Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 CHAPTER 8
Innovation and New Product
Strategy
The Innovation Mandate

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 INNOVATION AND NEW PRODUCT STRATEGY
* Innovation as a Customer Driven Process
* New Product Planning
* Idea Generation
* Screening, Evaluating, and Business Analysis
* Product and Process Development
* Marketing Strategy and Market Testing
* Commercialization
* Variation in the Generic New Product
Planning Process
8-3
 INNOVATION FEATURE
Managing Google’s Idea Factory
As director of consumer Web products Marissa Mayer is a champion of
innovation. She favors new product launches that are early and often.
She joined Google in early 1999 as a programmer when the workforce
totaled 20. By 2007 Google had 5,700 employees with expected sales of
$16 billion.
How Google Innovates
The search leader has earned a reputation as one of the most innovative
companies in the world of technology. A few of the ways Google
hatches new ideas:
 FREE (THINKING) TIME
Google gives all engineers one day a week to develop their own pet
projects, no matter how far from the company’s central mission. If
work gets in the way of free days for a few weeks, they accumulate.
Google News came out of this process.
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 FINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis
Objective is to identify needs for:

1. New products
2. Improvements to existing
products
3. Improvements in production
processes
4. Improvements in supporting
services
8-5
 Customer
Expectations
Customer
Satisfaction Gap
OPPORTUNITIES
Actual
(1) New Products
Product (2) Improvements
Performance (3) New and Improved
Processes

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TRANSFORMATIONAL
Break-through innovation
Digital photography
NEW PRODUCT CATEGORY

Dell Printers

Nike Apparel
Golf clubs
LINE EXTENSION
New color/package/style
INCREMENTAL IMPROVEMENTS
Software updates
8-7
 Characteristics of Successful Innovators
Creating an
Innovative Culture

Leveraging STRATEGIC Selecting the

Capabilities Right
INITIATIVES Innovation
Strategy

Making Resource Developing and

Commitments Implementing Effective
New Product Processes

8-8
 NEW PRODUCT PLANNING PROCESS
Customer
Needs
Analysis
Screening
Business
Idea and
Analysis
Generation Evaluation

Marketing Product
Strategy Development
Development

Testing

Commercialization
8-9
 Direct
Alliances/ Search
Technological
Acquisition/
Innovation
Licensing
METHODS
National OF Exploratory
Policy GENERATING Customer
IDEAS Studies

Creative Facilitating
Methods Lead User
Linking
Analysis
Marketing
and Technology

8-10
 An Innovation Champion in Action at GE
Beth Comstock calls herself “a little bit of the crazy, wacky one” at corporate
headquarters. And it’s an apt description when you realize she works at General Electric
Co. Comstock, 44, is charged with transforming GE’s culture, famously devoted to
process, engineering, and financial controls, to one that’s more agile and creative.
Chairman and CEO Jeffrey R. Immelt tapped the former communications chief to become
GE’s first-ever chief marketing officer almost three years ago. The job came with a
critical twist: the goal of driving innovation through the company’s 300,000 plus ranks.

“Creativity is still a word we’re wrestling with,” Comstock concedes. “It seems a bit
undisciplined, a bit chaotic for a place like GE.” More comfortable territory is the term
“imaginative problem-solving” – encouraging people to think “what if” – yet always with
the aim of driving growth. One of Comstock’s first moves was to bring in anthropologists
to audit GE’s culture. They came back with praise for GE’s famous work ethic but noted
that employees wanted more “wow” – more discoveries from the company founded by
Thomas Edison.

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Comstock has a role whose importance is spreading throughout Big Business – that of
innovation champion. She began by studying the best practices at companies such as
Procter & Gamble, FedEx, and 3M. She brought in a raft of creativity consultants,
futurists, and design gurus to lead sessions with different operations. Their names were
jolting for GE types: Play, a Richmond (VA.) group that helps execs think differently, and
Jump, based in San Mateo, CA., which researches how people use things. GE is
expanding its army of designers to bring businesses closer to customers. And Comstock
is staging “dreaming sessions” where Immelt, senior execs, and customers debate future
market trends. Comstock concedes some managers view the workshops as a waste of
time. “We have a long way to go,” she says. But for GE, there’s no turning back.

Source: Bruce Hussbaum, “How to Build Creative Companies,” BusinessWeek, August, 2005, 77.

8-12
SCREENING, EVALUATING, AND BUSINESS ANALYSIS

IDEA GENERATION

SCREENING
(fit/feasibility)

CONCEPT EVALUATION

BUSINESS ANALYSIS
8-13
 Business Analysis
* Revenue Forecasts

* Preliminary Marketing Plan

* Cost Estimation

* Profit Projections

* Other Considerations
8-14
 PRODUCT AND PROCESS DEVELOPMENT

NEW
PRODUCT
CONCEPT

PRODUCT MARKETING
DEVELOPMENT STRATEGY
AND USE DEVELOPMENT
TESTING
MARKET
TESTING

LAUNCH
8-15
 Product and Process Development
* Development of the new product includes:
* Product design
* Packaging design
* Decisions to make or purchase product components
* Product Development Process:
* Product Specifications
* Industrial Design
* Prototype
* Use Tests
* Process Development
* Collaborative Development

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 MARKETING STRATEGY AND MARKET TESTING
 Marketing Strategy Decisions
* Market Targeting
* Positioning Strategy
 Market Testing Options
* Simulated Test Marketing
* Scanner – Based Test Marketing
* Conventional Test Marketing
* Testing Industrial Products
* Selecting Test Sites
* Length of the Test
* External Influences
8-17
 Scanner-based Test Marketing
Less artificial than simulated testing

Costs less than full-scale market test

Test is controlled by using IRI’s 2300 panel

members in each test city

Cable TV enables use of controlled ad testing

Tests take about 12 months

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 COMMERCIALIZATION
The Marketing Plan
* Complete marketing strategy

* Responsibilities for execution

* Cross – functional approach

Monitoring and Control

* Real – time tracking

* Role of the Internet

* Include product performance metrics with performance

targets
8-19