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New Product Development MKTG 4320.002

New Product Development MKTG 4320.002. Dr. Audhesh Paswan Spring 2006 M 2:00-4:50 PM (BUSI 330). DML-COBA. Launch. The Five Decision Sets that Lead to a Marketing Plan. Common Myths About Marketing Planning for New Products.

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New Product Development MKTG 4320.002

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  1. New Product DevelopmentMKTG 4320.002 Dr. Audhesh Paswan Spring 2006 M 2:00-4:50 PM (BUSI 330) DML-COBA

  2. Launch

  3. The Five Decision Sets that Lead to a Marketing Plan

  4. Common Myths About Marketing Planning for New Products • Marketing people make the decisions that constitute a marketing plan. • The technical work is complete when the new item hits the shipping dock. Marketing people take over. • The marketer’s task is to persuade the end user to use the new product. • The more sales potential there is in a market segment, the better that segment is as a target candidate. • The pioneer wins control of a new market. • As with Broadway shows, opening night is the culmination of everything we have been working for.

  5. Strategic Launch Planning Ch -16

  6. Strategic Givens • Corporate, some team decisions made earlier. Often found in the PIC Guidelines. • A specified gross margin: affects funding. • Speed-to-market: affects promotional outlays and schedules. • Commitment to a given channel: affects distribution plan. • Advertising policy: affects promotion decisions. • Pricing policy: affects decision to use penetration or skimming pricing (slide down demand curve).

  7. Customer Acceptance Goals Use Satisfaction Sales Market Share Financial Performance Goals Time to break even Margins IRR, ROI Product Level Performance Goals Cost Time to Market Performance Quality Other Competitive Effect Image Change Morale Change Revision of Strategic (PIC) Goals

  8. Strategic Platform Decisions • Type of Demand Sought • Permanence • Aggressiveness • Type of Demand Sought • Competitive Advantage • Product Line Replacement • Competitive Relationship • Scope of Market Entry • Image

  9. Type of Demand Sought • Primary demand • Replacement demand • Selective demand

  10. Permanence • Permanent, stand-alone. • Permanent, but as a bridge to other items -- e.g., platform strategy. • Temporary. Given firms’ tendency to develop streams of products, more and more new products are actually only temporary.

  11. Some Other Strategic Platform Decisions • Aggressiveness (aggressive versus cautious attitude at entry) • Competitive advantage sought (differentiation, price leadership, or both) • Competitive relationship (aim at a competitor, avoid a competitor) • Image (create a new image, tweak an existing image, use the already-existing image)

  12. Product Line Replacement Strategies

  13. Scope of Market Entry • This is not test marketing. This is launch. All forces in place and working. • Roll out slowly -- checking product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc. • Roll out moderately, but go to full market as soon as volume success seems assured. • Roll out rapidly -- full commitment to total market, restricted only by capacity.

  14. The Target Market Decision • Alternative ways to segment a market • end-use, geographic/demographic, behavioral/psychographic, benefit segmentation • Micromarketing and mass customization – loyalists, deal selectives, price driven, store brand buyers, light users • Also consider the diffusion of innovation

  15. Using the Joint Space Map to Identify Benefit Segments 3 2 Comfort Aqualine 1 Molokai Islands Fashion Splash Sunflare

  16. Factors Affecting Diffusion of Innovation • Relative Advantage • Compatibility • Complexity • Divisibility • Communicability

  17. Appropriate Launch Tactics Given Relative Advantage and Compatibility

  18. Product Positioning • Who -- Why -- How • To whom are we marketing? • Why should they buy it? • How do we best make the claim?

  19. To Whom Are We Marketing? • Users vs. non-users (primary vs. selective demand) • Target market criteria (demographic, geographic, psychographic, benefit segmentation) • Everybody -- no narrowing down (mass customization, Post-It notes) The real issue here is commitment -- by all NPD participants and by management

  20. Why Should They Buy It? • This too we have been testing -- basic concept statement used for testing and for guiding technical (e.g., QFD “Whats”), and the key reason on the “How likely would you be to buy this if we marketed it?” (product use test) • Formatted in three ways: • Solves major problem current products do not. • Better meet needs and preferences. • Lower price than current items.

  21. How Do We Make the Claim? • Product positioning statement is a strategic driver --a core item -- not a list of advantages. Some new products get one short sentence -- technical items more. • Can be stated as one or more features (what it is). • Can be stated as a function (how it works). • Can be stated as one or more benefits (how the user gains). • Can be stated as a surrogate (no features, functions, benefits).

  22. Position to an Attribute Feature Function Benefit (direct or follow-on) Position on a Surrogate Nonpareil Parentage Manufacture Target Rank Endorsement Experience Competitor Predecessor Product Positioning Options

  23. Branding Decisions • What is the brand’s role or purpose? • Are you planning a line of products? • Do you expect a long-term position in the market? • How good is your budget? • Physical/sensory qualities of brand considered? • Message clear and relevant? • Insulting or irritating to anyone?

  24. Questions & Guidelines in Brand Name Selection

  25. Some Brand Names That Didn’t Work Crapsy Fruit French cereal Fduhy Sesane China Airlines snack food Mukk Italian yogurt Pschitt French lemonade Atum Bom Portuguese tuna Happy End German toilet paper Pocari Sweat Japanese sport drink Zit German lemonade Creap Japanese coffee creamer I'm Dripper Japanese instant coffee Polio Czech laundry detergent Sit & Smile Thai toilet paper Barf Iranian laundry detergent

  26. High Brand Loyalty High Brand Awareness High Perceived Quality More/Better Brand Associations Other Brand Assets Reduced marketing costs Increased trade leverage Easier to make brand associations Increased liking and familiarity Supports quality positioning Supports higher-price strategy Creates positive image Helps customer process information Patents or trademarks Strong channel relationships Provides value to customer: Assists in customer information processing Increases confidence in purchase Increases satisfaction in product use Provides value to firm: Increases effectiveness of marketing programs Increases customer loyalty and trade leverage Facilitates brand extensions Is a source of competitive advantage How Brand Equity Provides Value

  27. Building Brand Equity • Getting awareness of the brand and the meaning. • Making brand associations -- even the factory location in Saturn’s case. • Building perceived quality • Loyalty in repurchase -- locking them in • Getting reseller support

  28. A Brand Report Card

  29. Profitable Brand Strategies

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