MKT 300 1st Edition Lecture 13 Outline of Last Lecture I. Why Develop New Products?II. Developing New ProductsIII. Innovation and ValueOutline of Current Lecture I. Diffusion of InnovationII. Using the Diffusion of Innovation TheoryIII. Idea GenerationIV. Concept TestingV. Idea DevelopmentVI. Market TestingCurrent Lecturea. Flavor: we want bold/natural/sophisticatedb. Heinz went from one to eight flavors after 150 yearsc. Fashion: color/styled. Relationships with channel members: makes retailers more profitable if new products are on their shelvesI. Diffusion of Innovationa. Diffusion theory: how quickly does it move through population/catch onb. Innovator: buy it first, wait in line night before, tech savvyc. Early adopters: both innovators and early adopters are influential to others—opinion leadersd. Early majority/late majoritye. Laggards: may never buy product/adopt technologyi. People may never get FacebookII. Using the Diffusion of Innovation Theorya. Compatibility: compatible with many lifestyles: catch on quickerThese 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.b. Observability: more observable benefitsc. Trialability: more you can try a product—free sample, see demo, try in store, faster it will catch oni. Nestle Pure Life Exotics sparkling water: Sampling in Targetd. Relative advantage: needs big advantage over what’s already existingi. Gillette Fusion had to convince consumers that what’s new is that much better than what’s currently existing (to forego old one)III. Idea Generationa. Internal Research and Development (R/D) and Brainstormingi. Ways to form ideasii. Dyson spends 1.5 million weekly on r/d; Nestlé’s test kitchen has on-staff cooks iii. Fast Food Revolution: Taco Bell—Cool Ranch taco1. 50th anniversary decided to reinvent the taco2. Director of product development, Heather, saw a photo on Facebook of a waffle taco: made them at home and took to test kitchen to try out the idea3. 40 person innovation team: 4,000-4,500 ideas per yeara. 300 to 500 tested with consumers yearlyb. 8-10 make the menu nationallyc. Social media, grocery, competitors all researched4. Prototype: waffle taco went through eighty different versionsa. AM crunch wrap is best selleriv. Nestle $11 million test kitchen recently openedb. Outside Sources and Licensing: can’t come up with every idea on owni. Consult companies hired; attend conferences/shows; can license product from company and sell it yourself1. Pay Jeep for right to make products with their name on it2. Small company piggy-backing on largeii. Proctor and Gamble found Nehemiah company to market/sell Pampers’s hand soap for kidsc. Competitor’s Products: act as consumer, buy product and use reverse engineering in test kitcheni. Not stealing!ii. Lock trash cans, shred trash for this reasond. Customer inputi. Marketing research: General Mills’ Green Giant: talk to parents, found outthey didn’t want to be wasting by cooking too much; created “Just for One” servings1. Axe’s Gold Temptation: surveyed 1,000 males and females2. Cracker Barrel surveyed 2,000 customer for lighter choices; new concepts, fast casualii. Invite product lovers in product idea process: Lego invites enthusiasts to facility to test ideas1. Crowd sourced toys: ghost busters, DeLorean Time Machine, Minecraft Micro Worldiii. Contest: Lays “Do us a flavor” contest: Mango Salsa, Cappuccino, Wasabi-Ginger1. Look online: Pinterest/social media, looking for trendsIV. Concept Testinga. Concept is a brief written description of the productb. Customers reactions determine whether or not it goes forwardV. Product Developmenta. Prototypei. Can be tested in some way; actual version of the product; can have multiple typesb. Alpha testing: test at lab facility by employees and chefs (all before testing the market)c. Beta testing: potential target market: real consumers; testing at homei. New Pampers and Huggies Diaper Wars: 7 billion spent on diapers per year1. Pampers development center: improve look/feel of Nappie: top secret: executives don’t have access to all doors2. Bring in babies: fit n’ load test: x-rays 3D development (alpha)3. Take home diapers: use/return: smell/weigh (beta)ii. Huggies responded with Jean diaperiii. Tellinti Gelato: taste in facility, rate top three: Sea Salt Carameliv. Dyson/Whirlpool: clean/bang into furniturev. Coke Freestyle machine: Pepsi came out with rebuttal: did much beta testing before putting out into different locationsVI. Market Testinga. Premarket Tests: customers exposed, customers surveyed, firm makes decisionb. Not all do pre-market; bigger than beta, smaller than test marketingc. Test marketingi. Mini product launch1. Release in a limited number of stores in certain cities: test 4 P’s2. Real location in realistic situation3. Scott no cardboard rolls: tested in market for several monthsii. More expensive than premarket testsiii. Market demand is estimatedd. Adventures in Test Marketing: Wendy’s Black Label Burgeri. Test in lab, then on test marketii. Columbus, Ohio: unique culture: college/internationaliii. Piada Italian cuisineiv. Giant Eagle Market District: sells rattlesnake, elk, cactus, python, etc. (drink wine while