Learning Outcomes
LO1 Explain the importance of developing new products and describe the six categories of new products
LO2
LO3
LO4 LO5
LO6
Explain the importance of developing new products and describe the six categories of new products.
LO1
LO1
in the new-product
development process.
LO2
Long-term commitment
Company-specific approach
Capitalize on experience
Establish an environment
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New-Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization New Product
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Idea Generation
Customers
Employees
Distributors Vendors
Brainstorming
The process of getting a group to think of unlimited ways to vary a product or solve a problem.
11
Idea Screening
The first filter in the product development process, which eliminates ideas that are inconsistent with the organizations new product strategy or are inappropriate for some other reason.
12
Concept Test
A test to evaluate a new-product idea, usually before any prototype has been created.
13
Business Analysis
Demand
Cost
Sales
Profitability
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Development
Creation of prototype
Marketing strategy
Packaging, branding, labeling Promotion, price, and distribution strategy Manufacturing feasibility Final government approvals if needed
15
16
Test Marketing
The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.
17
18
Commercialization
Production
Inventory Buildup
Distribution Shipments
Sales Training
Trade Announcements Customer Advertising
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LO2
20
LO3
21
Poor promotion
Inferior product
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Success Factors
Factors in Successful New Products
Match between product and market needs
23
Success Factors
Listening to customers Producing the best product Vision of future market Strong leadership Commitment to newproduct development Project-based team approach
LO3
25
LO4
26
Global Issues
27
Modification of products
LO4
28
Explain the diffusion process through which new products are adopted.
LO5
29
Diffusion
30
Categories of Adopters
Innovators Early Adopters
Early Majority
Late Majority Laggards
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Observability
Trialability
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33
LO5
35
LO6
36
37
Sales
Dollars
Profits 0
Time
38
39
40
Introductory Stage
High failure rates Little competition Frequent product modification Limited distribution
Growth Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits
42
Maturity Stage
Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines
Decline Stage
Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Organized abandonment
44
Sales
Innovators
Laggards
Diffusion curve
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Product Strategy
Eliminate unprofitable models Phase out unprofitable outlets Phase out promotion
Sales
Distribution Strategy
Extensive; Margins drop; Shelf space Advertise; Promote heavily Prices fall (usually)
Aggressive ads. Stimulate demand Fall as result of competition & efficient production
Time