1. MM: Chapter 12 Developing New Market Offerings Warin Chotekorakul

2. Is it a new product or not? Yes!!!!! As long as the marketing action affects target and marketing strategies of the company. Marketing action can be Repackaging, or Repositioning, or Pdt improvement, etc.

3. Challenges in New Product Development Develop or not develop Develop or not develop Shortage of idea for commodities Shortage of idea for commodities Fragmented market Fragmented market Social and governmental constraints: cloning Social and governmental constraints: cloning Costliness of development Costliness of development Capital shortage Capital shortage Faster development time: same idea at the same time Faster development time: same idea at the same time Shorter PLC: due to successfully new pdt Shorter PLC: due to successfully new pdt

4. Steps in New Product Development 1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing strategy development 5. Business analysis 6. Product development 7. Market testing 8. Commercialization

5. Step 1 : Idea Generation Coordinate, stimulate, and search for ideas in external environment and among company personnel Coordinate, stimulate, and search for ideas in external environment and among company personnel Identifying needs and wants through Identifying needs and wants through 1. Lead users 2. Competitors 3. Sales reps and intermediaries 4. Inventors, comm labs, universities

6. Idea-Generating techniques: Idea-Generating techniques: Attribute listing: listing all attributes and try to improve them Attribute listing: listing all attributes and try to improve them Forced relationships: combining several objects to create a new product Forced relationships: combining several objects to create a new product Morphological analysis: finding the main structure of the product, then look for the relationships among them Morphological analysis: finding the main structure of the product, then look for the relationships among them Step 1 : Idea Generation (2)

7. Idea-Generating techniques: Idea-Generating techniques: Need/problem identification: bringing cust to lab to ask whether they like or not like pdt Need/problem identification: bringing cust to lab to ask whether they like or not like pdt Brainstorming: brainstorming to get as many ideas as possible Brainstorming: brainstorming to get as many ideas as possible Synectics: no letting the participants know the specific problem Synectics: no letting the participants know the specific problem Step 1 : Idea Generation (3)

8. Step 2 : Idea Screening Setting up criteria Setting up criteria May encounter errors: May encounter errors: -Drop error: losing good ideas -Go error: permitting poor ideas go 3 levels of failures from Go error:- 3 levels of failures from Go error:- 1. Absolute product failure: loss to the firm, FC & VC can’t be covered 2. Partial product failure: cover all VC, not all FC 3. Relative product failure: not achieve obj

9. Step 2: Idea Screening (2) Success Formula OverallProbabilityofSuccess = ProbabilityofCommercializationGivenTechnicalCompletionProbabilityofTechnicalCompletion ProbabilityofEconomics'GivenCommercialization X X

10. Step 3: Concept development and Testing Concept development: try to make particular ideas to become more tangible Concept development: try to make particular ideas to become more tangible Concept testing: Concept testing: Conjoint analysis Conjoint analysis

11. Step 4: Marketing strategies development Preliminary design marketing strategy Preliminary design marketing strategy 1. Describe target, pdt positioning, sales, mkt share, profit in the first few years 1. Describe target, pdt positioning, sales, mkt share, profit in the first few years 2. Plan price, distn strategy, mkting budget for the first year 2. Plan price, distn strategy, mkting budget for the first year 3. Describe long-run sales, profit goals, 4P’s over time 3. Describe long-run sales, profit goals, 4P’s over time

12. Step 5: Business Analysis Estimating sales and product life cycles Estimating sales and product life cycles One-time purchased pdt (ring, home, etc) One-time purchased pdt (ring, home, etc) Infrequently purchased pdt (durables, autos, etc.) Infrequently purchased pdt (durables, autos, etc.) Frequently purchased pdt (nondurables) Frequently purchased pdt (nondurables) Estimating cost and profit Estimating cost and profit Dragalong Income Dragalong Income Cannibalized Income Cannibalized Income

13. Step 6 : Product Development Functional test (Alpha testing) Functional test (Alpha testing) Customer test (Beta testing) : bringing cust to lab to let them use sample Customer test (Beta testing) : bringing cust to lab to let them use sample Consumer preference testing: Consumer preference testing: Rank-order: X>Y>Z Rank-order: X>Y>Z Paired-comparison: XY, XZ, YZ; X>Y>Z Paired-comparison: XY, XZ, YZ; X>Y>Z Monadic rating: rating liking of each pdt on a scale; X=8, Y=6, Z=3 Monadic rating: rating liking of each pdt on a scale; X=8, Y=6, Z=3

14. Step 7: Market Testing (2) Consumer-goods market testing Consumer-goods market testing Sales-waves research: reoffer the pdt at slightly reduced prices Sales-waves research: reoffer the pdt at slightly reduced prices Simulated test marketing: stimulate cust to try pdt in given outlet Simulated test marketing: stimulate cust to try pdt in given outlet Controlled test marketing: control some store factors Controlled test marketing: control some store factors Test markets Test markets Business-goods market testing Business-goods market testing

15. Step 8: Commercialization When When First entry First entry Parallel entry Parallel entry Late entry Late entry Where Where To whom (Target Market) To whom (Target Market) How (Marketing strategy) How (Marketing strategy)

16. Consumer Adoption Process Awareness Awareness Interest Interest Evaluation Evaluation Trial Trial Adoption Adoption

17. 5 Groups of Consumers Innovator Innovator Early adopter Early adopter Early majority Early majority Late majority Late majority laggards laggards

18. Factors Influencing Adoption Process 1. Difference in readiness 2. Personal influence 3. Characteristics of innovation 1. Relative advantage: seeing benefits 2. Compatibility: going well with cust belief 3. Complexity: how complex the pdt is 4. Divisibility: trying out pdt easily or not 5. Communicability: communicating benefits to others or not 6. Cost, risk 4. Organizations vary in readiness