1. Marketing’s role in new product development and product decisions

2. LEARNING OBJECTIVES Categorize products by type. Define new product success and newness and learn how to set the stage for creating success. Describe strategies, processes, and organizational structures by which products are developed. Categorize products by type Define new product success and newness and learn how to set the stage for creating success Describe strategies, processes, and organizational structures by which products are developed

3. LEARNING OBJECTIVES Discuss the importance of branding, packaging, and labeling decisions. Understand how to manage products through their life cycles. Identify issues associated with managing across multiple projects in the portfolio. Discuss the importance of branding, packaging, and labeling decisions Understand how to manage products through their life cycles Identify issues associated with managing across multiple projects in the portfolio

4. TYPES OF PRODUCTS Consumer Products Business-to-Business Products

5. Table 8.1 Consumer Products

6. SETTING THE STAGE FOR SUCCESSFUL NEW PRODUCT DEVELOPMENT New to the market New to the company

7. New Product Development (NPD) Success Financial success Technical performance success Success from the customer’s perspective  Market share  Customer satisfaction

8. Why Products Fail Strategic Factors  No advantage or performance improvement  Lack of synergy with technologies and manufacturing processes  Lack of synergy with marketing Developmental Process Factors

9. Requirements for Developing Successful New Products Uncover unmet needs and problems Develop a competitively advantaged product Shepherd products through the firm

10. Uncovering Unmet Needs and Problems Defining Customer Needs Understanding Customer Needs Becoming the Customer: Discovering Problems Anthropological Excursions: Live with and Critically Observe Customers Talk to Customers to Get Needs and Problems (VOC)

11. Developing a Competitively Advantaged Product Competitively advantaged product is a product that solves a set of customer problems better than any competitor's product.

12. Shepherding products Through the Firm Leading NPD Projects  Project leaders  Champions  NPD process owners Mustering Management Support for NPD

13. New Product Development Process Successful product development: Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

14. New Product Development Process Define customer needs Understand customer needs  Become customers - first hand experience  Observe customers - anthropological excursions  Interview customers - voice of the customer Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

15. New Product Development Process Strategic focus  Markets/Market segments  Product types or categories  Product lines  Technologies/Technology platforms Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

16. New Product Development Process Project Strategy  Describes target market and core benefit package for the product Managing development  Stage-Gate Process (next slides) Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

17. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Idea generation and screen

18. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Preliminary investigation

19. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Detailed investigation

20. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Development

21. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Testing and validation

22. New Product Development Process Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm Review Gate 1 Stage 1Stage 2 Stage 3Stage 4Stage 5 Ideation Gate 2 Gate 3 Gate 4 Gate 5 kill recycle go kill recycle go kill recycle go kill recycle go kill recycle go Product launch

23. Insert Table 8.2 A Framework for Managing Product Development: Stage-Gate Processes

24. Insert Table 8.3 Generate and Screen Ideas

25. Insert Table 8.4 Generate and Screen Ideas

26. New Product Development Process NPD project leadership  Project leaders - most frequent, appointed by upper management with formal power  Champions - unofficial, informally influence  Process owners - build and maintain expertise in NPD, may act in leadership roles as well Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

27. New Product Development Process NPD project organization  Functional NPD structure - responsibility resides with a manager  Divisional NPD structure - each division is responsible for their own markets  Venture group structure - risky projects Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

28. New Product Development Process NPD project management support tips  Interview specific managers for project expectations, customer needs  Send out weekly updates  Invite relevant managers to participate  Request management involvement with prototypes Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

29. New Product Development Process NPD project management support tips  Use managers as test subjects  Create a weekly/monthly lunch for managers  Invite managers to after-hours team functions Uncover unmet needs and problems Develop competitively advantaged product Shepherd products through a firm

30. MAKING PRODUCT DECISIONS Branding Packaging Labeling

31. Branding Brands - used to simplify choices and reduce purchase risk for consumers Brand equity - marketplace value of a brand based on reputation and goodwill

32. Insert Figure 8.7 Successful and Unsuccessful Brand Extensions

33. Brand Name, Logo, Trademark Brand name, logo, trademark should  Attract attention  Be memorable  Help communicate the positioning of the product  Distinguish the product

34. Branding Strategies Branding strategies  Individual brand name strategy Proctor and Gamble, General Mills, etc.

35. Branding Strategies Branding strategies  Family brand name strategy Coca-Cola, Fischer Price, etc.

36. Branding Strategies Branding strategies  Hybrids: blanket family name, separate family names for types of products, family/individual brand combinations

37. Packaging Strategies Packaging provides:  Protection  Identification  Information  Usage enhancement  Disposal enhancement  Channel acceptance enhancement

38. Labeling Strategies Labeling helps customers by:  Identifying the manufacturer, country of origin, ingredients  Reporting expiration dates, content grading  Explaining product use  Warning about potential misuse  Providing care instructions  Serving as a communications link between the user, eventual buyers, and the company

39. Insert table 8.5 PRODUCT MANAGEMENT: MANAGING PRODUCTS THROUGH THEIR LIFE CYCLES

40. Product mode Price policy PlacePromotionProfits new use skimming or penetration strategies rapidly building distribution network build general demand expected losses IntroductionGrowthMaturityDecline Product Life Cycle

41. Product mode Price policy PlacePromotionProfits differentiated products maintain stable pricing policy solidify distribution channels and network generate secondary demand start of profits IntroductionGrowthMaturityDecline Product Life Cycle

42. Product mode Price policy PlacePromotionProfits modify product or product usage price reduction increase distribution efforts concentrate on product positioning highest profits (peak) IntroductionGrowthMaturityDecline Product Life Cycle

43. Product mode Price policy Place Promotion Profits maintain a basic product maintain pricing or raise prices limit distribution efforts cut-back on advertising and sales promotions reduced profits IntroductionGrowthMaturityDecline Product Life Cycle

44. The Product Diffusion ProcessInnovators: n First purchasers of a new product n Venturesome, willing to accept risk, socially aggressive, communicative, and cosmopolitan Innovators Early Adopters Laggards Early Majority Late Majority 2.5%

45. The Product Diffusion Process Early Adopters: n Are the next customers to buy new product n Enjoy leadership, prestige, and respect that early purchases bring n Tend to be opinion leaders n Adapt new ideas but use discretion Innovators Early Adopters Laggards Early Majority Late Majority 13.5%

46. The Product Diffusion Process Early Majority: n First part of mass market n Outgoing, communicative, and attentive to information cues Innovators Early Adopters Laggards Early Majority Late Majority 34.0%

47. The Product Diffusion Process Late Majority: n Second part of mass market n Less cosmopolitan and responsive to change n Include lower economic and social brackets, those past middle age, and skeptics Innovators Early Adopters Laggards Early Majority Late Majority 34.0%

48. The Product Diffusion ProcessLaggards: n Last to purchase n Price conscious, suspicious of change, low income and status, tradition bound, and conservative n Often difficult to market to this small group Innovators Early Adopters Laggards Early Majority Late Majority 16.0%

49. Determinants of Rate-of-Adoption Relative Advantage Compatibility Complexity Triability Observability The degree to which the innovation appears superior to previous ideas Directly related to adoption rates

50. Relative Advantage Compatibility Complexity Triability Observability The degree to which innovation is consistent with the values and experiences of potential adopters The higher, the faster the rate-of- adoption Determinants of Rate-of-Adoption

51. Relative Advantage Compatibility Complexity Triability Observability The relative difficulty understanding the innovation In most cases, the more difficult, the longer it will take to gain general acceptance Determinants of Rate-of-Adoption

52. Relative Advantage Compatibility Complexity Triability The degree to which the innovation can be tried on a limited basis First adopters face financial loss and ridicule from others lessened by limited trials Observability Determinants of Rate-of-Adoption

53. Relative Advantage Compatibility Complexity Triability Observability The degree to which the results of using the product are observable to others Tangible superiority will increase the adoption rate Determinants of Rate-of-Adoption

54. MANAGING THE PRODUCT PORTFOLIO Product Mix – the full set of products across all markets served Product Line – the set of products a firm targets to one general market

55. Insert Figure 8.11 MANAGING THE PRODUCT PORTFOLIO

56. Product Growth OpportunitiesProducts Markets Existing New Existing New Product Development Product Diversification Market Penetration Market Development

57. Market Penetration Strategy of increasing sales of existing products in existing markets Product Growth Opportunities

58. Products Markets Existing New Existing New Product Development Product Diversification Market Penetration Market Development

59. Product Growth Opportunities Product Development Introduction of new products into established markets

60. Product Growth Opportunities Products Markets Existing New Existing New Product Development Product Diversification Market Penetration Market Development

61. Product Growth Opportunities Market Development Strategy of identifying new markets for existing products

62. Product Growth Opportunities Products Markets Existing New Existing New Product Development Product Diversification Market Penetration Market Development

63. Product Diversification Strategy of offering new products to new markets Product Growth Opportunities

64. Supplemental Material

65. Alternate Process Idea Generation Screening Business Analysis Development Testing Commercialization Sources of ideas: n sales force n customers n competitors n suppliers n company personnel n retailers n wholesalers

66. Alternate Process Idea Generation Screening Business Analysis Development Testing Commercialization Screening criteria: n company objectives n production capability n marketing capability n product risk n product fit

67. Alternate Process Idea Generation Screening Business Analysis Development Testing Commercialization Business analysis assessment: n financial budgets n potential market n growth rate

68. Alternate Process Idea Generation Screening Business Analysis Development Testing Commercialization Development activities: n prototype n feasibility testing n preliminary market strategies

69. Alternate Process Screening Business Analysis Development Testing Commercialization Testing: n consumer testing n test marketing n simulated test marketing Idea Generation

70. Alternate Process Screening Business Analysis Development Testing Commercialization Commercialization: n full-scale production n full-scale marketing n integration into firm Idea Generation