20 Introducing New Market Offerings 1. 20-2 Chapter Questions What challenges does a company face in developing new products? What organizational structures.

20Introducing New Market Offerings

1

20-2

Chapter Questions

What challenges does a company face in developing new products?

What organizational structures are used to manage new-product development?

What are the main stages in developing new products?

What is the best way to set up the new-product development process?

What factors affect the rate of diffusion and consumer adoption of newly launched products?

The World’s Most Innovative Companies

(@ Business Week & BCG)

20-3

2010 Rank 2009 Rank Company HQ Country

1 1 Apple US

2 2 Google US

3 4 Microsoft US

4 6 IBM US

5 3 Toyota Motor Japan

6 11 Amazon.com US

7 27 LG Electronics South Korea

8 NR BYD China

9 17 General Electrics US

10 14 Sony Japan

11 16 Samsung Electronics South Korea

12 33 Intel US

13 31 Ford Motor US

14 8 Research In Motion Canada

15 18 Volkswagen Germany

16 7 Hewlett-Packard US

17 13 Tata Group India

18 20 BMW Germany

19 24 Coca Cola US

20 5 Nintendo Japan

21 10 Wal Mart Stores US

22 NR Hyundai Motor South Korea

23 9 Nokia Finland

24 34 Virgin Group Britain

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Having New Products

Acquisition

- Buy other companies

- Acquire patents from other companies

Development

- Develop new products in its own laboratories

- Contact with independent researchers or new-product development firms to develop specific new

products.

20-5

Categories of New Products

New-to-the-world New product lines Additions to product lines Improvements to products Repositionings Cost reductions

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The early mobile phones

20-7

20-8

20-9

20-10

Principles to guide new-product

development

1. Work with potential customers

2. Let employees choose projects

3. Give employees “dabble” time

4. Know when to let go

20-11

Continuous InnovationBrand extensions: broadening brand meaning into related product categories

Positive attitude towards continuous innovation

Established companies – incremental innovation

Newer companies – disruptive technologies

Demand Media’s Value Proposition: Identifying and Filling a big lack in human being’s collective knowledge

20-12

Bryon Reese from Demand Media

New Product Development

12-13

Demand Media’s New Product

20-14

20-15

Factors That Limit New Product Development

Shortage of ideas Fragmented markets Social and governmental constraints Cost of development Capital shortages Faster required development time Shorter product life cycles

20-16

Table 20.4 Finding One Successful New Product

20-17

New-product Failure (-+ 95%)

Ignoring or misinterpreting market research Overestimating market size High development costs Poor design Incorrect positioning Ineffective advertising Wrong price Insufficient distribution support Competitors who fight back hard

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20-19

New-product Success Factors

Unique, superior product Well-defined product concept Technological & marketing

synergy, quality execution in all stages, & market attractiveness.

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Cross-functional group charged withdeveloping a specific product or business; Intrapreneurs are relieved of other dutiesand provided a budget and time frame.

Venture Team

Organizing New-Product Development

Product managers

New product managers

High-level management committee

New product department

Venture team

20-21

Criteria for Staffing Venture Teams

Desired team leadership style Desired level of leader expertise Team member skills and expertise Level of interest in concept Potential for personal reward Diversity of team members

20-22

Managing the Development Process

Idea generation:

- from interacting with various groups.

- from using creativity-generating techniques.

Idea screening

20-23

Figure 20.2 The New Product Development Decision Process

20-24

Ways to Find Great New Ideas

Run informal sessions with customers Allow time off for technical people to putter

on pet projects Make customer brainstorming a part of

plant tours Survey your customers Undertake “fly on the wall” research to

customers

20-25

Idea Generation: Creativity Techniques

Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind mapping

20-26

More Ways to Find Great Ideas

Use iterative rounds with customers Set up a keyword search to scan trade

publications Treat trade shows as intelligence missions Have employees visit supplier labs Set up an idea vault

20-27

Drawing Ideas from Customers

Observe customers using product Ask customers about problems with

products Ask customers about their dream products Use a customer advisory board or a brand

community of enthusiasts to discuss product

20-28

Idea Generation: Creativity Techniques

Attribute listing Forced relationships Morphological analysis Reverse assumption

analysis New contexts Mind mapping

Lateral Marketing for new product ideas: Combining two product concepts

Gas station stores = gas station + food Cyber cafés = cafetaria + internet Cereal bars = cereal + snacking Kinder surprise = candy + toy Sony walkman = audio + portable

20-30

Figure 20.2 The New Product Development Decision Process

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Variations on Failure

Absolute product failure Partial product failure Relative product failure

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Concepts in Concept Development

Product idea Product concept Category concept Brand concept Concept testing

20-33

Concept Testing

Communicability and believability Need level Gap level Perceived value Purchase intention User targets,

purchase occasions,

purchasing frequency.

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Marketing Strategy

Target market’s size, structure, and behavior, product positioning, the sales, market share, and profit goals sought in the first ten years.

Planned price, distribution, and promotion for Year 1

Long-run sales and profit goals and marketing-mix strategy over time

20-35

Business Analysis

Estimating total sales Estimating Costs & Profits

20-36

Product Development

Quality function deployment (QFD)Customer attributesEngineering attributes

20-37

Prototype Testing

Alpha testing Best testing

Rank-order methodPaired-comparison methodMonadic-rating method

Market testing

20-38

Consumer Goods Market Testing

Sales-Wave Research Simulated Test Marketing Controlled Test Marketing Test Markets

20-39

Test Market Decisions

How many test cities? Which cities? Length of test? What information? What action to take?

20-40

Timing of Market Entry

First entry Parallel entry Late entry

20-41

Criteria for Choosing Rollout Markets

Market potential Company’s local reputation Cost of filling pipeline Cost of communication media The influence of the area on other areas Competitive penetration

20-42

Consumer-Adoption Process

Adoption is an individual’s decision

to become a regular user

of a product.

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Innovation & Diffusion: Stages in the Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption

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Adopter Categorization

Innovators Early adopters Early majority Late majority Laggards

20-45

Characteristics of an Innovation

Relative advantage Compatibility Complexity Divisibility Communicability

20-46

Marketing Debate

Who should you target with new products?

Take a position:1. Consumer research is critical to new-productdevelopment.or2. Consumer research may not be all that helpful in new-product development.

Ancient Indian Medical SystemDuration 1 Week / 2 Weeks / 1 MonthVenue "Prashanthi Kutiram" (S-VYASA University Campus), Bangalore. Skill Level Beginner / ModerateGroup Size Min-02 / Max-12

OverviewIndia, the land of ancient culture, tradition and customs, has made innumerable contributions to the world in the fields of medicine and wellness. The ancient and popular practice of yoga, the physical and mental disciplines, has its deepest roots in our very own country. Ayurveda, a system of traditional medicine is a native to India. Learn the history and fundamentals of these forms of medicine, wellness and upkeep of the body and mind from our Ancient Indian Medical System. Relax your body, mind and soul with our programs designed for you. Absorb yourself in the Indian philosophy of satsang, release your apprehensions with melodious bhajans sounding in the milieu and self induce a mode of consciousness through meditation. Ranging from one week to one month, you can select a deal that best suits your requirements and interest

Airport weddings

• New at Amsterdam Airport Schiphol: weddings to go. Whether a couple met on a flight to Bangkok or just wants to be able to go straight from ceremony to runway for their honeymoon, Schiphol offers travellers the opportunity to get married at the airport.

• Brides and grooms to be can pick from several packages, from the all-out ‘Ticket to Paradise’: get hitched and leave for a tropical destination together with your wedding guests; to ‘Say Yes & Go’, the budget alternative for couples who want a quick and simple ceremony before flying off together. Schiphol Weddings works with a dedicated wedding planner, who can also help couples plan and arrange their honeymoons.

Funky kiwi campers

• In keeping with today’s mobile theme, Escape Rental is a New Zealand camper rental company that sets itself apart by letting artists turn camper vans into art on wheels.

• Taking something slightly dull – a camper – and turning it into something fresh, Escape Rentals is attracting travellers who are tired of mass tourism and looking for a more unique experience.

• Each of their nearly 100 campers is given an aerosol overhaul by a New Zealand artist. Paint jobs draw from the whole spectrum of visual art and pop culture, from kiwiana to Far Side comics and Maurice Sendak to Pablo Picasso. Rental rates are competitive, at around NZD 59 (USD 37/EUR 29) per day, with optional extras like mobile phones and solar showers charged separately.

• Another delightful example of innovation through design. Find something run-of-the-mill, and make it special!

Digital fuel for travel

Fuel for Travel lets consumers download travel guides, music, audio books, tv shows and movies to their MP3 players and other digital devices.Located in Schiphol’s Departure Lounges 1 and 2, the Fuel for Travel features listening and viewing stations for travellers to browse digital content. Once they’ve found what they want, they can dock their device, pay by credit or debit card, and download the material. Pricing is similar to that of online music and video downloads.

Checking into another dimension | aloft in Second Life

• The hotel’s virtual developers, Electric Sheep, started off with 64 acres of raw virtual land, and are working their way up to a beautifully landscaped island featuring a full-fledged aloft hotel. Each step of the design and building process can be followed, both in Second Life, and via a dedicated blog: virtualaloft.com.

• Aloft is the world’s first hotel brand to place a replica inside a virtual world, and will open its virtual doors this September. If well-executed, a three-dimensional metaverse outpost can be valuable in conveying the feel of a new product or concept, in this case the transformation of the mid-scale, business hotel segment from drab to delightful. At least that’s what aloft is aiming for

• Launched by two young British entrepreneurs, TRIBEWANTED is creating a global tribe that will develop a sustainable eco-community on an island in Fiji.

• In what seems like a hippie dream crossed with an episode of Survivor, tribewanted is looking for 5000 people from around the world to become part of a tribe that will not only exist online, but will also settle, 100 at a time, on ‘Adventure Island’. On the map, Adventure Island is known as Vorovoro, and is being leased to tribewanted by the local tribal chief.

• There are three types of membership to choose from: Nomads get 1 years membership and 7 nights on the island for GBP 120 / USD 210; Hunters are members for 2 years and can stay for 14 nights (GBP 240 / USD 420); and Warriors are member for 3 years and can stay for 21 nights (GBP 360 / USD 630). When the 5000th member joins, the tribe will be formed and will start to make tribal decisions by voting through the online community at tribewanted.com, on issues such as the name of the tribe, type of infrastructure that will be required, and how to build an island community in an environmentally friendly way.

Tribewanted

Minipreneur travel agents

• Joining the customer made revolution, Belgium tour operator Wasteels has set up a division called CLUB TOUR, which allows amateurs to create travel packages that are sold to the company’s customers.

• Every demographic group has its own needs and wants when it comes to travel, and travel agents have long catered to the demand for specialized tours for everyone from senior citizens and rock climbers to military buffs and amateur biologists. Club Tours takes it one step further by allowing non-professionals to create vacation packages for their own niche market. So far, that includes gays, seniors, singles and art lovers.

Tripadvisor for gay travellers

Pink Choice is a review website for gay and lesbian travellers. The company was founded by the owners of two successful gay guesthouses in Massachusetts, who were frustrated by the lack of relevant information when planning their own holidays. While Trip Advisor and other online travel review communities feature a wealth of user-generated information about hotels and holiday destinations, no such website exists specifically for a non-straight audience.

Pilih Sendiri Petualanganmu!

History Community (1-day tour for each theme)1. Trail of the Lost Kingdom of Mataram . 2. Trail of the Kingdom of Mataram Islam. 3. Colonial Legacy.

Friends of Museum (1-day tour for each theme)1. Museum Seni dan Budaya (Museum Ullen Sentalu, Museum Sonobudoyo, & Museum Affandi) 2. Museum Sejarah dan Perjuangan Bangsa Indonesia (Museum Sejarah Perjuangan Bangsa, Monumen Jogja Kembali, & Benteng

Vredeburg).3. Museum Ilmu Pengetahuan (Museum Biologi dan Museum Geothermal)

Additional: Kaliurang (dikombinasikan dengan kunjungan ke Museum Seni & Budaya)Malioboro (bisa dikombinasikan dengan semua paket)

Seri Wisata Sejarah dan Museum di Yogyakarta