New Product Development Strategy

WHY DEVELOP NEW PRODUCTS? In 1982 Timex turned down the opportunity to market "Swatches". Timex was resting on its laurels, simple low cost watches. Digitalisation revolutionized industry while Timex stuck with analog. DID NOT KEEP UP WITH WATCHES EVOLUTION FROM A FUNCTIONAL OBJECT TO A FASHION ACCESSORY. Today Global consumer owns 5 watches up from 1.5 watches 30 years ago. Move from chronometer to fashion accessory Timex then acquired Guess and Monet Jewellers

Why New Products Fail? Lack of differentiating advantage – RASna JUc FIT, HLL Ayush Poor marketing plan – Yamaha RX -100, Real Value Vaccumiser, Appy, Evita, Appy, HLL Max Biscuit Target market too small – Viruddh, Livon Poor product quality – Annapoorna RTEC, Dandi Namak, Real Juice

New Product – Value Proposition Value Proposition = Perceived Differential Advantage

Consumer Buying Process Need Recognition Information Search Evaluation of Alternatives Purchase Post-Purchase Behavior

Successive Sets Involved in Customer Decision Making FISHBEIN MULTI-ATTRIBUTE MODEL FOR BUYING Philips LG Samsung Sansui Onida Videocon Sony BPL Hitachi Akai National Aiwa LG Samsung Sansui Onida Videocon Sony BPL Akai Aiwa LG Samsung Sansui Onida Videocon Aiwa Sansui Onida Videocon ? Total Set Awareness Set Consideration Set Choice Set Decision

Differentiation Variable- Product Delivery Warranty Installation After-sales Credit Training Features Style Design Packaging Branding

Repositioning Cost reductions New Product Development New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Six categories of new products

NEW PRODUCTS - TYPES OF INNOVATION A new product can be: Continuous Innovation. Dynamic Continuous Innovation Discontinuous Innovation

NEW PRODUCT DEVELOPMENT PROCESS Idea Generation Idea Screening Caution : Go Error / Drop Error Concept Development Category concept / Brand Concept Concept Testing Marketing Strategy Market Testing When / Where / Whom / How ? Commercialisation  How many test cities? Which cities?  Length of test?  What information?  What action to take? Business Analysis Product Development

Relative Weight Product Score Product Rating Key Success Factors(a)(b)(c = a x b) Level of Differentiation Value for Money Marketing strength Competitive Intensity Total s Rating scale: poor fair good. Minimum acceptance rate: 6.1 Product-Idea Rating Device

Awareness Interest Trial Evaluation Adoption New Product –Innovation Diffusion

 Relative advantage  Compatibility  Complexity  Divisibility  Communicability New Product Adoption RATE OF ADOPTION AFFECTED BY

New Product Adoption ADOPTER CATEGORIES

A life cycle plots sales of an offering or a product class over a period of time. There are FOUR main stages: 1. Introduction 2. Growth 3. Maturity (Saturation) 4. Decline The Product Life Cycle

Profits Sales IntroductionGrowthMaturityDecline Sales The Product Life Cycle

INTRODUCTIONGROWTHMATURITYDECLINE Marketing Objective Market Development Build Brand Loyalty Convert the Competitor’s Customer Reduce Inventory SalesLowHigh Low CostsHighModerateLow ProfitsLowModerateHighLow CompetitorsVery FewIncreasingManyFew ProductBasic ProductDifferentiateLine ExtensionsReduce Variants PricePenetration/ Skimming Maintain Prices Lower Prices PlaceSelective Distribution Extensive Distribution Extensive Distribution Selective Distribution PromotionHigh Advertising Sales Promotion Moderate Advertising PR/Publicity High Advertising Trade Promotion Low LIFECYCLE STRATEGIES

The Product Life Cycle Product hierarchy Need family Product family Product class Product line Product type Item