New Product Ideas

1. New Product Ideas

8. How to fail without tryingFred Wiersema andMike Treacy • Why does Casio sell a calculator cheaper than a box of cornflakes ? • Why does it take a few minutes to rent a car at Hertz but twice the time to get a room at the Hilton? • Why does Land’s End remember your last order and family member’s sizes, while America Express urges you to join after you have been a member for ten years?

9. BUSINESS STRATEGY Steps in Setting Strategy • What is a company’s mission? • Set goals and objectives - quantify, set time • Design the business portfolio • Operational details - 4P’s

10. Strategy - basics • Mission • Business Objectives • Marketing Objectives • Marketing Strategy

11. Mission • Who is the customer? • What is the value to the customer ? • What will our business be? • What should our business be?

12. Factors that affect mission • History • Current preferences of owners and management • Market environment • Resources • Distinctive competencies - Core competencies - Hamel and Prahalad

13. Mission • Should define • Industry scope • Products and services • Competencies • Segments • Vertical scope • Geographical scope

14. Portfolio Models • Boston Consulting Group Matrix • (BCG Matrix) • General Electric Grid • GE Grid

15. Portfolio Analysis Boston Consulting Group - BCG Matrix Market ? Growth 10% Star Question Mark Rate Cash Cow Dog 1.0 Relative Market Share

16. General Electric Grid Business Strengths Relative Market Share Product Quality Sales/Promotion Effectiveness Geography Market Attractiveness Market Size Growth Rate Profits Competition Intensity

17. Business Strengths Market Strong Avg. Weak Attractiveness High A A C Med A C B Low C B B A-Build B-No Growth-Divest/Harvest C-Wait & See

18. Ansoff’s Product Market Grid Products Markets Current New Current Market Product Penetration Development New Market Diversification Development

19. Marketing Myopia Ted Levitt Focus on needs not products Revlon Xerox Standard oil Columbia Pictures Encyclopedia Brittanica Railroads

20. Strategic Choices Competitive Advantage The Discipline of Market Leaders Michael Porter Treacy and Wiersema • Overall Cost Leadership Operational Excellence • Differentiation Product Leadership • Focus Customer Intimacy

21. Strategy and tactics The science or art of military command as applied to the overall planning and conduct of large-scale combat operations Tactics are a plan of action resulting from the practice of this science

22. Art of War - Sun Tsu 350 B.C. Sun Pin - strategist of Tien Chi Horse Races

23. Laws of Physics Stronger force will overcome the lesser, all else being equal Boxing and weight classes

24. Lessons • Strategy is about getting a competitive advantage • Know the laws that govern the competition • Know the competition and the terrain • Creating strategies can be learned

25. Marketing Warfare Al Ries and Jack Trout 4 types of players Kotler • Leaders Leaders • Followers Challengers • Flankers Followers • Guerillas Nichers

26. Principles • Principle of force • Superiority of defense • Mind is the battleground

27. Defensive warfare • Only the market leader should play defense • The best defensive strategy is the courage to attack yourself • Strong competitive moves should be blocked

28. Gillette • Blue Blade • Super Blue Blade • Trac II - double blade • Atra - Adjustable • Good News - Disposable • Pivot - Adjustable disposable • Sensor

29. Offensive warfare • Consider the strength of the leader’s position • Find a weakness in the leader’s strength and attack at that point (Achilles heel) • Launch the attack on as narrow a front as possible

30. Flanking warfare • Move into an uncontested area • Tactical surprise is very important • The pursuit is as critical as the attack itself Don’t move resources to other targets.

31. Flanking • With low price - tell the loophole • With high price - popcorn, perfume • With distribution - Timex, L’eggs • With size - VW Beetle • With product form - Close-Up gel

32. Guerilla warfare • Find a niche small enough to defend • No matter how successful, never act as the leader • Be prepared to bug out at a moment’s notice Rolls Royce, Roos, United Jersey Bank, People’s Express, Jeep

33. Structural Analysis of Industries Michael Porter THREAT OF NEW ENTRANTS BARGAINING POWER OF SUPPLIERS BARGAINING POWER OF BUYERS RIVALRY AMONG COMPETITORS THREAT OF SUBSTITUTES

34. Barriers to Entry • Economies of Scale • Product Differentiation • Capital Requirements • Switching Costs • Access to Distribution Channels • Cost Disadvantages Independent of Scale • Government Policy • Experience Curves • Expected Retaliation

35. Factors Affecting Rivalry Among Existing Competitors • Numerous or Equally Balanced Competitors • Slow Industry Growth • High Fixed or Storage Costs • Need to operate at capacity Price cutting • Lack of Differentiation • Capacity Augmented in Large Increments • Diverse Competitors • High Strategic Stakes • High Exit Barriers

36. Bargaining Power of Buyers is High When.... • Purchasing is concentrated or is in large volumes relative to seller’s sales • The product represents a large proportion of buyer’s costs • There is little differentiation or there are low switching costs • Backward integration is a credible threat • Product performance / quality is unimportant to buyer’s performance

37. Bargaining Power of Suppliers is High When.... • Supplying industry is dominated by a few firms and is more concentrated than the customer industry • The product has few substitutes • The customer industry is not important to the supplier • The supplier product is an important input, is differentiated, or has high switching costs • The supplier group poses a credible threat of forward integration