Chapter 8: New Product Development
Team-Based
Company departments work closely together in cross-functional teams, overlapping steps in product development process to save time and increase effectiveness
Fashion
Currently accepted or popular in a given field
Market Strategy Development
Initial Marketing Strategy for introducing a new product to the market -The Marketing Strategy Statement 1. Target Market: Describe target market, planned value proposition, and sales, market-share, and profit goals for the first few years. 2. 4 P's: Outlines the planned product price, place (distribution), and promotions budget for the first year. 3. Strategic Objectives: Describes the planned long-run sales, profit goals, and marketing mix strategy.
Commercialization
Introducing the new product into the market Decisions: 1. Timing of introduction ( Internal & External factors) 2. Where to introduce ( Single location, nationally, internationally?)
Systematic
Organized ways to collect, review, evaluate, and manage new product ideas -Not random or haphazard
Product Lifecycle
The course that a product's sales & profits take over its lifetime 1. Product Development 2. Introduction 3. Growth 4. Maturity 5. Decline
4. Maturity
-Product has achieved acceptance by most potential buyers -slowdown in sales growth -profits level off or start to decline -increased marketing costs to defend against competitors
3. Growth
-Rapid market acceptance -Increasing Profits
1. Product Development
-finds/develops new product idea -no sales -increasing investment costs
2. introduction
-product is introduced to the market -slow growth sales -heavy investment costs -no profits
5. Decline
-sales drop off -profits drop
Business Analysis & Product Development
1. Business Analysis: Review of sales, costs, and profit projections for a new product -To find out whether the projections satisfy the company's objectives 2. Product development: Develop the product concept into a physical product -To ensure that the product idea can be turned into a workable market offering -Prototype versions for testing stage
Major Stages in New Product Development
1. Idea Generation 2. Idea Screening 3. Concept development and testing 4. Marketing strategy Development 5. Business Analysis 6. Product Development 7. Test Marketing 8. Commercialization
Styles
A basic, distinctive mode of expression
Product Concept Dev't & Testing
Develop & Tests a detailed version of the idea stated in meaningful customer terms 1. Product Concept Development -Develop alternative product concepts -Find out how attractive each concept is to customers -Choose the best one 2. Product Concept Testing -Test a group of target consumers to find out the degree of consumer appeal toward the concepts a.Present concepts to consumers symbolically or physically or with a word or picture description b. Ask customers about their reactions to the concepts
Idea Generation
External idea sources 1.Customers 2. Distributors and suppliers 3. Competitors 4. Other Industries 5.Crowdsourcing --Open innovation programs
Customer-centered
Focuses on new ways to solve customer problems and create more customer-satisfying experiences -discovered through customer research -involve customers in the process
Test Marketing
Product & proposed marketing campaign are introduced into realistic marketing settings 1.Gives the marketer an experience with marketing a product before the introduction 2. Tests the product and its marketing program 3. May use test markets --Minimize costs --Minimize time needed
Idea Screening
Spot good ideas and drop bad ones as soon as possible -Ways of screening new ideas: 1. Proposals reviewed by "New Product Committee" 2. R-W-W framework R=Real: is there real customer need and desire for the product? W=Win: Can we win? Does the product offer real sustainable advantage? W=Worth: Doing - Does the product fit the company's overall growth strategy?
Managing New Product Development
Successful new product development requires a holistic approach that is: 1. Customer Centered 2. Team- Based 3. Systematic
Fad
Temporary period of unusually high sales driven by immediate popularity
Idea Generation
The systematic search for new product ideas -internal idea sources 1.Intrapreneurially programs 2. Internal social networks 3. R&D Dept (ALWAYS DEVELOPING THINGS)
New Products
Those developed through an organizations own R&D efforts ( Can be good/Risky ) -new products -product improvements -product modifications -new brands Requires 1. Understanding consumers, markets, and competitors 2. Developing products that deliver superior value to customers