Introducing New Market Offerings

Mikhail Tenazas

Outline Challenges in developing new products Organizational structures and processes Main stages in new product development Managing the development process Factors affecting adoption process

Challenges in New-Product Development Types of New Products

New-to-the-world New product lines Minor additions or improvements Repositioning

Innovation

Challenges in New-Product Development 1. New-Product Success

Incremental innovation Kotler: Southwest Airlines Local: PLDT, Cebu Pacific, Pizza Hut Bistro Medical: Satellite clinics, Belo Medical Group

Challenges in New-Product Development 2. New-Product Failure

Shortage of ideas Fragmented markets Social and governmental constraints Cost of development Capital shortages Shorter required development time

“It is not just OK to fail; it is imperative to fail” Kotler: Dogster.com Local: IntelKinetic, ElectroLux Medical: Evista, Strattera

3. Organizational Arrangements Budgeting Organizing Internal changes: customer-driven

engineering Kotler: Xerox, Whirlpool Corporation Local: McDonald’s Medical: Medical City

Managing the Development Process

Idea Generation:Is the idea

worth considering?

Managing the Development Process 4. Idea Generation

Lateral marketing E.g. Gas station stores = gas stations + food

Cyber cafes = cafeteria + internet

Open innovation Tapping external sources Kotler: Mr. Clean Local: Medical:

Managing the Development ProcessIdea

Generation:Is the idea

worth considering?

Idea Screening:

Is the product idea

compatible with company

objectives, strategies,

and resources?

Concept Development and Testing:

Can we find a good concept

consumers say they

would try?

DROP

Managing the Development Process: 5. Concept Development and Testing

Product idea Product concept

Who will use it? Benefits? When will they use it?

Concept Development and Testing Kotler:

Product idea: powder to add to milk

Product concept: Instant breakfast drink for adults

Bacon and eggs

Cold cereal

PancakesHot cereal

Instant breakfast

Quick

Inexpensive

Slow

Expensive

Product-Positioning Map

(Breakfast Market)Perceptual mapping

Concept Development and Testing Local: Clear vs Head and Shoulders

Product-positioning: No dandruff, no hairfall

Soft and silky hair

Medical: Pain relievers

Brand-Positioning Map for Pain Relievers

Managing the Development ProcessIdea

Generation:Is the idea

worth considering?

Idea Screening:

Is the product idea

compatible with company

objectives, strategies,

and resources?

Concept Development and Testing:

Can we find a good concept

consumers say they

would try?

DROP

Marketing Strategy

Development:Can we find a cost-effective,

addordable marketing strategy?

Yes Yes Yes Yes

No No No No

Managing the Development ProcessIdea

Generation:Is the idea

worth considering?

Idea Screening:

Is the product idea

compatible with company

objectives, strategies,

and resources?

Concept Development and Testing:

Can we find a good concept

consumers say they

would try?

DROP

Marketing Strategy

Development:Can we find a cost-effective,

addordable marketing strategy?

Yes Yes Yes Yes

No No No No

Managing the Development ProcessBusiness analysis:Will this

product meet our profit

goal?

Product development

:Have we got a

technically and

commercially sound

product?

DROP

Yes

No

Managing the Development Process 6. Product Development

Quality function deployment

Development of physical prototypes

Kotler: Boeing 777Local: McRice BurgerMedical: Cloning, stem cell therapy

Desired customer attributes

Engineering attributes

Managing the Development ProcessBusiness analysis:Will this

product meet our profit

goal?

Product development

:Have we got a

technically and

commercially sound

product?

Market Testing

Have product sales met

expectations?

DROP

Yes Yes

No No

Managing the Development Process 7. Market Testing

Consumer-Goods Market Testing How many test

cities? Which cities? Length of test? What information to

collect? What action to

take?

Market Testing Kotler: General Mills’ Toast-Ems toaster pastries,

Colgate-Palmolive Local: Globe, Smart, Sun Medical: Pharmaceutical companies

Managing the Development ProcessBusiness analysis:Will this

product meet our profit

goal?

Product development

:Have we got a

technically and

commercially sound

product?

Market Testing

Have product sales met

expectations?

DROP

Commercialization:

Are product sales meeting

expectations?

Send the idea back for product

development

Modify the product or marketing program

Managing the Development Process 8. Commercialization

When (Timing) Where (Geographic Strategy) To Whom (Target-Market Prospects) How (Introductory-Market Strategy)

Kotler: Apple iPod

Kotler: Apple iPod Local: Clear Shampoo Medical: Medical City, Belo

Medical Group, Calayan

9. Factors Influencing the Adoption Process Readiness and Personal Influence

Factors Influencing the Adoption Process Readiness and Personal Influence

Kotler: Nike skateboard Local: Mini Cooper Medical: Lasik, stem cell therapy

10. Characteristics of the Innovation Relative advantage Compatibility Complexibility Divisibility Communicability

Kotler: TiVo, or PVRs Local: iPhone, preventive supplements Medical: Laparoscopic surgery, Lasik,

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