new-product development strategic launch planning lecture-30
TRANSCRIPT
New-Product Development Strategic Launch Planning
LECTURE-30
Chapter Questions
New product development strategy
New product development process
Marketing strategy development
Strategic launch planning
How brand equity provides value
The evaluation tasks In the new product process
New-Product Development Strategy
Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product.
New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.
Two ways to obtain new products
What Is a Successful New Product?
90
40
10
0102030405060708090
Sometimes Quotedin Press
Research Reports Sometimes Claimed
Percent of Products that Fail
Although you may hear much higher percentages, careful studies supported by research evidence suggest that
about 40% of new products fail -- somewhat higher for consumer products, somewhat lower for business-to-
business products.
New-Product DevelopmentReasons for new product failure
New-Product Development Process
Major Stages in New-Product Development
New-Product Development Process
Idea generation is the systematic search for new-product ideas
Sources of new-product ideas
Internal
External
Idea Generation
New-Product Development Process
Internal sources refer to the company’s own formal research & development, management and staff.
External sources refer to sources outside the company such as customers, competitors, distributors, suppliers.
Idea Generation
New-Product Development Process
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market.
Marketing strategy statement includes: Description of the target market Value proposition Sales and profit goals
Marketing Strategy Development
New-Product Development Process
Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
Marketing Strategy Development
New-Product Development Process
Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments
Requires an increase in investment
Marketing Strategy Development
New-Product Development Process
Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings.
Provides the marketer with experience in testing the product and entire marketing program before full introduction.
Marketing Strategy Development
New-Product Development Process
Commercialization is the introduction
of the new product
When to launch
Where to launch
Planned market rollout
Marketing Strategy Development
Managing New-Product Development
Successful new-product development should be:
Customer centered
Team centered
Systematic
Strategic Launch Planning
Some Important corporate decisions.
A specified gross margin: Affects funding.
Speed-to-market: Affects promotional outlays and schedules.
Commitment to a given channel: Affects distribution plan.
Advertising policy: Affects promotion decisions.
Pricing policy: Affects decision to use penetration or skimming pricing (slide down demand curve).
Revision of Pre-determined Goals
Customer Acceptance Goals Customer Acceptance Customer Satisfaction Sales Market Share
Financial Performance Goals Time to break even Margins Profitability (IRR, ROI)
Product Level Performance Goals Product Cost Time to Market Product Performance Quality Guidelines
Other Competitive Effect Image Change Morale Change
Strategic Platform Decisions Permanence
Permanent, stand-alone. Permanent, but as a bridge to other items -- e.g.,
platform strategy. Temporary. Given firms’ tendency to develop
streams of products, more and more new products are actually only temporary.
Aggressiveness Aggressive versus cautious attitude at entry
Type of Demand Sought Primary versus selective
Strategic Platform Decisions
Competitive Advantage Differentiation, price leadership, or both
Competitive Relationship Aim at a competitor, avoid a competitor
Image Create a new image, tweak an existing image, use
the already-existing image
Product Line Replacement Strategies
Butt-on product
replacement The existing one is simply dropped when the new one is announced. Example: Ford's marketing of Mondeo and
dropping of Sierra. Low-season
switch Same as butt-on, but arranging the switch at a low point
between seasons. Tour companies use this switch when they develop their new catalogs.
High-season switch
Same as butt-on, but arranging the new item at the top of a season. Example: Polaroid used this strategy often, putting new replacement items out during the Christmas season.
Roll-in, roll-out Another version of butt-on, but arranged by a sequence of market segments. Mercedes introduced its C series country
by country. Downgrading Keeping the earlier product along side the new, but with
decreased support. Example: The 386 chip stayed along side the 486, until the Pentium was introduced.
Splitting channels
Putting the new item in a different channel or diverting the existing product into another channel. Example: Old
electronic products often end up in discounter channels.
Scope of Market Entry
This is not test marketing. This is launch. All forces in place and working.
Roll out slowly -- checking product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc.
Roll out moderately -- but go to full market as soon as volume success seems assured.
Roll out rapidly -- full commitment to total market, restricted only by capacity.
The Target Market Decision
Alternative ways to segment a market End-use, geographic/demographic,
behavioral/psychographic, benefit segmentation
Micromarketing and mass customization
Also consider the diffusion of innovation
Product Positioning
Who -- Why -- How
To whom are we marketing?
Why should they buy it?
How do we best make the claim?
Why Should They Buy It?
“How likely would you be to buy this if we marketed it?”
Formatted in three ways: Solves major problem current products do
not. Better meet needs and preferences. Lower price than current items.
How Do We Make the Claim? Product positioning statement is a strategic driver --a
core item -- not a list of advantages. Some new products get one short sentence -- technical items more.
Can be stated as one or more features (what it is).
Can be stated as a function (how it works).
Can be stated as one or more benefits (how the user gains).
Can be stated as a surrogate (no features, functions, benefits).
Branding Decisions
What is the brand’s role or purpose?
Are you planning a line of products?
Do you expect a long-term position in the market?
How good is your budget?
Physical/sensory qualities of brand considered?
Message clear and relevant?
Is Insulting or irritating to anyone?
How Brand Equity Provides Value
Building Brand Equity
Getting awareness of the brand and the meaning.
Making brand associations
Building perceived quality
Loyalty in repurchase
Getting reseller support
The Evaluation Tasks In The New Product Process
Opportunity Identification/Selection
Concept Generation
Concept/Project Evaluation
Development
Launch
Direction: Where should we look?
New product Process Phase Evaluation Task
Initial Review:Is the idea worth screening?
Full Screen: Should we try to develop it?
Progress Report: Have we develop it? If not, should we continue to try?
Market Testing:Should we market it? If so, how?
In retrospect
Marketing Management – A South Asian Perspective by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13th Edition, Published by Pearson Education, Inc.
New Product Management by Merle Crawford and Anthony Di Benedetto, 9th Edition McGraw Hill Irwin. Principles of Advertising & IMC by Tom Duncan 2nd Edition, Published by McGraw-Hill Irwin.
Principles of Marketing by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall
Bibliography
The End:
Don’t use time or words carelessly.
Neither can be retrieved.