20 Introducing New Market Offerings 1

Chapter Questions  What challenges does a company face in developing new products and services?  What organizational structures and processes do managers use to oversee new-product development?  What are the main stages in developing new products and services? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-2

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-3 Chapter Questions  What is the best way to manage the new- product development process?  What factors affect the rate of diffusion and consumer adoption of newly launched products and services?

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-4 Categories of New Products New to the World Additions Improvements Repositionings Cost reductions

The Innovation of Wii Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-5

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-6 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 201. Finding One Successful Product Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-7

What is a Venture Team?  A venture team is a cross-functional group charged with developing a specific product or business. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-8

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-9 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 New-Product Development Decision Process Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-10

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ways to Find Great New Ideas  Run informal sessions with customers  Allow time off for technical people to putter on pet projects  Make customer brainstorming a part of plant tours  Survey your customers  Undertake “fly on the wall” research to customers

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall More Ways to Find Great Ideas  Use iterative rounds with customers  Set up a keyword search to scan trade publications  Treat trade shows as intelligence missions  Have employees visit supplier labs  Set up an idea vault

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Drawing Ideas from Customers  Observe customers using product  Ask customers about problems with products  Ask customers about their dream products  Use a customer advisory board or a brand community of enthusiasts to discuss product

Demand-First Innovation and Growth (DIG) Framework Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Demand Landscape Opportunity Space Strategic Blueprint

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Idea Generation: Creativity Techniques  Attribute listing  Forced relationships  Morphological analysis  Reverse assumption analysis  New contexts  Mind mapping

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Lateral Mapping  Gas stations + food  Cafeteria + Internet  Cereal + snacking  Candy + toy  Audio + portable

Table 20.2 Product Idea Rating Device Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-17

Figure 20.2 Forces Fighting New Ideas Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-18

Figure 20.3 Product and Brand Positioning Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-19

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Concept Testing  Communicability and believability  Need level  Gap level  Perceived value  Purchase intention  User targets, purchase occasions, purchasing frequency

Figure 20.4 Conjoint Analysis Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-21

Figure 20.5 Utility Functions Based on Conjoint Analysis Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-22

Figure 20.6 Product Life-Cycle Sales for Three Types of Products Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-23

Table 20.3 Projected Five-Year Cash Flow Statement Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-24

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-26

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Test Market Decisions  How many test cities?  Which cities?  Length of test?  What information to collect?  What action to take?

Timing of Market Entry  First entry  Parallel entry  Late entry Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-28

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall What is Adoption? Adoption is an individual’s decision to become a regular user of a product.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

Figure 20.7 Adopter Categorization on the Basis of Relative time of Adoption Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-31

Characteristics of an Innovation  Relative advantage  Compatibility  Complexity  Divisibility  Communicability Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-32

For Review  What challenges does a company face in developing new products and services?  What organizational structures and processes do managers use to oversee new-product development?  What are the main stages in developing new products and services? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-33

For Review  What is the best way to manage the new- product development process?  What factors affect the rate of diffusion and consumer adoption of newly launched products and services? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-34