New Product Decisions (18) Flashcards
Product: - The first P of 4 P's
What is a product
Seller view:
a bundle of tangible and intangible attributes designed to provide benefits to the customer
Customer view:
a bundle of tangible and intangible benefits
Product Line
the set of products offered within a certain category or subcategory (LG–>tv, phone, frigerators)
Product Mix
the set of product lines
Durable vs. nondurable
Durable= Car, TV Nondurable= Consumed- milk, bread, etc.
Consumer vs. industrial
Consumer (B->B)
Industrial (B->C)
Convience, Shopping, Specialty, Unsought
4 categories of 4P's (chart p245) Convenience- milk Shopping- jeans Specialty- specific handbag Unsought- life insurance/coffin
Why study new products?
Lot of new product failure
- 67-80% of new products fail
- reduces uncertainty and improves success associated with new products
- cost savings by screening out bad ideas at each stage
Steps In New Product Development Process
IgSIe
Step 1: Idea generation (from consumers, MR, competitors etc)
Step 2: Sceening- SWOT analysis + rough ROI est.
Step 3: Idea Evaluation- test product or idea on group
Step 4: Development- R&D- Develop model or service prototype, test marketing mix, revise as needed, ROI estimate (return on investment)
Step 5: Commercialization- finalize product and marketing plan, start production and marketing, Final ROI estimate
Marketing reasons for new product failure
Failure: IITPPB
- Insignificant “point of difference”- eg. google plus vs. facebook or clairol “look of buttermilk” but what is “look of buttermilk” mean? q of testers
- Incomplete market and product definition
eg. Corkys- frigdes in nyc too small for product - Too little market attractiveness- isnt enough of a market to sell the product
- Poor execution of the marketing mix- kelloggs Special K Calcium promote- looks like unfriderated milk
- Poor product quality of sensitivity- e.g. Nestle
- Bad timing (winter vs summer)- e.g. introducing coffee in the summertime
Why Introduce new product? Offensive vs. Defensive
Offensive:
- achieve profit goal
- opening wedge into customer segment or channel
Defensive:
- prevent loss- sales on down so you introduce new product to turn company around
- pre-empt attack
Conjoint Analysis
Done in Step 3: Idea evaluation- concept is evaluated without actual product)
TRADE OFF DATA FOR PRODUCT DESIGN- which attributes are most valued by customers
Conjoint analysis determines how people value different features that make up an individual product or service.
Stimulated Test Marketing (STM)
Step 4: Development- product + part of Marketing mix is evaluated
STM-
- Aka laboratory Test Markets
- simulates an actual test market to estimate
Advantages-
- fast
- cheap
- impressive accuracy rates
Limitations-
- assumes preference data and purchase decisions are valid predictors
- attrition
Test Marketing
Step 5: Commercialization- product + complete marketing mix is evaluated
it is a marketing program implemented in limited, but carefully selected parts of market
GOAL:
- to gain information and experience with the marketing program before making a total commitment to it.
- to predict the programs outcome when it is applied to the total market
Sell-In Test Marketing
Cities where product is sold just as it would be in a national launch
- must gain distribution space
- issues: selecting city, implementing and controlling the test, timing, evaluative measures, cost
The Adoption Proces
Which consumers adopted and why? How can we encourage adoption from: 1. innovators 2. early majority 3. late majority 4. laggards
Product Life Cycle (PFC)
IGMD introduction->growth->maturity->decline (chart) PLC Shapes Vary (chart) - slow starter - fads - classic - fashions
PLC Relation to BCG Matrix map (DRAW)
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PLC Types Chart (DRAW)
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PLC Shape: Effect of NPD (Innovations) Chart
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Levels of a product Chart (DRAW)
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