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8/6/2019 New Product Devt
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UNIT I
New Product Development
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Causes of New Product
Failures
Overestimation of Market Size Product Design Problems
Product Incorrectly Positioned, Priced or Advertised
Costs of Product Developmenta
Competitive Actions
To create successful new products, the companymust:
understand its customers, markets and competitors develop products that deliver superior value to
customers.
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New Product Development
Process
Idea Generation
Idea Screening Concept Development and Testing
Marketing Strategy
Business Analysis
Product Development
Test Marketing
Commercialization
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New Product Development ProcessStep 1. Idea Generation
New Product Development ProcessStep 1. Idea Generation
Systematic Search for New ProductIdeas
Internal sources
Customers
Competitors
Distributors
Suppliers
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Process to spot good ideas and drop poor ones
Criteria
Market Size Product Price
Development Time & Costs
Manufacturing Costs
New Product Development ProcessStep 2. Idea Screening
New Product Development ProcessStep 2. Idea Screening
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New Product Development ProcessStep 3. Concept Development & Testing
New Product Development ProcessStep 3. Concept Development & Testing
1. Develop Product Ideas intoAlternative
Product Concepts
2. Concept Testing - Test theProduct Concepts with Groups
of Target Customers
3. Choose the Best One
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New Product Development ProcessStep 4. Marketing Strategy Development
New Product Development ProcessStep 4. Marketing Strategy Development
Part Two - Short-Term:Products Planned Price
DistributionMarketing Budget
Part Two - Short-Term:Products Planned Price
DistributionMarketing Budget
Part Three - Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Part Three - Long-Term:Sales & Profit Goals
Marketing Mix Strategy
Marketing Strategy Statement Formulation
Part One - Overall:Target Market
Planned Product Positioning
Sales & Profit GoalsMarket Share
Part One - Overall:Target Market
Planned Product Positioning
Sales & Profit GoalsMarket Share
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New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See ifThey Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept
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New Product Development ProcessStep 7. Test Marketing
New Product Development ProcessStep 7. Test Marketing
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
ControlledTest Market
A few stores that have
agreed to carry newProducts.
ControlledTest Market
A few stores that have
agreed to carry newProducts.
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Characteristics of
Services intangibilityintangibility: difficult to sample and to evaluate inseparability:inseparability: difficult to separate services from the
service provider; mainly direct sales; staff are essential tothe delivery of quality services
heterogeneityheterogeneity: virtually every service is different; verydifficult to standardize quality
perishabilityperishability:: those not sold can not be stored
fluctuating demand:fluctuating demand: demand for some services
fluctuates by season, or even by time of day.
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Physical goods Vs Services
Physical Goods
Tangible
Homogeneous Production and
distribution areseparated from
consumption.
Services
Intangible
Heterogeneous Production,
Distribution andconsumption are
simultaneous process
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Physical goods Vs Services
A thing
Core value produced infactory.
Consumers do notparticipate in theproduction process.
Can be kept in thestock.
Transfer of ownership
An activity or process.
Core value produced inbuyer-seller
interactions. Customers participate
in the production.
Can not be kept instock.
No transfer ofownership