Bus M300 1nd Edition Lecture 15 Outline of Current Lecture I New product definition from different perspectives II New product marketing emphasis III New product considerations IV 7 steps in product development process NPDP Current Lecture I New product definition from different perspectives New Products Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation Definition No new learning by customers Disrupts customer s normal buying pattern but little new learning required Requires new learning and consumption patterns by customers Examples New flavors packaging and colors Electric toothbrushes DVDs synthetic wood GPS PCs hybrid cars smart phones Marketing Emphasis Build customer Promote points of Educate customers using awareness using same difference between old and promotion personal selling distribution channels new and trial a Legal Federal Trade Commission perspective new is limited to 6 months after it enters regular distribution b Company perspective Anything different from previous one c Customers perspective Degree of learning required in order to use the product properly These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute II New product marketing emphasis III New product considerations a Which new product categories offer the greatest potential return on investment The least i Discontinuous continuous b Which presents firms the greatest risk i Discontinuous new category c Which is most common Why i Continuous least risky d About 8 out of every 10 new products fail Why i Lack of competitive advantage ii Mismatch product with needs of consumer poor segmentation strategy product development issue iii Competition negates your actions iv Poor execution v Lack of interest e Why are new products important to firms i Diversified portfolio ii New product in PLC iii Future growth iv Financial performance v Buyers pay more for newer products vi Build firm morale vii Innovate vs stagnant IV 7 steps in product development process NPDP a 1 Idea Generation Many good ideas come from consumers i Identify consumer needs and pa ii Starting point for most research into solving consumer problems is wrong iii Most customer research questions feature 1 How would you improve this product Etc 2 They anchor them off of current products Instead of talking about the products they should talk about the product category b 2 Screening separate ideas from those that have no merit i Sophisticated firms screen projects examining expected financials competitive reactions and ability to manage the new product over time ii Example Frito Lay product must be forecasted to make 150 200 million before moving to the next stage c 3 Concept Development and Testing Measurement of consumer attitudes and perceptions relevant to the product i Example If the price of this product were similar to that of a portable DVD player would you consider buying it d 4 Rough Marketing Strategy i Target market ii Price distribution promotion and marketing budget iii Announcement of planned sales and profit figures iv Illustration of marketing mix strategy e 5 Development a physical product now exists and company can analyze results i Tests revisions and refinements occur before product is actually test marketed f 6 Test Marketing Process of generalizing a specific geographical area to the product s overall target market i Consumers evaluate and buy without knowing they are participating in the test market ii Sales are monitored during the test so company can estimate the product s performance iii Test Marketing is process of selecting a specific geographical are considered to be generalizable to the product overall target market 1 Test marketing is expensive time consuming 2 Fallible competitors can disrupt it 3 Risky competitors get a heads up V 7 Commercialization development of distribution channels chosen promotion pricing sales force and so on a Now 4P s need to be implemented for product i Promotion ii Pricing iii Place iv Product VI Last Step Measuring Success a Sales b Market share c Etc