Chapter 20 - Introducing New Market Offerings How to Acquire New Products The company can buy It can acquire

It can buy a from other companies. from another company.

How Companies Can e!e"op Products In its own laboratories. Contract with independent researchers or new-product development firms to develop new products. Categories of New Products New-to-the-world products New products that New product lines. New product that allows the company to enter an Additions to existing product lines. New products that supplement existing product lines Improvements and revisions of existing products. Improve or eplace existing product epositionings - !xisting product targeted to a Cost eductions. - New product that provides similar performance at a lower cost #$pes of Inno!ations Innovation - elies on incremental improvements to an already established technology "isruptive Innovation - A new technology that unexpectedly

%tages of New Product e!e"opment

&' Idea (eneration $ources Customers - surveys% focus groups% customer letters&email% blogs% social networ's !mployees ( )" dep*t% sales force% +ho else, Competitors -ther $ources Inventors .niversity Commercial laboratories How to )ncourage Interna" e!e"opment of New Product Ideas* "isperse ) " around the globe employees hierarchy !ncourage generation +elcome well thought out 2' Idea %creening +ho is responsible for screening Not Invented 0ere $yndrome %creening Idea +$ ,anking - ,ating /eep teams small and

Product Idea ! Concepts A product idea is a to the mar'et. A product concept is an of the idea expressed in product the company offer

Concept #esting !ntails presenting target mar'et with an elaborated version of the concept% and getting their reactions. The concepts can be presented symbolically or physically

.uestions to ask target market a+out the concept Communicability and believability ( Are the benefits clear and believable Need level ( +ill this product solve a problem or fill a need 2ap level ( +hat other product will satisfy this need 3erceived value ( Is the price reasonable for the value 3urchase intention ( +hat is the probability of purchase .ser targets% purchase occasions% purchasing frequency The respondents* answers indicate if the concept has4 A broad consumer appeal. +hat products this new product competes against. +hich consumers are the best targets. Concept #esting / Con0oint Ana"$sis Con5oint Analysis is used to evaluate consumer . 6

3roducts are composed of Con5oint analysis determines which preferred by consumers.

attributes. are most

Con5oint analysis assumes that consumers ma'e purchases by simultaneously considering several attributes of a product. Con5oint analysis helps you discover how consumers between the various possible attribute available $tatistical analysis is used to ran' combinations Manageria" 1ses of Con0oint Ana"$sis After determining the contribution of each attribute to the consumer*s overall evaluation% one could "efine the ob5ect with the optimal combo of features 3redict mar'et shares of different ob5ects with different sets of features Isolate groups of customers who place differing importance on different features Identify mar'eting opportunities by exploring the mar'et potential for feature combos not currently available Marketing %trateg$ - "evelop a preliminary strategy plan for introducing the new product into the mar'et 2usiness Ana"$sis !stimate Total $ales !stimate Cost and 3rofit 7 8ear 3ro-9orma Cash 9low

Canni+a"i3ation Introduction of a new product that ta'es sales away from other products the company sells% rather than from competitors 4hat to Consider 4hen Introducing a Product #hat has the Potentia" to Canni+a"i3e* #. +hat effect will the new product have on my 0ow 0ow much are the products is there ,

1. 0ow will the introduction of the new product affect my Additional fixed% variable costs ;ong term or short term cost 6. 0ow will my competitors react, 0ow is the product to

0ow much demand +hat is their cost structure +hat will happen if the product is & is not introduced by competitor,

Product e!e"opment Create a physical prototype The prototype should !mbody the 'ey attributes described in the product-concept statement. 3erforms safely under normal use and conditions. Can be produced within the budgeted manufacturing costs. #$pes of #est Marketing $ales +ave Consumers who initially try the product at no cost are reoffered the product% or a competitor*s product% at slightly reduced prices. They might be offered the product as many as five times <sales wave= with the company noting how many customers selected the product again and their reported levels of satisfaction. $imulated Test >ar'eting .ses 6? to :? qualified shoppers and questions them about brand familiarity and preferences in a specific product category. Controlled Test >ar'eting esearch firm manages a panel of stores that will carry new products for a fee.

Test >ar'et 3roduct is put representative cities to see how it sells Test >ar'et "ecisions4 0ow many test cities. +hich cities. ;ength of test. +hat information. +hat action to ta'e >ar'et Testing Consideration

Too little information Competitors Commercia"i3ation Aringing the product to mar'et 4hen to 2ring Out New Product 9irst entry ( 9irst >over Advantage 3arallel entry - $ynergy ;ate entry - 1nd to >ar'et Advantage 4here to 2ring Out New Product ;ocal egional National Criteria for Choosing ,o""out Markets >ar'et Company*s local reputation

Cost of communication media 4ho to #arget in ,o"" Out Market* . users. leaders. eached at a low cost.

0ow to 2et New 3roduct to >ar'et Critical 3ath 3lanning The sequence of activities that must be completed on schedule for the entire pro5ect to be completed on schedule. It is the longest duration path through the wor'plan. 3! T Chart A diagram that depicts pro5ect tas's and their interrelationships. 3! T stands for 3rogram !valuation eview Technique Pert Chart

Consumer Adoption Process Awareness Interest !valuate Adopt

5actor Inf"uencing Adoption Process

!nd Chapter 1?