Transcript LECTURE 30.ppt
LECTURE-30
New-Product Development Strategic Launch Planning
Chapter Questions
New product development strategy New product development process Marketing strategy development Strategic launch planning How brand equity provides value The evaluation tasks In the new product process
New-Product Development Strategy Two ways to obtain new products Acquisition
refers to the buying of a whole company, a patent, or a license to produce someone else’s product.
New product development
refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.
What Is a Successful New Product?
Percent of Products that Fail 90 90 80 70 60 50 40 30 20 10 0 40 10 Sometimes Quoted in Press Research Reports Sometimes Claimed
Although you may hear much higher percentages, careful studies supported by research evidence suggest that about 40% of new products fail -- somewhat higher for consumer products, somewhat lower for business-to business products.
New-Product Development Reasons for new product failure Overestimation of market size Poor design Incorrect positioning Wrong timing Priced too high Ineffective promotion Management influence High development costs Competition
New-Product Development Process Major Stages in New-Product Development
New-Product Development Process Idea Generation Idea generation
product ideas is the systematic search for new Sources of new-product ideas Internal External
New-Product Development Process Idea Generation Internal sources
refer to the company’s own formal research & development, management and staff.
External sources
refer to sources outside the company such as customers, competitors, distributors, suppliers.
New-Product Development Process Marketing Strategy Development
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market.
Marketing strategy statement includes: Description of the target market Value proposition Sales and profit goals
New-Product Development Process Marketing Strategy Development Business analysis
involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
New-Product Development Process Marketing Strategy Development Product development
involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an increase in investment
New-Product Development Process Marketing Strategy Development Test marketing
product and more realistic is the stage at which the marketing program are introduced into marketing settings.
Provides the marketer with experience in testing the product and entire marketing program before full introduction.
New-Product Development Process Marketing Strategy Development
Commercialization is the introduction of the new product When to launch Where to launch Planned market rollout
Managing New-Product Development
Successful new-product development should be: Customer centered Team centered Systematic
Strategic Launch Planning
Some Important corporate decisions.
A specified gross margin:
Affects funding.
Speed-to-market:
Affects promotional outlays and schedules.
Commitment to a given channel:
Affects distribution plan.
Advertising policy:
Affects promotion decisions.
Pricing policy:
Affects decision to use penetration or skimming pricing (slide down demand curve).
Revision of Pre-determined Goals
Customer Acceptance Goals
Customer Acceptance Customer Satisfaction Sales Market Share
Financial Performance Goals
Time to break even Margins Profitability (IRR, ROI)
Product Level Performance Goals
Product Cost Time to Market Product Performance Quality Guidelines
Other
Competitive Effect Image Change Morale Change
Strategic Platform Decisions Permanence
Permanent, stand-alone.
Permanent, but as a bridge to other items -- e.g., platform strategy.
Temporary. Given firms’ tendency to develop streams of products, more and more new products are actually only temporary.
Aggressiveness
Aggressive versus cautious attitude at entry
Type of Demand Sought
Primary versus selective
Strategic Platform Decisions
Competitive Advantage
Differentiation, price leadership, or both
Competitive Relationship
Aim at a competitor, avoid a competitor
Image
Create a new image, tweak an existing image, use the already-existing image
Product Line Replacement Strategies Butt-on product replacement Low-season switch High-season switch Roll-in, roll-out Downgrading Splitting channels
The existing one is simply dropped when the new one is announced. Example: Ford's marketing of Mondeo and dropping of Sierra. Same as butt-on, but arranging the switch at a low point between seasons. Tour companies use this switch when they develop their new catalogs. Same as butt-on, but arranging the new item at the top of a season. Example: Polaroid used this strategy often, putting new replacement items out during the Christmas season. Another version of butt-on, but arranged by a sequence of market segments. Mercedes introduced its C series country by country. Keeping the earlier product along side the new, but with decreased support. Example: The 386 chip stayed along side the 486, until the Pentium was introduced. Putting the new item in a different channel or diverting the existing product into another channel. Example: Old electronic products often end up in discounter channels.
Scope of Market Entry This is not test marketing. This is launch. All forces in place and working.
Roll out slowly
-- checking product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc.
Roll out moderately --
but go to full market as soon as volume success seems assured.
Roll out rapidly
-- full commitment to total market, restricted only by capacity.
The Target Market Decision
Alternative ways to segment a market End-use, geographic/demographic, behavioral/psychographic, benefit segmentation Micromarketing and mass customization Also consider the diffusion of innovation
Product Positioning
Who -- Why -- How To whom are we marketing?
Why should they buy it?
How do we best make the claim?
Why Should They Buy It?
“How likely would you be to buy this if we marketed it?” Formatted in three ways: Solves major problem current products do not.
Better meet needs and preferences.
Lower price than current items.
How Do We Make the Claim?
Product positioning statement is a strategic driver --a core item -- not a list of advantages. Some new products get one short sentence -- technical items more.
Can be stated as one or more features (what it is).
Can be stated as a function (how it works).
Can be stated as one or more benefits (how the user gains).
Can be stated as a surrogate (no features, functions, benefits).
Branding Decisions
What is the brand’s role or purpose?
Are you planning a line of products?
Do you expect a long-term position in the market?
How good is your budget?
Physical/sensory qualities of brand considered?
Message clear and relevant?
Is Insulting or irritating to anyone?
How Brand Equity Provides Value
High Brand Loyalty
Reduced marketing costs Increased trade leverage
High Brand Awareness
Easier to make brand associations Increased liking and familiarity
High Perceived Quality
Supports quality positioning Supports higher-price strategy
More/Better Brand Associations Other Brand Assets
Creates positive image Helps customer process information Patents or trademarks Strong channel relationships
Provides value to customer:
Assists in customer information processing Increases confidence in purchase Increases satisfaction in product use
Provides value to firm:
Increases effectiveness of marketing programs Increases customer loyalty and trade leverage Facilitates brand extensions Is a source of competitive advantage
Building Brand Equity
Getting awareness of the brand and the meaning.
Making brand associations Building perceived quality Loyalty in repurchase Getting reseller support
The Evaluation Tasks In The New Product Process New product Process Phase Opportunity Identification/Selection Evaluation Task Concept Generation Concept/Project Evaluation Development Launch Direction:
Where should we look?
Initial Review:
Is the idea worth screening?
Full Screen:
Should we try to develop it?
Progress Report:
Have we develop it? If not, should we continue to try?
Market Testing:
Should we market it? If so, how?
In retrospect
Bibliography
Marketing Management – A South Asian Perspective
by Philip Kotler, Kevin Lane Keller, Abraham Koshy & Mithileshwar Jha, 13th Edition, Published by Pearson Education, Inc.
New Product Management by Merle Crawford and Anthony Di Benedetto, 9th Edition McGraw Hill Irwin.
Principles of Advertising & IMC
by Tom Duncan 2 nd Edition, Published by McGraw-Hill Irwin.
Principles of Marketing
by Philip Kotler & Gary Armstrong Thirteenth Edition, Published by Prentice Hall
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