1. © 2000 South-Western College Publishing Slide #1 Marketing Management 2nd Edition Chapter 9: New Products Michael R. Czinkota and Masaaki Kotabe

2. © 2000 South-Western College Publishing Slide #2 Chapter Outline l Gap Analysis l Types of New Products l Product Modification l Corporate Factors to New Product Creation l Marketing Factors to New Product Creation l Product Development Process l Strategic Screening l Test Marketing l Product Launch

3. © 2000 South-Western College Publishing Slide #3 Gap Analysis Usage Gap (UG) Distribution Gap (DG) Product Gap (PG) Competitive Gap (CG) Existing Sales (ES) Existing (market) usage (EU) Market potential (MP) MP = UG + EU EU = DG+PG+CG+ES Real market share = ES ---- EU

4. © 2000 South-Western College Publishing Slide #4 Gap Analysis: Usage Gap Gap between the total potential for the market and the actual current usage by customers. l Market potential gap l Existing usage gap

5. © 2000 South-Western College Publishing Slide #5 Gap Analysis: Distribution Gap Sales potential in geographic regions or distribution channels where product is not currently distributed.

6. © 2000 South-Western College Publishing Slide #6 Gap Analysis: Product Gap Firm does not have product offerings in certain segments. X

7. © 2000 South-Western College Publishing Slide #7 Gap Analysis: Competitive Gap Differences in the effectiveness of a firm’s marketing strategy relative to its competitors.

8. © 2000 South-Western College Publishing Slide #8 Broader Objectives of Gap Analysis Five strategy scenarios: l Technologically driven strategy (26%) l Balanced, focused strategy (16%) l Technologically deficient strategy (16%) l Low budget, conservative strategy (24%) l High budget, diverse strategy (19%)

9. © 2000 South-Western College Publishing Slide #9 Types of “New” Products

10. © 2000 South-Western College Publishing Slide #10 Product Modification Feature Modification Quality Modification Style Modification Image Modification

11. © 2000 South-Western College Publishing Slide #11 Corporate Factors to New Product Creation l Production capabilities l Financial performance l Investment potential l Human factors l Materials supply l Cannibalism l Time

12. © 2000 South-Western College Publishing Slide #12 Marketing Factors to New Product Creation l Match with existing ranges l Price and quality l Distribution patterns l Seasonality

13. © 2000 South-Western College Publishing Slide #13 Product Development Process Strategic screening Concept testing Product development Product testing Test marketing

14. © 2000 South-Western College Publishing Slide #14 Strategic Screening l Qualitative screening l Financial analysis l Sensitivity analysis l Break-even analysis l Marginal costing Ideas Ideas Ideas Ideas Ideas Product idea

15. © 2000 South-Western College Publishing Slide #15 Test Marketing: Areas l Television viewing area l Test city l Residential neighborhoods l Test sites l Lead countries * Dallas *Seattle *Chicago * Los Angeles

16. © 2000 South-Western College Publishing Slide #16 Test Marketing: Decisions Which test market? Which test market? What will be tested? How long a test? What success criteria?

17. © 2000 South-Western College Publishing Slide #17 Product Launch l Product replacement l Risk vs. time l Japanese-style product development