Development Process
Product
Launch
Test
Marketing
Prototype
Development
Concept
Testing
Market research
and
Opportunity scan
 Marketing
 Very important to product development
success
 Key to successful marketing is imaginative,
effective, creative communication
 Find a need and fill it.
 Mutually beneficial exchange relationships
 Non-profit organizations have sometimes
difficult task
 Marketing Strategies

 Increase the number of customers

 Increase the average transaction
 Increase the frequency of repurchase
 Marketing Concepts

 Consumer orientation
 Customer service orientation
 Profit orientation
 Society
 Marketing Mix

Price Placement

Product Promotion
 Market Research
 Who is my target audience?
 Are there enough members of this target group
to make the business worthwhile?
 How large is the potential market and how much
of that potential market can I capture?
 Who is my competition and what would make
someone choose my product over their current?
 Market Opportunity and Threats

Societal Focus Economic Realities

•GNP
•Population Shifts
•Disposable Income
•Values
•Discretionary Income
•Attitudes
•Competition
•Trends
Technological
Development
•Advance in Legal & Regulatory
technology Condition
•Market receptiveness •Laws
to technology •Regulations
 Market Placement

Identify target markets

 Size and growth potential
 Ability and ease of reaching segment
 Good fit with organizational objectives
 Greatest revenue generation with least
investment
 Market Placement
Determine opportunity
 Segment size
 Annual usage potential
 Anticipated annual growth rate
 Margin
 Value in use
Evaluate competition
 Strengths/Limitations
 Implications
Market Research – Pricing Strategies

 Goal is to achieve a target profit

 Can you hold a product’s manufacturing
costs down to less than 25% of its
perceived value?
 Estimating manufacturing costs
 Obtain price quotes from several suppliers
 Concept Testing

Determine
 Critical success factors
 Financial objectives
 Marketing mix strategies
 Product, Pricing, Promotion, Placement
 Marketing plan initiatives
 Activity, Budget, Timing
 Prototype and Test Marketing

Survey end-users
 Do you prefer this product over your current
product?
 Does this product meet the need you thought
it would?
 Does the way the product works provide an
important benefit?
 Promotion and Product Launch

 Publicity
 Trade journals
 Conferences
 Personal selling
 Word of mouth
 Reasons For New Product Failures

 Poor marketing research

 Technical problems
 Insufficient marketing effort
 Bad timing
 Marketing Plan
Audit
 Challenge and refine assumptions from current
plan
 Evaluate success for input into next year’s plan
 Revise plan for new year incorporating
marketplace learnings, marketing insights and
current plan successes
 Summary

 New product development drives growth

 Market research is critical to the success
of a new product launch
 Market research is a continuous process as
customer needs, your business and the
environment changes