ELC 310 Day 21

Agenda Third Student Case –Terra Lycos by Karen – presentations at least 15 min before class so I may upload to web server Case studies are tied to proceeding chapters, make sure you discuss the connection Discussion/lecture New Products

Rest of Schedule Nov 27 –Terra Lycos K. Pelletier –New Products Nov 30 –MarketSoft Corporation L. Dubois –Communication and Selling Dec 4 –OSRAM Sylvania G.Sumyla –Pricing and Distribution Dec 7 –Logistics.com A & B G. Nagradic –Build a Trusting Relationship with Customer Dec 11 –Travelocity K. Pelletier –The Future of Digital Marketing Dec 14 –Citibank Online L. Dubois –Written Case Study Due Dec 3PM –Quiz #4 –Case Study Presentations Due

Overview Introduction Preventing new product Failures Proactive Product development Reactive Product development Market research techniques Product Life Cycles

Introduction New product development is necessary for continued profitability Some numbers –74% of new products are weeded out before reaching the marketplace –41% new product failure in marketplace –26%*41% = 10.66% success rate –49.2% of sales of leading companies are from new products

Digital failures 90% of Internet companies failed in the marketplace –Vs 41% for new products –Problem was with new product selection before marketplace All Internet products went to market –Failed to Screen, test and do design work before launch Dot Coms were very expensive concept test.

Preventing new product failure Reasons –Market too small –Poor positioning –Little benefit relative to the competition –Not New/Not different (enough) –Forecasting error –Poor timing –Shift in technology –Change in Customer Tastes

Use a Structured Process Systematic process Poor projects eliminated Good projects supported Top 33.3% of companies use a disciplined project development approach 9 step process from elephantX9 step process from elephantX

Proactive Market Development Driven by Marketing Strategy Opportunity analysis based on consumer needs Generate a few high- potential ideas

Reactive marketing Strategy Can Reduce Cost and risks Reactions to competitive moves Success based on “sensing” ability & quickness

Which to use Prerequisites for Proactive –Strong R&D –Marketing Power –Markets rewards Premium products Pioneers –Theory T marketing Prerequisites for Reactive –Firm is flexible and agile –Market Price is king No ability to differentiate products Products do not require much experience –Theory P marketing

Market research techniques for proactive Listening In –Lowers costs of gathering info on customer needs –Requires monitoring of third party “conversation” with consumers Blogs Forums –Replace focus groups –Used by GM trucks Information acceleration –Used for premarket forecasting of High tech products –Prototypes and virtual models –Measure interactions with virtual models –Used by Toyota for Prius

Managing Life Cycles 4 phases –Introduction –Growth –Maturity –Decline Diffusion Theory of Innovation –Adopt then communicate –Slow start followed by rapid increase –Leads to saturation then decline

Marketing actions for Life cycle Introduction –Advertising and promotion –Stimulate diffusion of innovation –Increase awareness and positive consumer acceptance –Preempt competitors –Pricing is key Too high  slow sale growth but high margins Too low  penetrate market but differs profits

Marketing actions for Life cycle Growth –Holding and building market share –Product improvement –More differentiation occurs as competitors enter market Maturity –Competition intensifies  prices erode –CAC goes up, loyalty more important Decline phase –Milk profits –Start new product