8-1 Topic:6 Planning for New Products Dr. Ehsanul Huda Chowdhury Course: Strategic Marketing Program: BBA IBA

8-2 Importance of New Products  Innovation at top of potential value drivers (Ernst & Young) Innovation initiatives extend beyond new goods and services to include ideas, processes, and business practices  Organizations must build a culture of innovation

8-3 New Product Planning as a Customer Driven Process  New product classifications: 1. Newness to market 2. Newness to company  New product types: – Transformational innovations – New product category – Product line extensions – Incremental improvements

8-4 TM 5-1 Customer value analysis Objective is to identify needs for: 1. New products 2. Improvements to existing products 3. Improvements in production processes 4. Improvements in supporting services Finding Customer Value Opportunities

8-5 TM 5-1 Matching Capabilities to Customer Value Opportunities – Fit between capabilities and product offering Transformational Innovations – “new-to-the-world” ideas – Customers not always the best guides

8-6 Customer Expectations Customer Satisfaction Gap Actual Product Performance OPPORTUNITIES (1) New Products (2) Improvements (3) New and Improved Processes

8-7 Characteristics of Successful Innovations STRATEGIC INITIATIVES Creating an Innovative Culture Leveraging Capabilities Selecting the Right Innovation Strategy Developing and Implementing Effective New Product Processes Making Resource Commitments

8-8 Developing an Innovation Culture  Innovation Workshop for top executives to develop an innovation plan.  Innovation Statement highlighting objectives and senior management’s role and responsibilities.  Training programs for employees and managers.  Communicate the priority of innovation.  Speakers to expose employees to innovation authorities. Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April 2003, 43.

8-9 Customer Needs Analysis Business Analysis Screening and Evaluation Idea Generation Marketing Strategy Development Product Development Testing Commercialization NEW PRODUCT PLANNING PROCESS

8-10 Achieving Cross- Functional Interaction and Coordination R & D OperationsMarketing Finance

8-11 BENETTON’S STRATEGY TO REVIVE APPAREL IDEA GENERATION “We didn’t take advantage of the [industry’s] quick transformation,” says Silvana Cassano, the ex-Fiat manager who assumed the post of chief executive of Benetton Group on May 5. The transformation saw the best retailers turn into cutting-edge users of digital technology. Benetton’s competitors-notably Spain’s Zara and Sweden’s H&M Hennes & Mauritz-have raised the bar for the entire industry. These retailers can beam new styles from the catwalk to the shop floor in less than a month-and at bargain prices. Both deploy sophisticated technology to track which items are selling and which aren’t, so winners can be speedily restocked and slow movers yanked down from the racks. They’ve got the look down, too-cool and minimal for the working women who love Zara, and over-the-top trendy for H&M’s teen fans. And Benetton’s look? Blan. “The Benetton brand is out of fashion,” says Sagra Maceira de Rosen, retail analyst at J.P. Morgan Chase & Co. in London.

8-12 Cassano is out to change that. The message he delivered in his first encounter with shareholders was short and powerful: Benetton is going to refocus on the apparel business, which encompasses the Sisley and Benetton brands. It’s no secret that Benetton’s core casual wear business has suffered neglect. In 1994, founder Luciano Benetton launched an ill-fated diversification into sports equipment, snapping up trophy brands such as Prince (tennis rackets), Rollerblade (in-line skates), and Killer Loop (snowboards). But the strategy foundered and last year, Benetton sold the entire equipment division, booking $190 million in write-offs. The company posted its first annual loss-$10.5 million, on revenues of $2.3 million. Benetton’s Strategy (continued) Source: “Has Benetton Stopped Unraveling?” Business Week, June 30, 2003, 76.

8-13 METHODS OF GENERATING IDEAS Direct Search Linking Marketing and Technology Facilitating Lead User Analysis Creative Methods National Policy Exploratory Customer Studies Alliances/ Acquisition/ Licensing Technological Innovation

8-14 IDEA GENERATION SCREENING (fit/feasibility) CONCEPT EVALUATION BUSINESS ANALYSIS SCREENING, EVALUATING, AND BUSINESS ANALYSIS

8-15 Business Analysis  Revenue Forecasts  Preliminary Marketing Plan  Cost Estimation  Profit Projections  Other Considerations

8-16 NEW PRODUCT CONCEPT PRODUCT DEVELOPMENT AND USE TESTING MARKETING STRATEGY DEVELOPMENT MARKET TESTING LAUNCH PRODUCT AND PROCESS DEVELOPMENT

8-17  Development of the new product includes: –Product design –Packaging design –Decisions to make or purchase product components  Product Development Process: –Product Specifications –Industrial Design –Prototype –Use Tests –Process Development  Collaborative Development Product and Process Development

8-18 MARKETING STRATEGY AND MARKET TESTING  Marketing Strategy Decisions –Market Targeting –Positioning Strategy  Market Testing Options –Simulated Test Marketing –Scanner – Based Test Marketing –Conventional Test Marketing –Testing Industrial Products –Selecting Test Sites –Length of the Test –External Influences

8-19 COMMERCIALIZATION The Marketing Plan –Complete marketing strategy –Responsibilities for execution –Cross – functional approach Monitoring and Control –Real – time tracking –Role of the Internet –Include product performance metrics with performance targets