1. Developing Product, Service and Value of the Offering
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Market Offering Market offering is beyond physical products:
Product characteristics
Design
Quality
Packaging
Delivery timing
Logistics
Pre-sales services
During sale services
After sale services
Warranties
Technical support
Payment/Credit conditions
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

3. Product Life Cycle (PLC)
Exhibit 8-1
Decline
Introduction
Growth
Maturity
Time
Sales Revenue/ period
Development
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

4. PLC: Development Stage
Continuous period between development and introduction
No sales volume
Product is not yet completely defined
Profits do not exist
Price/value are being determined
Promotion may be oriented towards publicity about technological developments
Heavy investment to prepare the offering that satisfies customer needs
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5. PLC: Introduction Stage
Low sales volume
Product is somewhat basic
Profits are typically negative
Price/value are being determined
Promotion is used to build awareness
If offering elements are outsourced or reside in a first-time value network, the logistical process experiences a learning curve
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

6. PLC: Growth Stage
Profits increase, new adopters and pragmatists accept product
Market penetration pricing
Product differentiation is important
Distribution is often important in the training and education of customers
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

7. PLC: Maturity Stage Profits have peaked
Promotion reinforces buyer decisions and focuses on supplier reputation and value
Remaining major players compete in an oligopoly
Distribution serves market sub-segments
Price is a major component of the marketing mix
New customers do not replace sales volumes as old customers move to newer products
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

8. PLC: Decline Stage Consolidation usually occurs among suppliers
Product line is reduced to minimize product variation
Promotion reduced to minimal levels to accommodate existing customers
Price in relation to long-term contracts is a major part of the marketing mix
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

9. Traditional New Product Development Model
Idea Generation
Product Screening
Business Case Analysis
Product/ Strategy/Plan Dev.
Test Market
Product Launch
Hand off to innovation/ translation team
Stage 1
Stage 4
Stage 5
Stage 7
Stage 2
Stage 3
Stage 6
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

10. Idea Generation & Screening
New ideas can come from anywhere.
customers
technical department,
marketing department,
the sales team or
anyone else within the company.
Ideas must then be screened––a process that is best carried out within the company, where internal experts know what is technically feasible.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

11. Business Case Development...
Product description – a detailed explanation of the product including:
- purpose of the product,
- technical specifications,
- market drivers,
- barriers,
- competitive environment, etc.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

12. Business Case Development...
Project justification – a breakdown of the market size and potential in terms of:
the total addressable market (i.e. notional spend from all audiences who could be consumers of the new product);
the served available market (i.e. current spend on all products with which the new product would compete);
pricing strategy and revenue potential.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

13. Business Case Development
Project plan – next steps and criteria for successful product launch,
Technical and manufacturing feasibility,
CAPEX requirements,
Risks,
Costs
Timings
Annual sales targets
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

14. Physcial Product Development
Once the product fetaures are specified product is now techically designed
Early Supplier involvement (ESI) is the concept of involving suppliers early in the product desgin process.
Supplier involvement in the new product develeopment process is a key concept in B2B
This increase product quality, decrease costs, decrease development duration
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

15. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

16. Physcial Product Development
This is development of the physical product.
Prototypes are created for review, and the manufacturing and marketing plans delineated.
A quick and small scale customer review of the prototype so as to identify any major potential flaws in the product as early as possible.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

17. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

18. Test & Validation
Once sufficient prototypes have been made, it is highly recommended that the product is tested in the field. Software is typically put through a “beta” test to
Industrial products can be placed with potential customers for them to trial and then comment on their likelihood to buy the product if it were on the market.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

19. Launch & Monitor
The final stage kicks off the commercialization of the product with full-scale production.
Some companies choose to carry out further research upon launch of the new product to monitor its uptake and keep a pulse on its “health” within the market.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

20. Notes on Product Development: Customer/Market Orientation
Two development approaches:
Engineering Driven
Market/Customer Driven
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

21. Notes on Product Development: Team Approach
Cross functional approach
- Lead usually by Product Managers
- Several departments involved
- difficult to manage
- complex interactions
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

22. Role of Marketing in Product Development
Understand the technology in depth
Define and redefine current and future customer needs and guide development with this process
Motivate other company departments and organizations
Screen and select ideas from all sources
Reward the efforts of the technical and support staff
Catalyze company resources to get the right talent on the job
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

23. Cooperation of buyer & seller
B2B new product development is a cooperative environment between seller & buyer
In many B2B interactions, customers are active partners of the product development process
Product/services are mostly modified according to special needs of different customers
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

24. Why Do New Products Fail?
The missing marketing plan
No real need exists
The market size is overestimated or a “Me Too” product fails to penetrate the market
The offering fails to meet needs adequately
Market will not pay
Contrary perceptions of innovation
A good marketing plan is a
solution to all of these!
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

25. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2009 Pearson Education, Inc.  
Publishing as Prentice Hall
1-25
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 25