Introducing New Market Offerings LECTURE-29 Introducing New Market Offerings

Chapter Questions What challenges does a company face in developing new products and services? What organizational structures and processes do managers use to manage new-product development? What are the main stages in developing new products and services? 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?

Categories of New Products New-to-the-world New product lines Additions Improvements Repositionings Cost reductions

The World’s Most Innovative Companies Apple Google Toyota General Electric Microsoft Procter & Gamble 3M Walt Disney IBM Sony Wal-Mart Honda Starbucks Target BMW Samsung

Seven Notions of Innovation See the future through the eyes of your customer Intellectual property and brand power are key assets Use digital technology to create tools for customers Build a championship team Innovation is a state of mind Speed is critical, so push your organization Partner up if you’re not the best Source: Kodak CEO Antonio Porez

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

What is a Venture Team? A venture team is a cross-functional group charged with developing a specific product or business; intrapreneurs are relieved of other duties and provided a budget and time frame.

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

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

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

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

Idea Generation: Creativity Techniques Attribute listing List the attributes of an object, then modify each object e.g. Screwdriver handle wooden or metal or plastic etc. Forced relationships List several ideas & consider each in relation to each other idea e.g. Office furniture desk, Book case or Filing cabinet etc. Morphological analysis Start with a problem & start thinking dimensions e.g. Power generation oil gas, wind, hydro or solar etc.

Idea Generation: Creativity Techniques Reverse assumption analysis List all the normal assumptions about an entity & then reverse them e.g. Restaurant menus ……raw material New contexts Take familiar process & put them in new context e.g. day care services for pets. Mind mapping Start with a thought & then think of the next thought. Link these thoughts e.g. Cars, colours, features etc.

Lateral Mapping Gas Station Stores = Gas stations + food Cyber Cafes = Cafeteria + Internet Cereak Bars = Cereal + snacking Kinder Surprise = Candy + toy Sony Walkman = Audio + portable

Variations on Failure Absolute product failure Partial product failure Relative product failure

Concepts in Concept Development Product idea Product concept Category concept Brand concept Concept testing

Concept Testing Communicability and believability Need level Gap level Perceived value Purchase intention User targets, purchase occasions, purchasing frequency

Marketing Strategy Target market’s size, structure, and behavior Planned price, distribution, and promotion for Year One Long-run sales and profit goals and marketing-mix strategy over time

Product Development Quality function deployment (QFD) The job of translating targeting customer requirements into a working prototype. It helped by a set of methods known as Quality Function Deployment (QFD) Customer attributes Engineering attributes

Prototype Testing Alpha testing Beta testing Testing the product within the firm to see how it performs in different applications. Beta testing Testing the product with customers. Rank-order method Paired-comparison method Monadic-rating method Market testing

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

Criteria for Choosing Rollout Markets Market potential Company’s local reputation Cost of filling pipeline Cost of communication media

What is Adoption? Adoption is an individual’s decision to become a regular user of a product.

Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

Characteristics of an Innovation Relative advantage The degree to which the innovation appears superior to existing products. Compatibility The degree to which the innovation matches the values & experiences of the individuals. Complexity The degree to which the innovation is relatively difficult to understand or use.

Characteristics of an Innovation Divisibility The degree to which the innovation can be tried on a limited basis. Communicability The degree to which the beneficial results of use are observable or describable to others.

Bibliography Marketing Management – A South Asian Perspective by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13th Edition, Published by Pearson Education, Inc. Advertising Principles & Practice by Wells, Moriarty & Burnett Published by Pearson Education, Inc. Principles of Advertising & IMC by Tom Duncan 2nd Edition, Published by McGraw-Hill Irwin. Principles of Marketing by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall

“Never deprive someone of hope; it might be all they have” The End: “Never deprive someone of hope; it might be all they have”