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