Chapter 11 marketing and development

Categories of new products
New to the world

New product lines

Product line addition

Improvements or revision

Repositioned products

Lower priced products

New product success factors
Long term commitment

Company specific approach

Capitalized on experience

Established an environment

New product strategy
A plan that links the new product development process with the objective of the marketing department, the business unit and corporation
Idea generation
Customers, employees, distributor, competitor, R&D, consultant, other experts
Brainstorming
The process of getting a group to think of unlimited ways to vary a product or solve a problem
Focus group
The objective of focus group interviews is to stimulate insightful comments through group interaction
Screening
The first filter in the product development process, which eliminates ideas that are inconsistent with organizations new product strategy or inappropriate for some other reason
Concept test
To evaluate a new product idea, usually before ant prototype has been created. Often successful for line extension
Consideration in business analysis stage
Demand, cost, sales, profitability
Development
Create a prototype

Sketch a marketing strategy

Decide on packaging, branding and labels

Map out promotions, price, and distribution strategy

Examines manufacturing feasibility

Simultaneous product development
A team oriented approach to new product development where all relevant functional areas and outside suppliers participate in the development process
Test marketing
The limited introduction of a product and a marketing program to determine the reaction of potential customers in a market situation
Costs of test marketing
Often takes 1 or more years

Can cost over 1 million

Expose new product to competition

Competition can jam testing program with their own promotions

Alternative to test marketing
Single source research using scanner data

Simulation market testing

Online testing marketing

Commercialization
Ordering, production, inventory buildup, distribution shipments, sales force training, trade announcement, customer advertising
Product failure
Despite the amount of time and money spent on developing and testing new product, a large proportion of new product introduction fail
Product failure 2
Most important factor in successful new product introduction is a good match between the product and marketing needs
New product success factors
Listen to customers

Produce the best products

Vision of market

Getting every aspect right

Strong leadership

Commitments to new product development

Projects based team approach

Global marketing questions
Increasing globalization of markets and of competition provides a reason for multinational firms to consider new product development from a worldwide perspective
GMQ2
Succeed in some countries often require companies to develop products that meet unique need of these populations
Product life cycle
A concept that provides a way to trace the stages of products acceptance from its introduction to decline
Introduction stage
High failure rates

Little competition

Frequent product modifications

Limited distribution

High marketing and production costs

Negative profits with slow sales increase

Promotion focuses on awareness and information

Communication challenge is to stimulate primary demand

Growth stage
Increase rate of sales

Entrance of competition

Market consolidation

Initials healthy profits

Aggressive advertising of the difference between brands

Wider distribution

Maturity stage
Sales increase at a decrease rate

Saturated markets

Annual models appear

Lengthened product lines

Service and repairs assume important roles

Heavy promotions to consumers and dealers

Marginal competitor drops out

Niche marketing emerges

Decline stage
Long run drop in sales

Large inventories of unsold items

Elimination of all nonessential marketing expenses

Organized abandonment