h:\share\rabino\information and marketing strategy.ppt 1 Why New Products Fail? Depending on study, up to 80% of new products fail. Reasons can suggest ways of proving problems. Too small a target market – must be large enough to be profitable Poor product quality/performance – product has to work adequately, meet customer needs – Problem of tradeoffs. Company may mismanage a tradeoff in benefits. MacLean Deluxe Insignificant point of difference – product is not a great improvement on competitive offerings

h:\share\rabino\information and marketing strategy.ppt 2 Why New Products Fail? (cont’d) No protocol – clear statement of target market, its needs, what product would do Poor positioning – diet beer vs. light beer Inadequate budget – biggest reason small companies fail is inadequate capital Inadequate competitive analysis – reaction of current incumbents, products from new entrants Blinders (=“Vision”?)– company may have preconception that is never questioned. (Especially for high-tech)

h:\share\rabino\information and marketing strategy.ppt 3 Why New Products Fail? (cont’d) No Access to Market – especially difficult for smaller companies in competitive industries. Bad timing – “Better never than late.” relative to competitors, First-movers may have advantage. Relative to customer trends, may not want to be early; too much education required. Poor execution of marketing mix – wrong price, wrong distribution, wrong ad campaign. “Bad advertising kills a good product”

h:\share\rabino\information and marketing strategy.ppt 4 Taxonomy of Types of Innovation Familiar with Product classUnfamiliar with product class Known Product Modifications Examples: Extra-strength pain killer Unscented TIDE Downsized Market Modification Examples: “Personal copier” Food processors for home use Developing Routine Innovations Examples: Digital audio tapes Fuel injected engines Product “Alpha” Radical Innovation Examples: Genetically engineered cancer “cures” Integrated office systems Product “Beta” Market Technology Note: Shaded cells indicate the domain of technological innovation

h:\share\rabino\information and marketing strategy.ppt 5 A New Product Introduction Model (Robert Cooper) The model is a series of moves and is set up as a stepwise process to move a new product from the idea stage to market launch The seven stage game plan Features of the model: The game plan is incremental The plan is designed to manage risk: each step is progressively more expensive than the one that precedes it, but the various activities are deliberately designed to drive uncertainty down as one moves from left to right-through the model Each stage is separated from the one before it by an evaluation or a bail-out point. Note: The strategy formulation is not presented here because it is “macro” in nature, dealing with the firm’s entire new product program.

h:\share\rabino\information and marketing strategy.ppt 6 Success Factors 1.A unique superior product. “Superiority” should be defined from the customer’s viewpoint, not the eye of R&D or design departments. Superiority is derived from design, features, attributes, specification and even positioning. 2.A strong market orientation must prevail throughout the entire new product project. 3.Pre-development activities – the homework – are vital. These activities include: preliminary market and technical studies, market research, business analysis, etc. 4.Sharp and early product definition. Including target market definition, concept and benefits, positioning strategy, product failures, attributes (prioritized among “must have” and “would like to have”) This definition is developed with inputs and a signed agreement obtained from functional areas involved (Marketing, R&D, Manufacturing). The definition also serves as a communication tool to all functional areas. 5. Companies that follow a new product game plan incorporate discipline into a process that often is ad hoc and seriously deficient.

h:\share\rabino\information and marketing strategy.ppt 7 The Seven-Stage Game Plan Idea Preliminary Assessment Concept Development Testing Trial Launch

h:\share\rabino\information and marketing strategy.ppt 8 Phases in the Life of a Product (Cont) Evaluation of a development product should be based on three primary measures: A.Resource Utilization (including materials, capital equipment, and people’s time.) B.Design Quality (where the quality of design captures the extent to which it meets the needs of the target market, as well as its actual performance, aesthetics, and cost. C.Development Cycle Time Quality of design and the achievement of the best performance possible for each new product is particularly relevant for the high tech firm.