1. New Product Innovation
National Correctional Industries Association Enterprise 2004
March 23, 2004

2. Agenda Product Development Market Research Concept Testing
Prototype Development
Market Testing
Product Launch
Discussion

3. Why New Products?
New product development is critical to long-term success
Approximately one-third of the revenue a business generates is coming from products they did not sell five years ago
Changing environment creates new demands and needs

4. Product Development Must be alert to quickly develop opportunities
Focus on markets or product categories consistent with organization’s objectives, resources, capabilities and strengths
Securing a competitive advantage

5. Industrial New Product Ideas
Company sources other than R&D %
Analysis of the competition %
Research & Development %
Product users %
Supplier suggestions %
Product user research %
Published information %

6. New Products A way of getting new and keeping old customers
Effective way of obtaining a competitive advantage
Source of growth and excitement

7. New Product Categories
New to the world products
New product lines
Product line extensions
Improvements and revisions to existing products
Repositionings
Cost reductions

8. Product Development Process
Launch
Test
Marketing
Prototype
Development
Concept
Testing
Market research
and
Opportunity scan

9. Marketing Very important to product development success
Key to successful marketing is imaginative, effective, creative communication
Find a need and fill it.
Mutually beneficial exchange relationships
Non-profit organizations have sometimes difficult task

10. Marketing Strategies Increase the number of customers
Increase the average transaction
Increase the frequency of repurchase

11. Marketing Concepts Consumer orientation Customer service orientation
Profit orientation
Society

12. Marketing Mix
Price
Placement
Product
Promotion

13. Market Research Who is my target audience?
Are there enough members of this target group to make the business worthwhile?
How large is the potential market and how much of that potential market can I capture?
Who is my competition and what would make someone choose my product over their current?

14. Market Opportunity and Threats
Economic Realities
GNP
Disposable Income
Discretionary Income
Societal Focus
Population Shifts
Values
Attitudes
Competition
Trends
Technological Development
Advance in technology
Market receptiveness to technology
Legal & Regulatory Condition
Laws
Regulations

15. Market Placement Identify target markets Size and growth potential
Ability and ease of reaching segment
Good fit with organizational objectives
Greatest revenue generation with least investment

16. Market Placement Determine opportunity Evaluate competition
Segment size
Annual usage potential
Anticipated annual growth rate
Margin
Value in use
Evaluate competition
Strengths/Limitations
Implications

17. Market Research – Pricing Strategies
Goal is to achieve a target profit
Can you hold a product’s manufacturing costs down to less than 25% of its perceived value?
Estimating manufacturing costs
Obtain price quotes from several suppliers

18. Concept Testing Determine Critical success factors
Financial objectives
Marketing mix strategies
Product, Pricing, Promotion, Placement
Marketing plan initiatives
Activity, Budget, Timing

19. Prototype and Test Marketing
Survey end-users
Do you prefer this product over your current product?
Does this product meet the need you thought it would?
Does the way the product works provide an important benefit?

20. Promotion and Product Launch
Publicity
Trade journals
Conferences
Personal selling
Word of mouth

21. Reasons For New Product Failures
Poor marketing research
Technical problems
Insufficient marketing effort
Bad timing

22. Marketing Plan
Audit
Challenge and refine assumptions from current plan
Evaluate success for input into next year’s plan
Revise plan for new year incorporating marketplace learnings, marketing insights and current plan successes

23. Summary New product development drives growth
Market research is critical to the success of a new product launch
Market research is a continuous process as customer needs, your business and the environment changes