20

Introducing New
Market Offerings
Chapter Questions
What challenges does a company face in
developing new products and services?
What organizational structures and processes
do managers use to oversee new-product
development?
What are the main stages in developing new
products and services?
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-2
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-3
Chapter Questions
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?
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-4
Categories of New Products
New to the World
Additions
Improvements
Repositionings
Cost reductions
The Innovation of Wii
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-5
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-6
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
Table 201. Finding One
Successful Product
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-7
What is a Venture Team?
A venture team is a cross-functional group
charged with developing a specific product or
business.

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-8
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-9
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
Figure 20.1 New-Product
Development Decision Process
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-10
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-11
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-12
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-13
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
Demand-First Innovation and
Growth (DIG) Framework
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-14
Demand Landscape
Opportunity Space
Strategic Blueprint
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-15
Idea Generation:
Creativity Techniques
Attribute listing
Forced relationships
Morphological analysis
Reverse assumption analysis
New contexts
Mind mapping
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-16
Lateral Mapping
Gas stations + food
Cafeteria + Internet
Cereal + snacking
Candy + toy
Audio + portable
Table 20.2 Product Idea
Rating Device
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-17
Figure 20.2 Forces Fighting
New Ideas
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-18
Figure 20.3 Product and
Brand Positioning
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-19
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-20
Concept Testing
Communicability and believability
Need level
Gap level
Perceived value
Purchase intention
User targets, purchase occasions,
purchasing frequency
Figure 20.4 Conjoint Analysis
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-21
Figure 20.5 Utility Functions
Based on Conjoint Analysis
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-22
Figure 20.6 Product Life-Cycle
Sales for Three Types of Products
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-23
Table 20.3 Projected Five-Year
Cash Flow Statement
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-24
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-25
Prototype Testing
Alpha testing
Beta testing
Rank-order method
Paired-comparison method
Monadic-rating method
Market testing
Consumer Goods Market Testing
Sales-Wave Research
Simulated Test Marketing
Controlled Test Marketing
Test Markets

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-26
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-27
Test Market Decisions
How many test cities?
Which cities?
Length of test?
What information to collect?
What action to take?
Timing of Market Entry
First entry
Parallel entry
Late entry
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-28
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-29
What is Adoption?
Adoption is an individuals decision to
become a regular user of a product.

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-30
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Figure 20.7 Adopter
Categorization on the Basis of
Relative time of Adoption
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-31
Characteristics of an Innovation
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-32
For Review
What challenges does a company face in
developing new products and services?
What organizational structures and processes
do managers use to oversee new-product
development?
What are the main stages in developing new
products and services?

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-33
For Review
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?

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 20-34