1. Product Strategy New Products and Life Cycles

2. Memorable Product Forecasts “640K ought to be enough for anybody.” - Bill Gates, 1981 “We don’t like their sound, and guitar music is on the way out.” - Decca Recording Co. rejecting Beatles, 1962 “I think there is a world market for maybe five computers.” - Thomas Watson, IBM Chairman, 1943 “Who the hell wants to hear actors talk?” - H.M. Warner, Warner Brothers, 1927 “Everything that can be invented has been invented.” - Charles Duell, Commissioner, US Office of Patents, 1899

3. What is a… Product Brand SKU Variant

4. What is a Product? Core: The Product Tangible Augmented The Product Offering -Core : The Product -Tangible: The Packaging, Features, Styling, Quality, Brand Name -Augmented: Installation, Warranty, After Sale Service, Delivery and Credit

5. Types of New Products

6. New Product Development Process Idea Generation Concept Development and Testing Marketing Strategy Development Idea Screening Business Analysis Product Development Market Testing Commercialization

7. Idea Screening Idea Attractiveness Probability of successful Technical development Probability of Commercial acceptance Profit if successful Development cost A = (T x C x P)/D

8. Concept Testing

9. Market Testing % Share = (%Aware) x (%Trial) x (%Repeat)

10. 2 ½ % Innovators 13 ½ % Early adopters 34% Early majority 34% Late majority 16% Laggards Time of adoption innovations Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

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

12. Sales & Profit Life Cycles Time IntroductionGrowthMaturityDecline Sales & profits ($)

13. Types of PLCs Staples E.g. Bread Fashions E.g. Bell-Bottoms Fads E.g.Furbies

14. Marketing Mix and the PLC GrowthMaturityDecline Objective Competition Product Price Place Promotion Intro AwarenessDifferentiationLoyalty NoneGrowingManyReduced OneManyFull lineBest sellers Skim vs. penetrate Gain share/deal Defend share/ profit LimitedMore outletsMax. outlets Inform/ educate Stress competitive difference Reminder

15. 15 Product Life Cycle Diffusion of Floppy Drives

16. The Diffusion Model New buyers who buy this period (sales) = Innovators: (remaining buyers) x (% innovators) Imitators: (remaining buyers) x (% remaining buyers that are people who have heard about product via word of mouth) Market size

17. The Bass Diffusion Model Innovation effect Imitation effect where = number of adopters during time t = ultimate number of adopters (market size) = cumulative number of adopters at the beginning of time t = effect of each adopter on each non-adopter (coefficient of imitation) = individual conversion rate absent adopters’ influence (coefficient of innovation)

18. Estimating Bass Model Parameters 1. Rewrite model as follows 2. Then, estimate (regression) where 3. Solve for M, then substitute to solve for the other parameters