1. 11 - 1 © 1997 South-Western College Publishing LHM Slides Created and Designed by Apple Mountain Software, Inc. http://www.apmtnsoft.com Marketing Charles W. Lamb, Jr. Joseph F. Hair, Jr. Carl McDaniel

2. 11 - 2 © 1997 South-Western College Publishing LHM Categories of New Products New-To-The-World New Product Lines Product Line Additions Improvements/Revisions Repositioned Products Lower-Priced Products Six Categories of New Products Six Categories of New Products

3. 11 - 3 © 1997 South-Western College Publishing LHM New Product Introductions Source: Statistical Abstract of the United States (1996), p. 548. Technology 1.1% Positioning 39.1% New Formulation 47.8% Packaging 8.6% New Market 3.4%

4. 11 - 4 © 1997 South-Western College Publishing LHM New Product Development Process New Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product

5. 11 - 5 © 1997 South-Western College Publishing LHM New Product Introductions in 1994 Source: Statistical Abstract of the United States (1996), p. 548. Miscellaneous Food Beverages Health and Beauty Household Products Pet Products 3,883 807 2,655 378 161 87

6. 11 - 6 © 1997 South-Western College Publishing LHM Why Some New Products Succeed Success Factors Good match between product and market needs Adequate target market size Offers a clear, meaningful benefit Distinguishable from substitute products Offers unique, superior value Organizational commitment to new product development Failure Factors Poor match between product and market needs Overestimation of market size Incorrect positioning Inappropriate price Inadequate distribution Poor promotion

7. 11 - 7 © 1997 South-Western College Publishing LHM Organization for New Product Development New Product Committee Structures Used to Facilitate New Product Development Structures Used to Facilitate New Product Development New Product Department Venture Teams Simultaneous Product Development

8. 11 - 8 © 1997 South-Western College Publishing LHM The Product Life Cycle Time Dollars 0 Product Category Profits Product Category Sales Introductory Stage Growth Stage Maturity Stage Decline Stage

9. 11 - 9 © 1997 South-Western College Publishing LHM The Importance of New Products + 0 – Dollars Time Profits New product 1 New product 2 Sales volume Profits Sales volume

10. 11 - 10 © 1997 South-Western College Publishing LHM Adopters’ Categories Percentage of Adopters ADOPTERS’ CATEGORIES BASED ON INNOVATIVENESS Innovators 2.5% Early Adopters 13.5% Late Majority 34% Early Majority 34% Laggards 16% Time

11. 11 - 11 © 1997 South-Western College Publishing LHM The Diffusion Process Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Diffusion curve Cumulative Percentage of Adoption 100 90 80 70 60 50 40 30 20 10 0 Relationship of the Diffusion Process to the Product Life Cycle Introduction Growth Maturity Decline Time of Adoption of Innovations

12. 11 - 12 © 1997 South-Western College Publishing LHM Rate of Adoption Trialability Observability Relative Advantage Compatibility Complexity Characteristics Affecting New Product Diffusion Characteristics Affecting New Product Diffusion