UNT Marketing 3650 Topic 8 Thompson

What is a new product
Types of new products include Discontinuous innovation, dynamic continuos innovation, and continuos inovation
Discontinuous innovation
New Learning & Consumption Patterns
Dynamic continuos innovation
Disrupts Normal Routine; does not require total new learning & consumption patterns
Continuos innovation
No New Learning & No Change in Consumption Patterns
Importance of New Products
New product development recognizes that products have life cycles.
New products can foster differential advantage.
New products can enhance firm’s image and market position.
New products may reduce risk via diversity
Why do new products fail
Absolute failure & Relative failure
Absolute failure
Product loses money and does not achieve breakeven. The most drastic form of loss
Relative failure
Profitable, but does not achieve profit objectives.
Factors Underlying Failure
Inadequate Product Superiority or Uniqueness.
Inadequate or Inferior Planning.
Poor Execution.
Technical Problems
Inadequate Product Superiority or Uniqueness.
Relative advantage lacking and insignificant ‘point of difference’
Inadequate or Inferior Planning.
Lack of well-defined target market, ill defined position and low market ‘attractiveness’
The Development Process
Idea generation
Idea Screening
Concept Test
Business Analysis
Prototype Development
Test Market
Commercialize
Idea generation
An ongoing search for product ideas that are consistent with target market needs and company objectives.
The Goal of Idea generation
The goal is to generate as many new ideas as possible. Sources of new ideas can include customers, competitors, or employees.
Techniques for generating Ideas
Brainstorming
Problem analysis
Attribute Listing
Problem analysis
Focus group application
Customers react to product
Problems encountered with actual use
Attribute Listing
Listing what makes it what it is. i.e. what does it do.
Idea Screening
An analysis of new ideas to determine which are reasonable, fit organization’s goals, and are appropriate for the target market.
Product Screening Checklist
There key factors for products and success is identified on a chart with a rating scale developed and applied to each factor. Overall rating is what counts.
Goal of Idea Screening
The goal is to eliminate risky alternatives and to focus resources on those ideas with the highest probability of success
Concept Development & Testing
Identify product’s desired position & what consumers think of idea?
Business Analysis
Identify preliminary marketing strategy, Forecast demand: Market & sales potential, Competitor reactions; Project costs: Development, production, marketing; Estimate profits.
Prototype Development
A product prototype is built and allows: functional, use, & safety testing, specification of a more concrete marketing strategy, and costing. Additional concept testing & mix changes are common and test marketing may be used
Test Market
a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out.
Factors Favoring Test Marketing
-Acceptance of product very uncertain
-Sales potential difficult to estimate
-Cost of developing consumer interest & trial uncertain
-Major investment required
Reasons Not to Test Market
-Risk of failure is low
-Product will have a brief life cycle
-Beating competition to market is important
-Basic product, package, promotional appeal well established
Commercialization
A decision to launch the product and has considerations.
Decisions to commercialize include
Full-scaleproductionandsales
Seriouscommitmentofresources/effort
Last chance to stop the project.
What are the considerations of commercializations
Timing, resources, roll-out
Geographic Roll-Out
Is done where test market is. Cuts risk and extends test market
New Product Adoption Process
The decision by individuals to adopt the new product for continued regular use. Steps include: Awareness, interest, evaluation, trial, than adoption.
New Product Diffusion Process
Diffusion results from People adopting products at different rates and the different rates at which people adopt results in “spread” or “diffusion” of the product over time.
The process of diffusion
Process is represented by a “normal distribution” when plotted over time (bell curve). It represents the distribution of all people who will adopt a product from time of commercialization to final decline.
What are the different groups of the bell curve.
From left to right: Innovators, early adopters, early & late majority, laggards
Factors Influencing Diffusion
Relative advantage, Compatibility, Trial-ability, Communicability, and Complexity. Relative advantage is most Important.
Innovators
The first to buy new products and typically described as – venturesome, educated, financially stable, and willing to take risks.
Do not contribute significantly to WOM
WOM
Word of mouth
Early adopters
Local opinion leaders — responsible for WOM similar characteristics to innovators. This group is a key target for new product developers.
Early majority
First category of “mass market” and are typically solid, middle-class consumers, average in socioeconomic status, and more deliberate and cautious in purchase decisions
Late Majority
Second part of mass market. Similar to early majority but consumers are older, more conservative, traditional, and skeptical of new products. Reluctantly adopt when newness of product has worn off
Laggards
Last group to adopt a new product. resist challenges to tradition,
– remain oriented toward the past,
– may be older
– lower in socioeconomic
status than other groups.
• Product often obsolete
before adopt