2. Product Life Cycle “…in addition to nonstop advertising, food companies must bring out a constant stream of new products to keep sales up and revenue high.” (The End of Food)

3. 8/22/20142 Why new product development? Impacts the future Role of the sales professional New products more broadly defined In developing a product, a firm is determining a lot about its future

4. Question #5 5 New Product Classes? New-to-the-World New Product Lines Additions to Existing Product Lines Extensions Product Improvements Repositioning 8/22/20143

5. New to the World Innovative products→ create a new market “the thoroughbreds of product innovation” Examples: –Kellogg’s Pop Tarts (1963) –Oscar Mayer’s Lunchables (1988) –Dreyer’s Slow-Churned Light Ice Cream (2003) Creating “new to the world” products is expensive but potentially quite lucrative.

6. New Product Line Allows a company to enter an existing market for the first time - often copies a rival’s product

7. Line Extension Company makes additions to existing product lines Wendy’s Homestyle Chicken Strips Heinz green and purple ketchup (2000)

8. Product Improvements Quality, feature, service enhancements toward greater value -Different flavor, change in packaging (i.e. tamper proof)

9. Repositioning Existing products targeted to a new market Cereal becomes a portable snack (Kellogg’s) 7-Up – the “un-cola”

10. 8/22/20149 List & Classifying New Products (Added) New-to-the-World: Innovative products. Create a new market. Monsanto’s blue cotton New Product Lines: Allows the company to enter an established market for the first time. Gerber life insurance, private label Additions to Existing Product Lines: Extensions. Vanilla Pepsi, Vanilla Diet Pepsi, Ocean Spray’s grapefruit juice products Product Improvements: Quality, feature, service enhancements toward greater value. Soft drink refrigerator packs Repositionings: Existing products targeted to a new market. Gerber graduates, Hilton and professional businesswomen Be able to list example new products by class or label one given you with the correct category 1.______________ 2._______________ 3.______________ 4._______________ 5.______________

11. New Product Type and Development Time Based on the previous classifications of new products, which would you expect to take the longest to get to the market? New-to-the-worldRepositioning New lines ExtensionImprovements

12. 8/22/201411 Q#5 (b): Development Time by New Product Type Which would you expect to take the longest to get to market? The shortest time to market? New-to-the-World: Innovative products. New Product Lines, new to the Co. Additions to Existing Product Lines: Extensions. Product Improvements: modifications Repositionings: new market existing item

13. 8/22/2014AEC 320-Fall 2008- Robbins12 Product Life Cycle Life Cycle Stage Competition Role of Sales Professional Advertising None Input on demand for various features Raising client awareness Focus on awareness IncreasingGather maximum profits Trial/loyalty IntenseDifferentiationLoyalty LessTie in to other products Less return to adv. Difficult to differentiate LessLook for niche clients ditto

14. 8/22/201413 Q#4: Activities in New Product Development Process 1st step of product life cycle

15. Where do new product ideas come from? Opportunity Identification –Market Intelligence: Understand changes in the market and the best segments (profitable, growing) to enter –Internal Intelligence or idea Generation: Generate new product ideas to enter these markets.

16. 8/22/201415 Product or Service Design –Consumer Value Measurement –Other tools: Product Positioning 3, Forecasting 4, Perceptual Mapping 5, Conjoint Analysis 6,Test Marketing 7 Product Positioning: Forecasting: Helps set goals.

17. 8/22/201416 Perceptual Mapping Objective: getting feedback from customers. Identify holes Helps see opportunities Axes derived from surveys to see how primary attributes valued. (conjoint analysis) How is our product is perceived and the competitive density of the space

18. 8/22/201417 Organic Food Stores (like Wild Oats) Whole Foods Market, a fast growing US food retailer How is their Price and Quality Supermarkets are suffering US Household with incomes are changing Organic Food Stores are not high volume

19. 8/22/201418 Organic Food Stores Whole Foods Market has elite fare Compare to the ‘30’s King Kullen’s store Who, “Piled it high and sold it low” Supermarkets are suffering because of Wal-Mart & similar stores

20. 8/22/201419 Conjoint Analysis Define demand at the at the attribute level People drink wine not just because it’s wine

21. The (Modified and Simplified) McFadden Case - Dr. Hu List attributes –In-vehicle time –Outside-vehicle time –Cost List “levels” within each attribute

22. Attributes and Levels - Dr. Hu How to determine attributes and levels? Then what? –Design and implement a survey –Analyze data –Draw conclusion

23. 8/22/201422 Data Collected - Dr. Hu Attributes associated with each transportation mode; i.e., product (X variables) Choices people made (Y variables) Individuals’ characteristics (age, income,…) (another set of X variables)

24. 8/22/201423 - Dr. Hu - Luckily… Attributes associated with each product (alternative) Choices people made Individuals’ characteristics (age, income,…)

25. Results - - Dr. Hu Individuals’ preferences for each level within each attribute Individuals’ willingness to pay for each level within each attribute Individuals’ overall WTP for a product (package) What and why different people like (dislike) different levels and attributes Particularly Useful for…

26. 8/22/201425 Conjoint Analysis –Statistical tool that helps us to understand consumer preferences of product –Typical approach

27. 8/22/201426 Conjoint Analysis Allows developers to estimate the marginal value of each attribute— Pros & cons?

28. 8/22/201427 Q#1: What is Supply Chain Management and the advantages of using it? A strategy that integrates the various organizations’ objectives in order to increase the efficiency of the entire supply chain The channel members must behave as if they are part of the same company

29. 8/22/201428 Q#2: WHAT ARE THE BENEFITS OF BUYER- SUPPLIER INVOLVEMENT? BUYER INVOLVEMENT SUPPLIER INVOLVEMENT

30. 8/22/201429 Q#3: What is OUTSOURCING and what are some of the advantages and drawbacks of using it?

31. 8/22/201430 Best Management Practices in NPD 1 1) Systematic Process 2) Early involvement 3) Parallel Processing Advantages and disadvantages

32. 8/22/2014AEC 320-Fall 2008- Robbins31 PARALLEL PROCESSING ADVANTAGES & Disadvantages Shortens the product development cycle time; Reduces delays caused by failure to include necessary information Encourages frequent interaction Maintains continuity across phases There is a need for significant changes in the corporate culture

33. 8/22/2014AEC 320-Fall 2008- Robbins32 Cross-Functional Teams in NPD ADVANTAGES & DISADVATAGES

34. 8/22/201433 Development Time Matters Strategy making has changed...The premium now is on moving fast and keeping pace...The best strategies are irrelevant if they take too long to formulate. ----Kathleen M. Eisenhardt Speed kills competition. ----Richard D. Stewart As a strategic weapon, time is the equivalent of money, productivity, quality even innovation. ----George Stalk, Jr.

35. 8/22/201434 ADVANTAGES & DISADVANTAGES of First to Market

36. 8/22/201435 The challenge is: “To achieve speed without cutting corners, sacrificing quality or eliminating steps” “Today’s climate is characterized by increased competition, changing customer requirements, rising product development costs and an increasing dependence on external organizations.” (Gupta and Souder, 1998)

37. 8/22/201436 Misconceptions of NPD Two misconceptions of NPD –It worked over there, it will work over here –It worked once, it will work again Each organization will need to develop a flexible & unique NPD strategy that works for them