innovations and go to market Flashcards
why new product development
increased competition
more demanding customers
growth strategies of companies
fast changing technologies
need for continuous innovations regarding products and services
product innovation can be
better performing product
a brand new product
totally new category
two ways of product development
developing new products in own R n D department
acquisition: buying company, patent or license to produce and sell the products of someone else
Risks of innovation
high investments and costs
needs time and market is unpredictable
delays during the development
% of failures is very high
more than 30000 new products every year
70-80% is a failure
only 10% really are radical innovations
Reasons of failure
- bad idea
- smaller market potential
- bad product functioning
- me too product
- price is too high
- bad or weak advertising campaign
- wrong moment (too early)
- strong reaction to competition
Reasons for success
- product is unique and relevant
- superior quality, new functions, high perceived value
- better performance compared to competition
- market segment is big
- high involvement and support of top management
- very innovative
NPD
more difficult to be successful as a consequence of
fragmentation of the market and high competition
Npd consequence
resulting in smaller turnover and profit potential for each new product
more government regulation
increasing production, media and distribution costs
competition reacts faster
process of npd
- strategy for new products
- idea generation
- idea screening
- concept development and testing
- strategy and marketing mix development
- business plan
- preproduction
- market test
- production and launch
- evaluation
external factors
right insights consumer research
opportunities
competition
internal factors
production capabilities and capacity
budget - money
know how and expertise needed
internal sources
own R and D department
managers, marketeers, salesmen, production people
brainstorm sessions
programs to involve employees to bring new ideas
external sources customers
observations
complaints
listening to our sales staff
co creation
crowdsourcing
External sources competition
monitoring competition
analyses of competitors products
co branding
External sources suppliers and distributors
suppliers new production techniques
distributors new tendencies in the market
others
fairs
professional magazines
idea screening
objective= reduction of list of ideas
ideas have to be technically feasible and commercially interesting
Idea screening: how
internal board
externally through market research
concept development
attractive ideas are translated into real product concepts
product idea
idea for a potential product that a company can launch on the market
product concept
extensive description of this idea, formulated to be understood by consumers
concept test
testing of a product concept with the target consumer segment to find out if the product is attractive
Concept test: how
Concept boards
concept test to find out
which concept is the most interesting, attractive
the buying intention predicting the sales volume of the product, BUT be careful
3 major parts
market definition and positioning of the product
planned price, promotion and distribution including the market budget for the first year
market share objectives
Business plan
check if the budgeted turnover costs and profit of the new product or brand match with the objectives of the company
p and l analysis
profit and loss analysis
step 7 preproduction
big step financially
test if the product idea can really be produced
Preproduction objective
develop a prototype that consumers are going to appreciate and that can be produced at reasonable costs
step 8 test market
test the product performance
maybe test the full marketing program for the new product
positioning advertising distribution and price
test the consumer reactions: usage, repeat purchases
market tests depend on
required marketing budget, so high risk of introduction
market research costs
time
product and launch
launch in one region or nationally/internationally
smaller companies launch in steps
big companies combination of countries or european roll out
international companies and multinationals: on a global scale
Product and launch to whom?
target groups
innovators and or early adopters
distribution channels needed?
Product and launch how?
division of marketing budget
advertising communication campaign
promotions
evaluation
mostly the first two months are crucial
adoption by retailers and consumers
are purchases followed by repurchases
buzz tracking
rotation of the product in stores
what about budgeted production cost
What is Plc
Product life cycle
reveals turnover and profit loss of a product during its life cycle
can relate to a product category, a product form or a brand
5 phases turnover and profit
product development phase
introduction phase
growth phase
maturity phase
decline
plc concept can be used for
product category/brand
longest life cycle - extensive maturity phase
product
mostly standard life cycle
brand + product
PLC can change rapidly depending on the competitors reactions
importance of plc concept
framework to understand the functioning and mechanisms of market and products
not suited to predict results or define marketing strategies because strategy is as well the source as the result of a life cycle stage
actual position of a product in the plc is the base for defining your marketing strategy
the chosen marketing strategy will impact the results in the next phases
