B2 B CHAPTER 11 - BA 303 sup

©2000 Prentice Hall ObjectivesObjectives ä Challenges in New Product Development (NPD) ä Organizational Structure & NPD ä Stages & Management of NPD ä Diffusion & Adaption of New Products

©2000 Prentice Hall Why New Products Fail ä Poor Product Positioning ä Vague Consumer Difference ä “Over Championing” ä Overestimated Demand ä Poor Design ä Poor Marketing Execution ä High Development Costs ä Strong Competitive Reaction ä Remember the 20 clues to NPS

©2000 Prentice Hall Challenges in NPD ä Idea Shortage ä Fragmented Markets ä Social & Governmental Constraints ä Cost ä Capital Shortage ä Need for Speed ä Shorter Product Life Cycles

©2000 Prentice Hall New Product Development Process IdeaGenerationConceptDevelopment and Testing IdeaScreening BusinessAnalysis ProductDevelopment MarketTesting Commercialization MarketingStrategyDevelopment (sometimes concurrent with product development)

©2000 Prentice Hall Sales & Profit Life Cycles IntroductionGrowthMaturityDecline Time Sales & profits ($)

©2000 Prentice Hall 20% Probability of Success Probability of technical completion Overallprobability of success = Probability of commercialization given technical completionX Probability of economic success given commercializationX

©2000 Prentice Hall EXPLORE FIRST, INNOVATION TEAM- SESSION ACUMEN ACUMEN SUCCESSFUL NEW PRODUCTS NEW PRODUCTS = CREATIVITY CREATIVITY +

©2000 Prentice Hall 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

©2000 Prentice Hall 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

©2000 Prentice Hall IDEAS EXPLORE FIRST, 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

©2000 Prentice Hall DON’T SQUELCH CREATIVITY, 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

©2000 Prentice Hall Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

©2000 Prentice Hall Consumer-Goods Market Testing Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Standard Test Market Water Baby St. Louis Full marketing campaign in a small number of representative cities. Standard Test Market Water Baby St. Louis Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee. Controlled Test Market A few stores that have agreed to carry new products for a fee.

©2000 Prentice Hall Commercialization (Introductory Life Cycle) When Where Whom Product Price Place Promotion Politics

©2000 Prentice Hall 2 1 /2% Innovators 13 1 /2% *Early adopters 34% Early majority 34% Late majority 16% Laggards Time (speed) of adoption, diffusion, innovations *opinion leader Remember our chapter 3 - OPTHALMOLIC (EYE) EXAMPLE Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

©2000 Prentice Hall Characteristics of the Innovation Rate of Adoption ä Relative advantage ä Compatibility ä Complexity ä Divisibility ä Communicability

©2000 Prentice Hall Remember B2B Product POSITIONING ä Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the the target market’s mind.

©2000 Prentice Hall Remember B2B COMPETIITIVE ADVANTAGE: SOURCE, POSITION, OUTCOMES AND REINVEST ä US AEROSPACE AND BOEING EXAMPLES ä UNDERSTANDING CORE COMPETENCIES

©2000 Prentice Hall Sales & Profit Life Cycles *IntroductionGrowthMaturityDecline Time *Corresponds with full commercialization (NPD) Sales & profits ($)

©2000 Prentice Hall Four Introductory Marketing Strategies Rapid-skimmingstrategy Rapid-penetrationstrategySlow-penetrationstrategy Slow-skimmingstrategy Price Low HighPromotionHighLow

©2000 Prentice Hall Maturity Stage ä Market Modification ä Product Modification ä Marketing-Mix Modification

©2000 Prentice Hall Decline Stage ä Increase investment ä Resolve uncertainties - stable investment ä Selective niches ä Harvesting ä Divesting

©2000 Prentice Hall Market Evolution ä Emergence ä Growth ä Maturity ä Decline

©2000 Prentice Hall ReviewReview ä Challenges in New Product Development (NPD) ä Organizational Structure & NPD ä Stages & Management of NPD ä Diffusion & Adaption of New Products