MARKETING MANAGEMENT 12th edition 20 Introducing New Market Offerings Kotler Keller

Chapter 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? What is the best way to set up the new-product development process? What factors affect the rate of diffusion and consumer adoption of newly launched products?

3M Emphasizes New Product Development

Categories of New Products New-to-the-world New product lines Additions Improvements Repositionings Cost reductions

Innovations

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

Table 20.1 Finding One Successful New Product

Venture Team Cross-functional group charged with developing a specific product or business; intrapreneurs are relieved of other duties and provided a budget and time frame.

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

Figure 20.1 The New Product-Development Decision Process

Idea Generation: Creativity Techniques Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind mapping

Lateral Mapping Gas stations + food Cafeteria + Internet Cereal + snacking Candy + toy Audio + portable

Variations on Failure Absolute product failure Partial product failure Relative product failure

Table 20.2 Product-Idea Rating Device

Concepts in Concept Development Product idea Product concept Category concept Brand concept Concept testing

Concept Testing Communicability and believability Need level Gap level Perceived value Purchase intention User targets, purchase occasions, purchasing frequency

Figure 20.5 Utility Functions Based on Conjoint Analysis

Airlines Use Conjoint Analysis

Marketing Strategy Target market’s size, structure, and behavior Planned price, distribution, and promotion for Year 1 Long-run sales and profit goals and marketing-mix strategy over time

Figure 20.6 PLS Sales for Three Product Types

Table 20.3 Projected 5-year Cash-Flow Statement (in thousands $)

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

Prototype Testing Alpha testing Beta testing Rank-order method Paired-comparison method Monadic-rating method Market testing

Consumer Goods Market Testing Sales-Wave Research Simulated Test Marketing Controlled Test Marketing Test Markets

Test Market Decisions How many test cities? Which cities? Length of test? What information? What action to take?

Timing of Market Entry First entry Parallel entry Late entry

Criteria for Choosing Rollout Markets Market potential Company’s local reputation Cost of filling pipeline Cost of communication media

Consumer-Adoption Process Adoption is an individual’s decision to become a regular user of a product.

Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

Figure 20.7 Adopter Categorization

Characteristics of an Innovation Relative advantage Compatibility Complexity Divisibility Communicability

Marketing Debate Who should you target with new products? Take a position: New products should always target new adopters. 2. New products should target the broadest market possible.

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?