1. Strategies for Obtaining New Product Ideas
Acquisition
Development
Acquired
Companies
Development in
Own laboratory
Acquired
Patents
Contract with
Independent
Researcher
Acquired
Licenses

2. Categories of New Product
New-to-the-world
New product lines
Additions to existing Product lines
Improvements and revisions of existing products
Repositioning
Cost reductions
Strategies for Obtaining New Product Ideas
Acquired
Companies
Acquired
Companies
Original
Products
Original
Products
Acquired
Patents
Acquired
Patents
Product
Improvements
Product
Improvements
Acquired
Licenses
Acquired
Licenses
Product
Modifications
Product
Modifications
New
Brands
New
Brands

3. Challenges in New Product Development
Why do new products fail?
A high-level executive pushes a favorite idea through in spite of negative research findings.
The idea is good, but the market size is overestimated.
The product is not well designed
The product is incorrectly positioned in the market, not advertised effectively, or overpriced.
The product fails to gain sufficient distribution coverage or support.
Development costs are higher than expected.
Competitors fight back harder than expected.

4. Challenges in New Product Development
Factors that tend to hinder new-product development:
Shortage of important ideas in certain areas
Fragmented markets
Social and governmental constraints
Cost of development
Capital shortages
Faster required development time
Shorter product life cycles
Fragmented Market

5. New Product Development Process
Marketing
Strategy
Development
Business
Analysis
Product
Development
Concept
Development
and Testing
Market
Testing
Idea
Screening
Commercialization
Idea
Generation

6. Organizational Arrangements
Budgeting for New Product Development
Stage
Number of Ideas
Pass Ratio
Cost per Product Idea
Total Cost
1. Idea screening 64
1:4
$1,000
$64,000
2. Concept testing 16
1:2
20,000
320,000
3. Product development 8
200,000
1,600,000
4. Test marketing 4
500,000
2,000,000
5. National launch 2
5,000,000
10,000,000
$5,721,000
$13,984,000

7. Organizational Arrangements
Organizing New-Product Development
Product managers
New-product managers
High-level management committee
New product department
Venture teams

8. 1. Managing Development Process: Ideas
(i) Idea Generation: It is the Systematic Search for New Product Ideas Obtained Internally and from: C U S T O M E R C O M P E T I R S D I S T R B U O S U P L I E R

9. 1. Managing Development Process: Ideas
(ii) Idea Screening:
Idea Manager
Idea Committee
Ideas
Screening
Promising Idea
Marginal Idea
Rejected Idea
Good Idea
Bad Idea
Accepted
Go Error
Rejected
Drop Error

10. 2. Managing Development Process: Concept to Strategy
Concept Development and Testing:
1. Concept Development
Product Idea
Product Concept
Example:
Product Idea: Producing a powder to add to milk to increase its nutritional value and taste.
Product Concepts:
Concept 1: Instant breakfast drink for adults who want a quick nutritious breakfast without preparing a breakfast.
Concept 2: Tasty snack drink for children to drink as a midday refreshment
Concept 3: A health supplement for older adults to drink in the late evening before they go to bed.
Contd………

11. 2. Managing Development Process: Concept to Strategy
Suppose the instant breakfast drink concept looks best. Next task is to find out:
Product Positioning Map
Brand Positioning Map

12. 2. Managing Development Process: Concept to Strategy
Concept Development and Testing:
2. Concept Testing: Presenting the product concept to appropriate target consumers and getting their reaction.
Questions to measure product dimensions
Communicability and believability
Need level
Gap level
Perceived value
Purchase Intention
User targets, purchase occasions and purchasing frequency

13. 2. Managing Development Process: Concept to Strategy
Concept Development and Testing:
3.Conjoint Analysis: Respondents are shown different hypothetical offers formed by combining varying levels of the attributes, then asked to rank the various offers.
Brand name --
Utility
1.0
| | |
K2R Glory Bissell
Retail Price
$ $ $1.59
Good Housekeeping Seal?
| |
No Yes
Money-Back
Guarantee?

14. 2. Managing Development Process: Concept to Strategy
(ii) Marketing Strategy Development
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two Describes Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Term:
Sales & Profit Goals
Marketing Mix Strategy

15. 2. Managing Development Process: Concept to Strategy
(iii) Business Analysis
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept

16. 2. Managing Development Process: Development to Commercialization
Product Development
Quality Function Deployment (QFD): Translating target customer requirements into a working prototype.
Customer attributes (CAs): Generated by market research
Engineering attributes (EAs)
When prototypes are ready, they must be put through rigorous tests:
Functional Tests (Alpha Testing): Within the organization
Customer Tests (Beta Testing): Set of customers use the prototype and give feedback on their experience.
Rank Order Method
Paired Comparison Method
Monadic Rating Method

17. 2. Managing Development Process: Development to Commercialization
(ii) Market Testing
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
Sales-
Wave
Research
Test offering trail to
a sample of
consumers in
successive
periods.
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.

18. 2. Managing Development Process: Development to Commercialization
(iii) Commercialization: It is the introduction of the new product into the market place.
When?
Where? To
Whom?
How?
Product
Price
Place
Promotion

19. Consumer Adoption Process
Adoption: It is an individual’s decision to become a regular user of a product. Consumer adoption process is later followed by consumer loyalty process.
Stages in Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption

20. Factors Influencing Adoption Process
(i) People Differ in Readiness to Try new Products
2 1/2%
Innovators
13 1/2%
Early
adopters
34%
Early
majority
34%
Late
majority
16%
Laggards
Time of adoption innovations
(ii) Personal Influence Plays a Large Role
Contd……

21. Factors Influencing Adoption Process
(iii) Characteristics of Innovation Affect Rate of Adoption
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
(iv) Organization also vary in Readiness to adopt Innovation
Relative Advantage
Compatibility
Comunicability

22. Summary
Once a company has segmented the market, chosen its target customers, identified their needs and desired positioning, it is ready to develop and launch appropriate new products.
New product development requires the company to establish an effective organization for managing the development process.
Eight stages are involved in the new product development process: Idea generation, Idea Screening, Concept Development and Testing, Marketing Strategy Development, Business Analysis, Product Development, Market Testing and Commercialization.
Consumer Adoption process is the process by which customers learn about new product, try them and adopt or reject them.
Consumer Adoption process is influenced by many factors beyond the marketer’s control, as, consumer’s and organization’s willingness to try new products, personal influences and the characteristics of new product or innovation.

23. Thank You !