20

Introducing
New Market Offerings

Marketing Management
A South Asian Perspective, 13th ed
 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

New product lines

Additions

Improvements

Repositionings

Cost reductions

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 Moser Baer has moved from
making optical storage media to
selling home entertainment

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 The World’s
Most Innovative Companies
• Apple • IBM
• Google • Sony
• Toyota • Wal-Mart
• General Electric • Honda
• Microsoft • Starbucks
• Procter & Gamble • Target
• 3M • BMW
• Walt Disney • 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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 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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 Mahindra and Mahindra followed a
thorough product development
process for ‘Scorpio’

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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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 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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 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 20.8 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?

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