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Unveiling New Products: Strategies for Success and Global Considerations

Explore the significance of new product development, steps in the process, factors influencing success, and global issues in this comprehensive guide. Learn about idea generation, concept testing, and the product life cycle.

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Unveiling New Products: Strategies for Success and Global Considerations

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  1. MKTG Lamb, Hair, McDaniel 2009-2010 10 CHAPTER Developing and Managing Products Designed by Amy McGuire, B-books, Ltd. Prepared by Dana Freeman, B-books, Ltd.

  2. Learning Outcomes Explain the importance of developing new products and describe the six categories of new products Explain the steps in the new-product development process Discuss global issues in new-product development LO1 LO2 LO3

  3. Learning Outcomes Explain the diffusion process through which new products are adopted Explain the concept of product life cycles LO4 LO5

  4. The Importance of New Products LO1 Explain the importance of developing new products and describe the six categories of new products

  5. New Product New Product A product new to the world, the market, the producer, the seller, or some combination of these. LO1

  6. New-to-the-World New Product Lines Product Line Additions Improvements or Revisions Repositioned Products Lower-Priced Products Categories of New Products LO1

  7. REVIEW LEARNING OUTCOME LO1 Developing New Products

  8. The New Product Development Process LO2 Explain the steps in the new-product development process

  9. The New-Product Development Process New Product Success Factors Long-term commitment Company-specific approach Capitalize on experience Establish an environment LO2

  10. New-Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product New-Product Development Process LO2

  11. Sources ofNew-ProductIdeas Customers Employees Distributors Competitors Vendors R & D Consultants Online Idea Generation http://www.ideo.com LO2

  12. Tips for New Product Development • Disperse R & D around the globe • Keep teams small and empower employees • Flatten hierarchy • Encourage generation of crazy new ideas • Welcome mistakes LO2

  13. Brainstorming Brainstorming The process of getting a group to think of unlimited ways to vary a product or solve a problem. LO2

  14. Idea Screening Idea Screening The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. LO2

  15. Concept Testing Concept Testing A test to evaluate a new-product idea, usually before any prototype has been created. LO2

  16. Demand Considerations in Business Analysis Stage Cost Sales Profitability Business Analysis LO2

  17. Development • Creation of prototype • Marketing strategy • Packaging, branding, labeling • Promotion, price, and distribution strategy • Manufacturing feasibility • Final government approvals if needed LO2

  18. A new team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process. SimultaneousProduct Development Simultaneous Product Development LO2

  19. TestMarketing Online Test Marketing The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. foodcom.com/signup.com LO2

  20. http://www.newproductworks.com Online Alternatives to Test Marketing • Single-source research using supermarket scanner data • Simulated (laboratory) market testing • Online test marketing LO2

  21. Production Inventory Buildup Distribution Shipments Sales Training Trade Announcements Customer Advertising Commercialization LO2

  22. Number of new product ideas 0 Time REVIEW LEARNING OUTCOME LO2 New-Product Development Process Ideageneration Ideascreening Businessanalysis Development Testmarketing Commercialization

  23. Why Some Products Succeed and Others Fail Explain why some products succeed and others fail Beyond the Book NOTE: Supplemental content – not in book.

  24. Why New Products Fail • No discernible benefits • Poor match between features and customer desires • Overestimation of market size • Incorrect positioning • Price too high or too low • Inadequate distribution • Poor promotion • Inferior product Beyond the Book NOTE: Supplemental content – not in book.

  25. Success Factors Factors in SuccessfulNew Products Match between product and market needs Beyond the Book Different from substitute products Benefit to large number of people NOTE: Supplemental content – not in book.

  26. Listening to customers Strong leadership Producing the best product Commitment to new-product development Vision of future market Project-based team approach Getting every aspect right Success Factors Beyond the Book NOTE: Supplemental content – not in book.

  27. Why Products Succeed and Others Fail Beyond the Book NOTE: Supplemental content – not in book.

  28. Global Issues in New-Product Development LO3 Discuss global issues in new-product development

  29. Develop product for potential worldwide distribution Build in unique market requirements Design products to meet regulations and key market requirements Global Marketing Questions LO3

  30. Single product worldwide Modification of products Multiple products in multiple countries REVIEW LEARNING OUTCOME LO3 Global Issues in New-Product Development

  31. The Spread of New Products LO4 Explain the diffusion process through which new products are adopted

  32. The process by which the adoption of an innovation spreads. Diffusion Diffusion LO4

  33. Innovators Early Adopters Early Majority Late Majority Laggards Categories of Adopters LO4

  34. Complexity Compatibility Relative Advantage Observability Trialability Online Product Characteristics and the Rate of Adoption http://www.electronicgadgetdepot.com LO4

  35. Sales of New Audio Products LO4

  36. Word of Mouth CommunicationAids theDiffusion Process Direct fromMarketer Marketing Implications of the Adoption Process LO4

  37. Early majority 34% Late majority34% Early adopters13.5% Innovators2.5% Laggards34% REVIEW LEARNING OUTCOME LO4 Diffusion Process for New Products Sales Percentage of total adoptions by category Product Characteristics (Influence Rate of Adoption) • Complexity • Compatibility • Relative Advantage • Observability • “Trialability”

  38. Product Life Cycles LO5 Explain the concept of product life cycles

  39. Product Life Cycle ProductLife Cycle A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). LO5

  40. Introductory Stage Growth Stage Maturity Stage Decline Stage Sales Dollars Profits 0 Time Product Life Cycle LO5

  41. Product Life Cycles for Styles, Fashions, and Fads LO5

  42. U.S. Sales of Televisions LO5

  43. Introductory Stage • High failure rates • Little competition • Frequent product modification • Limited distribution • High marketing and production costs • Negative profits with slow sales increases • Promotion focuses on awareness and information • Communication challenge is to stimulate primary demand LO5

  44. Growth Stage • Increasing rate of sales • Entrance of competitors • Market consolidation • Initial healthy profits • Aggressive advertising of the differences between brands • Wider distribution LO5

  45. Maturity Stage • Sales increase at a decreasing rate • Saturated markets • Annual models appear • Lengthened product lines • Service and repair assume important roles • Heavy promotions to consumers and dealers • Marginal competitors drop out • Niche marketers emerge LO5

  46. Decline Stage • Long-run drop in sales • Large inventories of unsold items • Elimination of all nonessential marketing expenses • “Organized abandonment” LO5

  47. Introduction Growth Decline Maturity Product life cycle curve Sales Early majority Late majority Early adopters Innovators Laggards Diffusion curve Diffusion Process and PLC Curve LO5

  48. Sales Time REVIEW LEARNING OUTCOME LO5 Product Life Cycles GROWTH INTRODUCTION MATURITY DECLINE More models. Frequent changes. Product Strategy Limited models. Frequent changes. Eliminate unprofitable models. Large number of models. Limitedwholesale/retail distributors. Expanded dealers. Long- term relations. Phase out unprofitable outlets. Extensive. Margins drop. Shelf space. Distribution Strategy Advertise. Promote heavily. Phase outpromotion. Awareness. Stimulate demand. Sampling. Aggressive ads. Stimulatedemand. Promotion Strategy Fall as result of competition and efficient production. High to recoupdevelopment costs. Prices stabilize at low level. Prices fall (usually). Pricing Strategy

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