Product-Development Programs
Types of Newness to the Firm Type of Corporate Strategy Types of New ProductTypical Extent of Newness DiversificationCompletely newNew Market Brand franchise extensionProbable new technology Market DevelopmentTechnical extensionNew use Change in formUser-related technology Product DevelopmentLine extensionNew segment FlankerPossible new technology Market penetrationProduct modificationNo change in market intended to meet or Small change in technology beat competition
Types of Newness to the Market Type of InnovationType of NewnessChange required of Buyers DiscontinuousNew-product classCreates new consumption pattern (TV, radio) Dynamically New-product formChanges determinant benefits continuous(personal computer, portable radio) ContinuousNew or improvedChanges evaluation of brand modelbut not determinant attributes (IBM Thinkpad, Sony Walkman) NoninnovativeNew brandChanges set of alternatives within a product form (IBM clones, new brands of toothpaste)
A Phased New Product Development Process Strategic Direction Concept Generation Concept Testing Screening Technical Feasibility Product -Use Testing Market Testing Marketing Plan Production Plan Financial Evaluation Launch
A Parallel New-Product Development Process Strategic Direction Concept Generation Concept Testing Screening Product Use Testing Market Testing Final Financial Evaluation Launch Preliminary Marketing Plan Revised Marketing Plan Basic/Applied Research Develop Prototype Production Planning
Factors Influencing the Success of New products uProduct superiority/quality uEconomic advantage to the user uOverall company/project fit uTechnological compatibility uFamiliarity to the company uMarket need, growth and size uCompetitive situation uDefined opportunity uProject definition
Frequently Occurring and Most Bothersome Problems Among Users of Car Waxes
Questions and Typical Methods for Concept Testing Question ¶How desirable is the concept to target customers? ·What is the probability the customer will try or use the product? ¸What is the relative utility for various attribute combinations? Method ¶Customers rate the concept on a series of dimensions such as uniqueness, problem solving potential, believability, etc. ·Customers are asked to rate the product on a scale from “would not try” to “definitely would try.” ¸Customers rank order their preferences for various combinations of attributes (conjoint analysis).
Example of a Conjoint Analysis Concept Test
Results of Conjoint Analysis on One Customer’s Preferences
A Scoring Profile for a New Product
Determinants of First Year Sales volume Sales and Distribution Budget Advertising Budget Advertising Message Price and Consumer Promotions Product Characteristics Awareness and Distribution Coverage Probability of Trial Product Satisfaction Transaction Size Purchase Frequency Trial Repeat Purchases Sales Volume Marketing ProgramsConsumer Reaction/Response
Typical First Year Sales Patterns Sales Time Trial Repeat Total Sales
To Test or Not to Test Factors Favoring Test Marketing ¶Acceptance of the product concept is very uncertain ·Sales potential is difficult to estimate ¸Cost of developing consumer awareness and trial is difficult to estimate ¹A major investment is required to produce at full scale ºAlternative prices, packages, or promotional appeals are under consideration
To Test or Not to Test Reasons for Not Test Marketing ¶The risk of failure is low relative to test- marketing costs ·The product will have a short life cycle ¸Beating competition to the market is important because the product is easily imitated ¹Basic price, package and promotional appeals are well established
Alternatives to Internal Product Development ¶ Acquisition · Licensing Advantages è Save Time è Improve Chances of Success by Acquiring Skills è May be Less Costly