Chapter 9: New product development – Flashcards
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Acquisition
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refers to the buying of a whole company, a patent, or a license to produce someone else's product
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New product development
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refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development
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New product development process
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Idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization
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Idea generation
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is the systematic search for new-product ideas (two sources: external and internal)
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Internal sources
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refer to the company's own formal research and development, management and staff, and intrapreneurial programs
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External sources
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refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
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Crowdsourcing
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Inviting broad communities of people— customers, employees, independent scientists and researchers, and even the public at large—into the new-product innovation process.
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Idea screening
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Identify good ideas and drop poor ideas R-W-W Screening Framework: Is it real? Can we win? Is it worth doing?
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Product idea
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is an idea for a possible product that the company can see itself offering to the market (company coming up with new compact car) more vague
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Product concept
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is a detailed version of the idea stated in meaningful consumer terms (midsize sporting compact car appealing to young singles)
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Product image
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is the way consumers perceive an actual or potential product; can be a word or picture
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Concept testing
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refers to testing new-product concepts with groups of target consumers (Picture of a sports car. Haven't built it out yet and haven't tested the actual product yet. Now we're going to move into the marketing strategy development)
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Marketing strategy development
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refers to the initial marketing strategy for introducing the product to the market
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Marketing strategy statement
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Description of the target market Value proposition (mix, four p's) Sales and profit goals (budgets)
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Business analysis
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involves a review of the sales, costs, and profit projections to find out whether they satisfy the company's objectives
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Product development
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Involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an increase in investment Shows whether the product idea can be turned into a workable product.
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Test marketing
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is the stage at which the product and marketing program are introduced into more realistic marketing settings. Provides the marketer with experience in testing the product and entire marketing program before full introduction
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Types of test markets
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Standard, Controlled, and Simulated
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Standard test market
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typical test markets (QFC, 7eleven, Seattle)
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Controlled test market
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when panels of stores agree to participate for a fee. Get results quickly
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Simulated test market
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When a firm creates a shopping environment (lab or online)
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Advantages of test markets
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of simulated test markets Less expensive than other test methods Faster Restricts access by compeitors
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Disadvantages of test markets
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Not considered as reliable and accurate due to the controlled setting
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When firms test market
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New product with large investment. Uncertainty about product or marketing program.
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When firms may not test market
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Simple line extension. Copy of competitor product. Low costs. Management confidence.
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Commercialization
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The introduction of the new product. - When to launch (timing) - Where to launch (single market, national, international, regional) - Planned market rollout (start on west coast, roll out the US, when you can't launch nationally) (Microsoft spent over 100 million dollars to introduce Bing. A lot of money is spent so you really have to do all of your research to see if this product is viable.)
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Managing New-Product Development
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Successful new-product development should be: Customer centered, Team-based, and Systematic. (Solving a customer problem and offering value)
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Customer-centered new-product development
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New ways to solve customer problems and create more customer satisfying experiences. (Ideally you want it to be differentiated to have a good value proposition. Focus on what customers want)
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Sequential new-product development
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Company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage. Increased control in risky or complex projects but may be slow. (Effective if you have a complex or risky project. You want to be able to control it more. It may be very slow though)
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Team-based new-product development
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Company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness. (Save some time here to increase effectiveness if it's managed correctly)
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Systematic new-product development
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Innovative development approach that collects, reviews, evaluates, and manages new-product ideas. Creates an innovation-oriented culture. Yields a large number of new-product ideas. (More innovative approach)
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Product Life Cycle
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Product development - Sales are zero and investment costs mount. (No sales, when you develop a product, any profits are negative, not out yet) Introduction - Slow sales growth and profits are nonexistent. (Launch the product out, sales are going to slowly pick up, profits are still negative/still spending a lot of money, lot of promotion) Growth - Rapid market acceptance and increasing profits. (Sales really pick up, start seeing some of those profits (iPad)) Maturity - Slowdown in sales growth & profits level off or decline. (Sales start to slow down a bit, profits level off (macbook, televisions, detergent) Decline - Sales fall off and profits drop. (Sales are going to fall off and profits drop pretty sharply (Blackberry, CD's)) (EXAM! Draw and understand!)
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Introduction stage
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Slow sales growth Little or no profit High distribution and promotion expense
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Growth stage
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Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale
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Maturity stage
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Slowdown in sales Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R to support sales and profits
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Maturity stage modifying strategies
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Market modifying Product modifying Marketing mix modifying
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Decline stage
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Maintain the product Harvest the product (reap any benefits) Drop the product
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Product life-cycle strategies
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Style, Fashion, Fad
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Style
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Basic and distinctive mode of expression
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Fashion
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What's popular right now
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Fad
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are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. A lot of excitement and then drops off (Atkins diet, Kony 2012)
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Product decisions and social responsibility
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Public policy and regulations regarding developing and dropping products, patents, quality, and safety
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International Product and Service Marketing—Challenges
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Determining what products and services to introduce in which countries Standardization versus customization Packaging and labeling Customs, values, laws
