Product Life Cycle: Managing New Products Flashcards
two basic types of demand forecasting methods
1 collecting primary data (data collected especially for the purposes of demand forecasting)
2 analyzing secondary data (existing data)
primary data comprises 2 methods
1 expert-judgment forecasts
2customer-research forecasts
secondary data methods
1 offering-specific forecasting
2 forecasting by analogy
3 category-based forecasting
S-shaped curve
depicts the total number of adoptions at any given point in time
bell- shaped curve
number of new (rather than total) adoptions of the innovation at any given point in time
New product adoption is influenced by several factors:
1 inherent value of the product
2 relative advantage over similar offering
3 transparenty of product benefits
4 compatibility with related products
5perceived risk that consumers associate with product adoption
process of converting ideas to market offerings (6 stages)
1 idea generation 2 concept development 3 business analysis 4 product development 5 market testing 6 `business deployment.
the stage- gate approach
minimizes risks
- introduces benchmarks (gates ) to be met in order for an idea to proceed to next stage
stages of the market
introduction, growth, maturity, and decline
Brand Development Index (BDI)
BDI = percent of an offerings total US sales in market C / percent of total us population in market x
degree to which sales of a given offering have captured the total market potential in geographic area
sales potential of a given brand in a particular market.
Category Development Index (CDI)
CDI = percent of a category’s total US sales in market X/ percent of the total US population in market X
sales potential of a given category in a particular market.
Delphi Method
multiple rounds of collecting anonymous expert opinions
Each forecast typically consists of two parts: the forecast and its rationale.
The adopters:
1 Technology enthusiasts (innovators) 2 Visionaries (early adopters) a 3 Pragmatists (early majority) 4 Conservatives (late majority) 5 Skeptics (laggards)
2 types of demand forecasts
1 market forecasts: estimate the total sales volume that ultimately can be achieved by all companies in a given market
2 sales forecasts: impose a specific time frame for achieving the sales volume.
2 type sof primary demand forecasts:
1 expert judgement forecasts (executive forecast senior managers, sales force forecast, industry forecast)
2 customer research forecasts (concept testing, market testing)
concept testing
process of evaluating consumer response to a particular offering prior to its introduction to the market.
- prototype, focus group
market testing
test markets to estimate market potential and future sales volume
Test markets aim to replicate all relevant aspects of the environment in which the company’s offering will be launched
Offering-specific forecasting
secondary data
is based on past data from the sales of the same offering for which the demand is being forecast.
forecasting by analogy
forecasting an offering’s performance by comparing its adoption cycle to a functionally similar product for which sales data are available.
eg. 3-D TVs by comparing it to the adoption of analogous products, such as color, flat-screen,
Category-based forecasting
involves utilizing available product-category data to estimate a particular product’s performance
high BDI and low CDI indicates that the brand is doing better than competitive offerings, whereas a combination of low BDI and high CDI indicates that the brand is doing worse than competitive offerings.
risk involved in new product development
1 market risk (5Cs)
2 technological risk (desired product features might not be achievable with currently available technologies)
