Chapter 11 Developing New Market Offerings Marketing Management Tenth Edition Philip Kotler

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

Why New Products Fail “Over Championing” Overestimated Demand Poor Design Poor Marketing Execution High Development Costs Strong Competitive Reaction

Challenges in NPD Idea Shortage Fragmented Markets Social & Governmental Constraints Cost Capital Shortage Need for Speed Shorter Product Life Cycles

New Product Development Process Marketing Strategy Development Business Analysis Product Development Concept Development and Testing Market Testing Idea Screening Commercialization Idea Generation

Probability of Success commercialization given technical completion X Probability of economic success given commercialization X Overall probability of success = Probability of technical completion

Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts Concept Development & Testing 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

Product & Brand Positioning (a) Product-positioning map (breakfast market) b) Brand-positioning map (instant breakfast market) Expensive Slow Inexpensive Quick High price/oz. Low in calories Low price/oz. High in calories Brand C Brand B Brand A Bacon and eggs Pancakes Instant breakfast Cold cereal Hot

Good Housekeeping Seal? Conjoint Analysis Brand name -- Utility 1.0 | | | K2R Glory Bissell Retail Price Utility -- 1.0 | | | $1.19 $1.39 $1.59 Utility Money-Back Guarantee? 1.0 -- | | No Yes Good Housekeeping Seal? Utility 1.0 -- | | No Yes

Consumer-Goods Market Testing Controlled Test Market A few stores that have agreed to carry new products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Standard Test Market Full marketing campaign in a small number of representative cities.

Commercialization When Whom Product Price Place Promotion Where

Time of adoption innovations Adopter Categorization of the Basis of Relative Time of Adoption of Innovations 2 1/2% Innovators 13 1/2% Early adopters 34% Early majority 34% Late majority 16% Laggards Time of adoption innovations

Characteristics of the Innovation Rate of Adoption Relative advantage Compatibility Complexity Divisibility Communicability

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