BA 315 CHAPTER 8

NEW PRODUCT PLANNING

LPC
Many new products that are
developed never reach the
market!!!!!!
MOST NEW PRODUCTS FAIL!!!
 The definition of product
"newness"
• depends on who is making the assessment:
the buyer or the seller.
 product "newness"
• The degree of newness to both the buyer
and the seller impacts the amount of risk
taken and influences the way the new
product development process is managed.
Essentially there are six types of
new products.
• New to the world products are products that create entirely
new markets.

• New product lines are products that represent entries

into existing markets that are new to the firm.

• Line extensions are new products that allow the firm to'
extend its served market by offering different benefits.
 NEW PRODUCTS(CONT)
• Cost reductions are versions of existing
products that provide comparable
performance at lower cost.
 NEW PRODUCTS
• Improvements to existing products are usually
designed as replacements for existing product
offerings.

•. Repositionings are modest technical

improvements that allow a product to offer new
applications and serve new needs. 1
 ABSOLUTELY FAILED!!!!
• Because of the high probability of new product
failure and its consequences, most organizations
have developed some formalized system or
structure for managing the new product
development process. Firms use either a staged
(phased)approach or parallel development
approach in new product development and. the use
of teams is widespread.
 There are seven, not six stages in
new product development
• Idea Generation
• Idea Screening
• Conceptual Testing
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
 Idea Generation
• Idea generation stage includes alternative
specifications for product concepts utilizing end
user analysis or problem analysis. Focus groups
and direct observation provide insights for product
development.
 Idea Screening
BEGIN TO CONFIRM a new product concept.
Product candidates are evaluated on initial estimates
of potential demand and the chances/barriers to
success. Market potential studies, concept tests, and
scoring models such as NewProd are used to
evaluate the product concept.
 Conceptual Testing
REMEMBER CHEW’S EXAMPLES ………
AIR ONE MINUTE
MAID
STORY BOARD
QUESTIONAIRE
INTERVIEW
ANALYSIS
 Business Analysis
• RUN THE NUMBERS
• CHECK OUT THE PRODUCEABILITY
• MAKE RECOMMENDATIONS
• comprehensive view of the financial
consequences of introducing a new product.
 Product Development
• converts the concept into a working product by
developing the product architecture; design
function, value, and appearance of the product;
create and develop product specifications; and
consider manufacturing and operational costs and
operational constraints or tradeoffs (POLITICS)
 Product and Market Testing
• provides a more detailed assessment of a new
product's chances for success technical testing,
preference and satisfaction testing, simulated test
markets and test markets can be used to evaluate
potential success/failure and define important
marketing elements.
COMMERCIALIZATION
• planning and launch strategy for introducing the product to the
marketplace. Timing of the introduction, the selection of a
branding strategy, and coordinating the marketing program
activities are all components of the launch strategy.

• CHEW SAY’S FULL LAUNCH!!!

 portrayed in Fig. 8-5
• Is the relationship between product
development programs other marketing
programs and corporate, and marketing
strategy
 WATER BABY by Dan Lauer
• The worlds most popular doll of the 1990’s.
• A blend of condoms and water balloons
were sighted in room 206 ssb where DAN
studied marketing at UMSL
Why do most new products fail??
• ABSOLUTE
• RELATIVE
• 80%+ FAIL

• POOR PRODUCT POSITIONING

• VAGUE CONSUMER DIFFERENCE
 NEW PRODUCTS
HAVE YOU COMPLETED YOUR NET PRESENT
VALUE ASSIGNMENT????

OPPORTUNITYISNOWHERE!!
ARE WE GOING TO ACHIEVE
OUR PAYOUT AND ROI????
90
80
70
60
50 East
40 West
30 North
20
10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

TIME WILL TELL!!!

 LPC IS FINISHED
• WE NOW
CONCLUDE
CHAPTER 8 …..
• ANY
QUESTIONS????
 ????????????????????????????

• LINDELL PHILLIP CHEW

• LPC1@UMSL.EDU