ELC 310 Day 21

Agenda Third Student Case Terra Lycos by Randy E-mail presentations at least 15 min before class so I may upload to web server Case studies are tied to proceeding chapters, make sure you discuss the connection Discussion/lecture New Products

Case study Grading rubric Grade Generation for analysis Two Components Instructor Grade for Presenter 60% of Total grade Instructor Grade for Class Participation 40% of Total Grade Grading Rubric for Presenter Demonstrated Mastery of Case Study 30% Understanding of How Case Study Fits 30% Presentation effectiveness 20% Quality of PowerPoint 20% Grading Rubric for Class Participation Subjective interpretation 100% Grades will be posted Nov 25 & Dec 12

Rest of Schedule Today Nov 25 Dec 2 Dec 5 Dec 9 Dec 12 Dec 17 @ 1 PM Terra Lycos (Randy) New Products Nov 25 MarketSoft Corporation (Emlyn) Communication and Selling Dec 2 OSRAM Sylvania (Owen) Pricing and Distribution Dec 5 Logistics.com A & B (Steve) Build a Trusting Relationship with Customers Dec 9 Travelocity (Randy) The Future of Digital Marketing Dec 12 Citibank Online (Emlyn) Dec 17 @ 1 PM Quiz #4 Written Case Study & Presentations Due ® Tony Gauvin, UMFK , 2007

Overview Introduction Preventing New Product Failures Proactive Product development Reactive Product development Market Research Techniques Product Life Cycles

Introduction New product development is necessary for continued profitability Some numbers 74% of new products are weeded out before reaching the marketplace 41% new product failure in marketplace 26%*41% = 10.66% success rate 49.2% of sales of leading companies are from new products

Digital failures 90% of Internet companies failed in the marketplace Vs. 41% for new products Problem was with new product selection before marketplace All Internet products went to market Failed to Screen, test and do design work before launch Dot Coms were very expensive concept test.

Preventing new product failure Reasons Market too small Poor positioning Little benefit relative to the competition Not New/Not different (enough) Forecasting error Poor timing Shift in technology Change in Customer Tastes

Use a Structured Process Systematic process Poor projects eliminated Good projects supported Top 33.3% of companies use a disciplined project development approach 9 step process from elephantX

Proactive Market Development Driven by Marketing Strategy Opportunity analysis based on consumer needs Generate a few high-potential ideas

Reactive marketing Strategy Can Reduce Cost and risks Reactions to competitive moves Success based on “sensing” ability & quickness

Which to use Prerequisites for Proactive Prerequisites for Reactive Strong R&D Marketing Power Markets rewards Premium products Pioneers Theory T marketing Prerequisites for Reactive Firm is flexible and agile Market Price is king No ability to differentiate products Products do not require much experience Theory P marketing

Market research techniques for proactive Listening In Lowers costs of gathering info on customer needs Requires monitoring of third party “conversation” with consumers Blogs Forums Replace focus groups Used by GM trucks Information acceleration Used for premarket forecasting of High tech products Prototypes and virtual models Measure interactions with virtual models Used by Toyota for Prius

Managing Life Cycles 4 phases Diffusion Theory of Innovation Introduction Growth Maturity Decline Diffusion Theory of Innovation Adopt then communicate Slow start followed by rapid increase Leads to saturation then decline

Marketing actions for Life cycle Introduction Advertising and promotion Stimulate diffusion of innovation Increase awareness and positive consumer acceptance Preempt competitors Pricing is key Too high  slow sale growth but high margins Too low  penetrate market but defers profits

Marketing actions for Life cycle Growth Holding and building market share Product improvement More differentiation occurs as competitors enter market Maturity Competition intensifies  prices erode CAC goes up, loyalty more important Decline phase Milk profits Start new product