Introducing New Market Offerings

1. Introducing New Market Offerings LECTURE-29

2. Chapter Questions • What challenges does a company face in developing new products and services? • What organizational structures and processes do managers use to manage new-product development? • What are the main stages in developing new products and services? • What is the best way to manage the new-product development process? • What factors affect the rate of diffusion and consumer adoption of newly launched products and services?

3. Categories of New Products New-to-the-world New product lines Additions Improvements Repositionings Cost reductions

4. Apple Google Toyota General Electric Microsoft Procter & Gamble 3M Walt Disney IBM Sony Wal-Mart Honda Starbucks Target BMW Samsung The World’s Most Innovative Companies

5. Seven Notions of Innovation • See the future through the eyes of your customer • Intellectual property and brand power are key assets • Use digital technology to create tools for customers • Build a championship team • Innovation is a state of mind • Speed is critical, so push your organization • Partner up if you’re not the best Source: Kodak CEO Antonio Porez

6. Factors That Limit New Product Development • Shortage of ideas • Fragmented markets • Social and governmental constraints • Cost of development • Capital shortages • Faster required development time • Shorter product life cycles

7. What is a Venture Team? A venture team is a cross-functional group charged with developing a specific product or business; intrapreneurs are relieved of other duties and provided a budget and time frame.

8. Criteria for Staffing Venture Teams • Desired team leadership style • Desired level of leader expertise • Team member skills and expertise • Level of interest in concept • Potential for personal reward • Diversity of team members

9. Ways to Find Great New Ideas • Run informal sessions with customers • Allow time off for technical people to putter on pet projects • Make customer brainstorming a part of plant tours • Survey your customers • Undertake “fly on the wall” research to customers

10. More Ways to Find Great Ideas • Use iterative rounds with customers • Set up a keyword search to scan trade publications • Treat trade shows as intelligence missions • Have employees visit supplier labs • Set up an idea vault

11. Drawing Ideas from Customers • Observe customers using product • Ask customers about problems with products • Ask customers about their dream products • Use a customer advisory board or a brand community of enthusiasts to discuss product

12. Idea Generation: Creativity Techniques • Attribute listing • List the attributes of an object, then modify each object e.g. Screwdriver handle wooden or metal or plastic etc. • Forced relationships • List several ideas & consider each in relation to each other idea e.g. Office furniture desk, Book case or Filing cabinet etc. • Morphological analysis • Start with a problem & start thinking dimensions e.g. Power generation oil gas, wind, hydro or solar etc.

13. Idea Generation: Creativity Techniques • Reverse assumption analysis • List all the normal assumptions about an entity & then reverse them e.g. Restaurant menus ……raw material • New contexts • Take familiar process & put them in new context e.g. day care services for pets. • Mind mapping • Start with a thought & then think of the next thought. Link these thoughts e.g. Cars, colours, features etc.

14. Lateral Mapping • Gas Station Stores = Gas stations + food • Cyber Cafes = Cafeteria + Internet • Cereak Bars = Cereal + snacking • Kinder Surprise = Candy + toy • Sony Walkman = Audio + portable

15. Variations on Failure • Absolute product failure • Partial product failure • Relative product failure

16. Concepts in Concept Development • Product idea • Product concept • Category concept • Brand concept • Concept testing

17. Concept Testing • Communicability and believability • Need level • Gap level • Perceived value • Purchase intention • User targets, purchase occasions, purchasing frequency

18. Marketing Strategy • Target market’s size, structure, and behavior • Planned price, distribution, and promotion for Year One • Long-run sales and profit goals and marketing-mix strategy over time

19. Product Development • Quality function deployment (QFD) • The job of translating targeting customer requirements into a working prototype. It helped by a set of methods known as Quality Function Deployment (QFD) • Customer attributes • Engineering attributes

20. Prototype Testing • Alpha testing • Testing the product within the firm to see how it performs in different applications. • Beta testing • Testing the product with customers. • Rank-order method • Paired-comparison method • Monadic-rating method • Market testing

21. Test Market Decisions • How many test cities? • Which cities? • Length of test? • What information to collect? • What action to take?

22. Timing of Market Entry • First entry • Parallel entry • Late entry

23. Criteria for Choosing Rollout Markets • Market potential • Company’s local reputation • Cost of filling pipeline • Cost of communication media

24. What is Adoption? Adoption is an individual’s decision to become a regular user of a product.

25. Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

26. Characteristics of an Innovation • Relative advantage • The degree to which the innovation appears superior to existing products. • Compatibility • The degree to which the innovation matches the values & experiences of the individuals. • Complexity • The degree to which the innovation is relatively difficult to understand or use.

27. Characteristics of an Innovation • Divisibility • The degree to which the innovation can be tried on a limited basis. • Communicability • The degree to which the beneficial results of use are observable or describable to others.

28. Bibliography • Marketing Management – A South Asian Perspective • by Philip Kotler, Kevin Lane Keller, Abraham Koshy & • Mithileshwar Jha, 13th Edition, Published by Pearson • Education, Inc. • Advertising Principles & Practice by Wells, Moriarty & • Burnett Published by Pearson Education, Inc. • Principles of Advertising & IMC by Tom Duncan 2nd • Edition, Published by McGraw-Hill Irwin. • Principles of Marketing by Philip Kotler & Gary Armstrong • Thirteenth Edition, Published by Prentice Hall

29. The End: “Never deprive someone of hope; it might be all they have”