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Chapter 11

Chapter 11. Developing New Market Offerings. B2 B CHAPTER 11 - BA 303 sup. Objectives. Challenges in New Product Development (NPD) Organizational Structure & NPD Stages & Management of NPD Diffusion & Adaption of New Products. Why New Products Fail. Poor Product Positioning

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Chapter 11

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  1. Chapter 11 Developing New Market Offerings B2 B CHAPTER 11 - BA 303 sup

  2. Objectives • Challenges in New Product Development (NPD) • Organizational Structure & NPD • Stages & Management of NPD • Diffusion & Adaption of New Products

  3. Why New Products Fail • Poor Product Positioning • Vague Consumer Difference • “Over Championing” • Overestimated Demand • Poor Design • Poor Marketing Execution • High Development Costs • Strong Competitive Reaction • Remember the 20 clues to NPS

  4. Challenges in NPD • Idea Shortage • Fragmented Markets • Social & Governmental Constraints • Cost • Capital Shortage • Need for Speed • Shorter Product Life Cycles

  5. Business Analysis Concept Development and Testing Product Development Idea Screening Market Testing Commercialization New Product Development Process Marketing Strategy Development (sometimes concurrent with product development) Idea Generation

  6. Sales & profits ($) Introduction Growth Maturity Decline Time Sales & Profit Life Cycles

  7. Probability of economic success given commercialization Probability of commercialization given technical completion X X = Overall probability of success 20% Probability of Success Probability of technical completion

  8. CREATIVITY + = SUCCESSFUL NEW PRODUCTS EXPLORE FIRST, INNOVATION TEAM- SESSION ACUMEN

  9. IDEAS EXPLORE FIRST, INNOVATION TEAM- SESSION • A’S & B’S NO C’S OR D’S • DECISION MAKERS • DRIVER • FACILITATOR • NO LAME DUCKS • NO NOMINAL TITLE HOLDERS • INSIDER V OUTSIDER

  10. IDEAS EXPLORE FIRST, INNOVATION TEAM- SESSION • AWAY FROM CAMPUS • ROUND TABLE • AUDIO VISUAL • TAPE RECORD • 6-8 PLAYERS & POSITIONING • BETTER PART OF THE DAY • EARLY IN THE MORNING • NEVER ON MONDAY

  11. IDEAS EXPLORE FIRST, Explore- NO Rules • No idea is a bad idea • Be creative • Take risks • No criticism allowed • JOHN HEFELY KNOWN ELEMENT A + KNOWN ELEMENT B = NEW PRODUCT C = ACUMEN + CREATIVITY

  12. DON’T SQUELCH CREATIVITY, Explore- NO Rules • THOMAS EDISON • CHRISTOPHER COLUMBUS • HENRY FORD • STATE HOSPITAL ON ARSENAL ST. • NATIONAL ACADEMY OF SCIENCE • ADMIRAL HULSEY • JOHN HEFELY KNOWN ELEMENT A + KNOWN ELEMENT B = NEW PRODUCT C

  13. 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One Concept Development & Testing

  14. Consumer-Goods Market Testing Controlled Test Market A few stores that have agreed to carry new products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Standard Test Market Water Baby St. Louis Full marketing campaign in a small number of representative cities.

  15. Whom When Product Price Place Promotion Politics Where Commercialization(Introductory Life Cycle)

  16. 34% Late majority 34% Early majority 13 1/2% *Early adopters 16% Laggards 2 1/2% Innovators Adopter Categorization of the Basis of Relative Time of Adoption of Innovations • Time (speed) of adoption, diffusion, innovations • *opinion leaderRemember our chapter 3 - • OPTHALMOLIC (EYE) EXAMPLE

  17. Characteristics of the Innovation Rate of Adoption • Relative advantage • Compatibility • Complexity • Divisibility • Communicability

  18. Remember B2B Product POSITIONING • Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the the target market’s mind.

  19. Remember B2B COMPETIITIVE ADVANTAGE: SOURCE, POSITION, OUTCOMESAND REINVEST • US AEROSPACE AND BOEING EXAMPLES • UNDERSTANDING CORE COMPETENCIES

  20. Sales & profits ($) *Introduction Growth Maturity Decline Time *Corresponds with full commercialization (NPD) Sales & Profit Life Cycles

  21. Promotion High Low High Price Low Four IntroductoryMarketing Strategies Rapid- skimming strategy Slow- skimming strategy Rapid- penetration strategy Slow- penetration strategy

  22. Maturity Stage • Market Modification • Product Modification • Marketing-Mix Modification

  23. Decline Stage • Increase investment • Resolve uncertainties - stable investment • Selective niches • Harvesting • Divesting

  24. Market Evolution • Emergence • Growth • Maturity • Decline

  25. Review • Challenges in New Product Development (NPD) • Organizational Structure & NPD • Stages & Management of NPD • Diffusion & Adaption of New Products

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