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New Product Innovation

New Product Innovation. National Correctional Industries Association Enterprise 2004. March 23, 2004. Agenda. Product Development Market Research Concept Testing Prototype Development Market Testing Product Launch Discussion. Why New Products?.

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New Product Innovation

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  1. New Product Innovation National Correctional Industries Association Enterprise 2004 March 23, 2004

  2. Agenda • Product Development • Market Research • Concept Testing • Prototype Development • Market Testing • Product Launch • Discussion

  3. Why New Products? • New product development is critical to long-term success • Approximately one-third of the revenue a business generates is coming from products they did not sell five years ago • Changing environment creates new demands and needs

  4. Product Development • Must be alert to quickly develop opportunities • Focus on markets or product categories consistent with organization’s objectives, resources, capabilities and strengths • Securing a competitive advantage

  5. Industrial New Product Ideas • Company sources other than R&D 36.2% • Analysis of the competition 27.0% • Research & Development 24.3% • Product users 15.8% • Supplier suggestions 12.5% • Product user research 10.5% • Published information 7.9%

  6. New Products • A way of getting new and keeping old customers • Effective way of obtaining a competitive advantage • Source of growth and excitement

  7. New Product Categories • New to the world products • New product lines • Product line extensions • Improvements and revisions to existing products • Repositionings • Cost reductions

  8. Product Development Process Product Launch Test Marketing Prototype Development Concept Testing Market research and Opportunity scan

  9. Marketing • Very important to product development success • Key to successful marketing is imaginative, effective, creative communication • Find a need and fill it. • Mutually beneficial exchange relationships • Non-profit organizations have sometimes difficult task

  10. Marketing Strategies • Increase the number of customers • Increase the average transaction • Increase the frequency of repurchase

  11. Marketing Concepts • Consumer orientation • Customer service orientation • Profit orientation • Society

  12. Marketing Mix Price Placement Product Promotion

  13. Market Research • Who is my target audience? • Are there enough members of this target group to make the business worthwhile? • How large is the potential market and how much of that potential market can I capture? • Who is my competition and what would make someone choose my product over their current?

  14. Market Opportunity and Threats • Economic Realities • GNP • Disposable Income • Discretionary Income • Societal Focus • Population Shifts • Values • Attitudes • Competition • Trends • Technological Development • Advance in technology • Market receptiveness to technology • Legal & Regulatory Condition • Laws • Regulations

  15. Market Placement Identify target markets • Size and growth potential • Ability and ease of reaching segment • Good fit with organizational objectives • Greatest revenue generation with least investment

  16. Market Placement Determine opportunity • Segment size • Annual usage potential • Anticipated annual growth rate • Margin • Value in use Evaluate competition • Strengths/Limitations • Implications

  17. Market Research – Pricing Strategies • Goal is to achieve a target profit • Can you hold a product’s manufacturing costs down to less than 25% of its perceived value? • Estimating manufacturing costs • Obtain price quotes from several suppliers

  18. Concept Testing Determine • Critical success factors • Financial objectives • Marketing mix strategies • Product, Pricing, Promotion, Placement • Marketing plan initiatives • Activity, Budget, Timing

  19. Prototype and Test Marketing Survey end-users • Do you prefer this product over your current product? • Does this product meet the need you thought it would? • Does the way the product works provide an important benefit?

  20. Promotion and Product Launch • Publicity • Trade journals • Conferences • Personal selling • Word of mouth

  21. Reasons For New Product Failures • Poor marketing research • Technical problems • Insufficient marketing effort • Bad timing

  22. Marketing Plan Audit • Challenge and refine assumptions from current plan • Evaluate success for input into next year’s plan • Revise plan for new year incorporating marketplace learnings, marketing insights and current plan successes

  23. Summary • New product development drives growth • Market research is critical to the success of a new product launch • Market research is a continuous process as customer needs, your business and the environment changes

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