BA 315 CHAPTER 8NEW PRODUCT PLANNING LPC Many new products that are developed never reach the market!!!!!! MOST NEW PRODUCTS FAIL!!!
The definition of product "newness" • depends on who is making the assessment: the buyer or the seller.
product "newness" • The degree of newness to both the buyer and the seller impacts the amount of risk taken and influences the way the new product development process is managed.
Essentially there are six types of new products. • New to the world products are products that create entirely new markets. • New product lines are products that represent entries into existing markets that are new to the firm. • Line extensions are new products that allow the firm to' extend its served market by offering different benefits.
NEW PRODUCTS(CONT) • Cost reductions are versions of existing products that provide comparable performance at lower cost.
NEW PRODUCTS • Improvements to existing products are usually designed as replacements for existing product offerings. • . Repositionings are modest technical improvements that allow a product to offer new applications and serve new needs. 1
ABSOLUTELY FAILED!!!! • Because of the high probability of new product failure and its consequences, most organizations have developed some formalized system or structure for managing the new product development process. Firms use either a staged (phased)approach or parallel development approach in new product development and. the use of teams is widespread.
There are seven, not six stages in new product development • Idea Generation • Idea Screening • Conceptual Testing • Business Analysis • Product Development • Test Marketing • Commercialization
Idea Generation • Idea generation stage includes alternative specifications for product concepts utilizing end user analysis or problem analysis. Focus groups and direct observation provide insights for product development.
Idea Screening BEGIN TO CONFIRM a new product concept. Product candidates are evaluated on initial estimates of potential demand and the chances/barriers to success. Market potential studies, concept tests, and scoring models such as NewProd are used to evaluate the product concept.
Conceptual Testing REMEMBER CHEW’S EXAMPLES ……… AIR ONE MINUTE MAID STORY BOARD QUESTIONAIRE INTERVIEW ANALYSIS
Business Analysis • RUN THE NUMBERS • CHECK OUT THE PRODUCEABILITY • MAKE RECOMMENDATIONS • comprehensive view of the financial consequences of introducing a new product.
Product Development • converts the concept into a working product by developing the product architecture; design function, value, and appearance of the product; create and develop product specifications; and consider manufacturing and operational costs and operational constraints or tradeoffs (POLITICS)
Product and Market Testing • provides a more detailed assessment of a new product's chances for success technical testing, preference and satisfaction testing, simulated test markets and test markets can be used to evaluate potential success/failure and define important marketing elements.
COMMERCIALIZATION • planning and launch strategy for introducing the product to the marketplace. Timing of the introduction, the selection of a branding strategy, and coordinating the marketing program activities are all components of the launch strategy. • CHEW SAY’S FULL LAUNCH!!!
portrayed in Fig. 8-5 • Is the relationship between product development programs other marketing programs and corporate, and marketing strategy
WATER BABY by Dan Lauer • The worlds most popular doll of the 1990’s. • A blend of condoms and water balloons were sighted in room 206 ssb where DAN studied marketing at UMSL
Why do most new products fail?? • ABSOLUTE • RELATIVE • 80%+ FAIL • POOR PRODUCT POSITIONING • VAGUE CONSUMER DIFFERENCE
NEW PRODUCTS HAVE YOU COMPLETED YOUR NET PRESENT VALUE ASSIGNMENT???? OPPORTUNITYISNOWHERE!!
ARE WE GOING TO ACHIEVE OUR PAYOUT AND ROI???? TIME WILL TELL!!!
LPC IS FINISHED • WE NOW CONCLUDE CHAPTER 8 ….. • ANY QUESTIONS????
???????????????????????????? • LINDELL PHILLIP CHEW • LPC1@UMSL.EDU