2. Chapter Objectives
In this chapter, we focus on the following
questions:
What challenges does a company face in
developing new products?
What organizational structures are used to
manage new-product development?
What are the main stages in developing new
products, and how can they be managed better?
What factors affect the rate of diffusion and
consumer adoption of newly launched products?
3. New Product Options
MAKE or BUY
1. Company can buy other company
2. Acquire patent from another company
3. Buy a license or franchise from other
company
4.
5. Types of new product
Six categories of new products
1. New-to-the-world products
2. New product lines
3. Additions to existing product lines
4. Improvements and revisions of existing
products
5. Repositioning
6. Cost reductions
9. Why do new products fail?
A high-level executive pushes a favorite
idea
through in spite of negative research
findings.
The idea is good, but the market size is
overestimated.
The product is not well designed.
10. The product is incorrectly positioned in the
market, not advertised effectively, or
overpriced.
The product fails to gain sufficient
distribution coverage or support.
Development costs are higher than
expected.
Competitors fight back harder than
11. product
development
Shortage of important ideas in certain areas
Fragmented markets
Social and governmental constraints
Cost of development
Capital shortages
Faster required development time
Shorter product life cycles
14. Managing the Development Process:
Ideas
Idea Generation
Interacting with Others
1. Sales representatives
2. Intermediaries
3. Product champion
15. Managing the Development Process:
Ideas
Techniques for stimulating creativity in
individuals and groups
Attribute listing
Forced relationships
Morphological analysis
Reverse assumption analysis
New contexts
Mind-mapping
16. Idea Screening
1. Idea manager
2. Idea committee
Two types of errors in screening ideas
1. DROP-error
2. GO-error
17. Some of the most notable “drop-errors”
have come from the most recognizable
names in American business. Xerox saw
the potential of the copy machine, IBM and
Eastman Kodak did not. IBM thought the
personal computer market would be
miniscule.Can you think of any“drop-
errors” that the company didn’t survive?
18. Managing the Development Process:
Concept to Strategy
Concept Development and Testing
A. Product idea
B. Product concept
Concept development
A. Category concept
B. Product–positioning map
C. Brand concept
19. Concept Testing
1. Rapid prototyping
2. Virtual reality
3. Customer-driven engineering
Questions to measure product dimensions
Communicability and believability
1. Need level
2. Gap level
Need-gap score
20. Perceived value
Purchase intention
User targets, purchase occasions, purchasing
Frequency
Conjoint Analysis- Example: five design elements
Three package designs
Three brand names
Three prices
Possible Good Housekeeping seal
Possible money-back guarantee
21. Marketing Strategy
Business Analysis
Estimating Total Sales
Estimating Cost and Profits
1. Break-even analysis
2. Risk analysis
22. Managing the Development Process:
Development to Commercialization
Product Development
Quality Function Deployment (QFD)
Customer attributes (CAs)
Engineering attributes (EAs)
23. Market Testing
Consumer-Goods Market Testing
Seeks to estimate four variables
1. Trial
2. First repeat
3. Adoption
4. Purchase frequency
Sales wave research