New Product Decisions Flashcards
Types of new products
- new-to-the-world/innovations (e.g. medical breakthroughs)
- replacements (e.g. MP3 players instead of stereos)
- variants (e.g. kit kat chunky)
- me-too (e.g. Fritz-Kola)
- Re-launched (same product with revamped marketing strategy)
New Product Options: Options on organizational level
- buy other companies
- buy patents from other companies
- buy a license or franchise from another company
- innovations
- improve existing products
Challenges in New Product Development
- innovative imperative (continuous innovation is necessary)
- new-product success (incremental innovation vs. disruptive success)
- shifting paradigms in product innovations
New Product Failure
- fragmented markets
- social, economic, governmental barriers
- development costs
- capital shortages
- shorter development time
- poor launch timing
- shorter PLCs
- lack of organizational support
Organizational Arrangements for New Products (Budgeting)
- budgeting for new product development (cost to find one successfull new product)
- stages: Idea screening, concept testing, product development, test marketing, national launch
Organizing New Product Development: New Product Development Concepts
- new product department
- venture teams
- stage-gate systems
- skunkworks
- crowdsourcing
- communities of practice
Stages in new product development process
1) Idea Generation
2) Idea Screening
3) Business Analysis
4) Market Testing
5) Commercialization
Generating Ideas: How To
- interacting with employees
- interacting with outsiders
- studying competitors
- adopting creativity techniques
Ways to find new product ideas
- trade shows
- employees visiting supplier labs
- idea vaults
- customer brainstorming or surveys
Ways to draw new ideas from customers
- observe how customers use the product
- ask customers about product problems
- use customer advisory board
- challenge customers to improve products
Idea Screening
- company can monitor and revise its estimate of the product’s overall probability of success
overall probability of success = p (technical completion) * p (commercialization given technical completion) * p (economic success given commercialization)
Concept Testing Responses
- communicability and believability
- perceived value
- need level
- purchase intention
- user targets, purchase occasions and frequency
Marketing strategy development following a successful concept test
1) targets market’s size, structure, behavior; planned brand positioning, sales, market share and profit goals in the first few years
2) planned price, distribution strategy and marketing budget for the first year
3) long-run sales and profit goals and marketing-mix strategy over time
Concept to Strategy: Business Analysis & Projected Cash Flow Statements
- estimating total sales
- graphs: product lifecycle sales for one-time purchased products, infrequently purchased products (replacement sales), frequently purchased products (repeat purchase sales)
Development to Commercialization
1) Product Development (physical prototypes, alpha- & beta-testing)
2) Market testing (consumer goods or business goods market testing)
3) Commercialization: Timing (first entry bevor competitor, parallel entry or late entry)
4) Commercialization: Where? (Geographic strategy), to whom? (target-market prospects), how? (introduction market strategy)
