New Product Process and Likelihood of success (Lecture #12/13) Flashcards
What are the seven stages of the new product process?
- New product strategy development
- idea generation
- screening and evaluation
- business analysis
- development
- market-testing
- commercialization
Describe the new product strategy
-involves defining the role of the new product in terms of the firm’s overall corporate objectives
what are the objectives of the new product strategy stage (stage 1)?
-identify markets and strategic roles of the new product
- strategic roles: types of innovation, time horizon, budget, role of new product, fit in firm’s portfolio, etc.
- need for cross-functional teams (different functional expertise working towards common goal)
def. six sigma
a measure that delights customers by achieving quality through highly disciplined process that is focused on developing and delivering near-perfect product and services
what stage is six sigma used/considered?
new product strategy development stage (stage 1)
who are the lead users in the new product strategy development stage and what do they do?
lead users are early adopters and provide substantive feedback
lead users face needs that will be general in the new marketplace, but face them before marketplace encounters them
describe the idea generation stage
involves developing a pool of concepts as candidates to become new products
what are some sources of ideas
- customer and supplier suggestions
- employee and co-worker suggestions
- research and development breakthroughs
- competitive products
- R&D at Universities, inventors, and small tech firms
- new patents and trademarks
- scientific/tech reports and emerging trend lines
describe the screening and evaluation stage
involves internal and external evaluations of the new product ideas to eliminate ideas that do not warrant further efforts
describe the internal approach (screening and evaluation)
evaluate if the new idea matches corporate objectives and assess if it is feasible (technically, technologically, financially, time, etc.)
describe the external approach (screening and evaluation)
- concept testing
- –written descriptions for potential customers to ask a lot of questions and generate a lot of feedback in : online tests, simulated lab tests, limited market tests
**security of tests must be ensured
describe the business analysis stage
- will it be profitable?
- involves specifying the features of the product and the marketing strategy needed for its successful commercialization; and also making the necessary financial projections (objectively)
describe the development stage
the product ideas that survive stage 4, proceed into actual development, which turn the idea on paper into a few prototypes
describe the market testing stage
involves exposing actual products to prospective consumers under a few realistic purchase conditions to see if consumers buy them
what are some examples of market testing
- test marketing (limited sale)
- simulated test markets (STM)(asking potential customers to evaluate against competitors)
- virtual reality market testing
describe the commercialization stage
involves positioning and launching the new product in full-scale production and sales
where do risks and uncertainties come from in the commercialization stage
the difficulty of mass-producing products developed in the laboratory, cost overruns leading to excessively high price, costly education of potential buyers, and bad timing
how many fees are retailers now requiring and what are they?
2
slotting fees: a payment required of manufacturers to place a new item on a shelf
failure fees: a penalty payment by manufacturers to compensate the retailer for sales its valuable shelf-space never made
What things improve likelihood of success? (5)
- compatibility (compatible with the way the consumer currently consumes)
- trialibility (try out product before committing to purchase, ie test drive)
- complexity (more complex the new product, the less likely, it will be embraced)
- observability (if we can observe other people having success with the product, increase likelihood of success)
- Relative advantage (has to be better than current product)
def. continuous innovation
where an existing
product undergoes marginal changes, without
altering consumption practices; no new
learning
def dynamically continuous innovation
Some new learning; disrupt’s consumer’s normal routine
def. discontinuous innovation
A new product is launched, very different from previous; new learning and significant
change in consumption habits
def. cross-functional teams
group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments. Typically, it includes employees from all levels of an organization.
Marketing information and methods used in the new-product process: New-product strategy development
purpose: Identify focus, structure, approach, and guidelines for innovation
marketing info and methods: Company objectives; use of
cross-functional teams, Six
Sigma, and lead users
Marketing information and methods used in the new-product process: Idea generation
purpose: Develop concepts for possible products
marketing info and methods: Ideas from employees and co-workers, consumers, R&D, and competitors; methods of brainstorming and focus groups
Marketing information and methods used in the new-product process: Screening and evaluation
purpose:
Separate good product
ideas from bad ones
inexpensively
marketing info and methods used: Screening criteria, concept tests, and weighted point systems
Marketing information and methods used in the new-product process: business analysis
purpose: Identify the product’s features and its marketing strategy, and make financial projections
marketing info and methods: Product's key features, anticipated marketing mix strategy; economic, marketing, production, legal, and profitability analyses
Marketing information and methods used in the new-product process: Development
purpose: Create the prototype product, and test it in the laboratory and on consumers
mark info and methods: Laboratory and consumer
tests on product
prototypes
Marketing information and methods used in the new-product process: Market testing
purpose: Test product and
marketing strategy in the
marketplace on a limited
scale
mark info and methods: Test markets, simulated test markets (STMs), virtual reality market testing
Marketing information and methods used in the new-product process: commercialization
purpose: Position and offer product in the marketplace
mark methods and info used:
Perceptual maps, product
positioning, regional
rollouts
