New market offerings

1. Introducing
New Market Offerings
Marketing Management, 13th
ed
20

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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?

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Chapter Questions (cont.)
• 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?

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Johnson & Johnson Emphasizes
New Product Development

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

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

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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

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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

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Table 20.4 Finding One Successful
New Product

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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.

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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

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Figure 20.2 The New Product
Development Decision Process

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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

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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

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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

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Idea Generation: Creativity Techniques
• Attribute listing
• Forced relationships
• Morphological
analysis
• Reverse assumption
analysis
• New contexts
• Mind mapping

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Lateral Mapping
• Gas stations + food
• Cafeteria + Internet
• Cereal + snacking
• Candy + toy
• Audio + portable

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

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Table 20.5 Product-Idea
Rating Device

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

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

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Figure 20.6 Utility Functions Based on
Conjoint Analysis

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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

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Figure 20.7 Product Life Cycle Sales
for Three Product Types

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Table 20.6 Projected Five-Year
Cash-Flow Statement (in thousands $)

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Product Development
• Quality function
deployment (QFD)
• Customer attributes
• Engineering attributes

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Prototype Testing
• Alpha testing
• Beta testing
• Rank-order method
• Paired-comparison method
• Monadic-rating method
• Market testing

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Consumer Goods Market Testing
• Sales-Wave Research
• Simulated Test Marketing
• Controlled Test Marketing
• Test Markets

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

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

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

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

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Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption

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Figure 20.6 Adopter Categorization

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Characteristics of an Innovation
• Relative advantage
• Compatibility
• Complexity
• Divisibility
• Communicability

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Marketing Debate
 Who should you target with new products?
Take a position:
1. Consumer research is critical to new-product
development.
or
2. Consumer research may not be all that
helpful in new-product development.

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Marketing Discussion
 Think about the last new product
you bought.
 How do you think its success will be
affected by the five characteristics
of an innovation?