Chapter

15
Introducing New
Market Offerings

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 New-Product Options
• Buy other companies
• Buy patents from other
companies
• Buy a license or franchise
from another company
• New-to-the-world items
• Improvine existing products

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 Challenges in New-Product
Development
• The innovation
imperative
– Continuous innovation
is a necessity
• New-product success
– Incremental innovation
vs. disruptive
technologies

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 New-Product Failure

• Fragmented • Shorter
markets development time
• Social, economic, • Poor launch timing
and government • Shorter PLCs
constraints
• Lack of
• Development costs organizational
• Capital shortages support

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 Organizational Arrangements
• Budgeting for New-Product Development

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 Organizing New-Product
Development
• New-product development concepts
New-
Venture
product
teams
department

Stage-gate Skunkworks
systems

Communities
Crowdsourcing
of practice

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 Figure 15.1
New-Product Development Process

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 Generating Ideas
• Interacting with
employees
• Interacting with
outsiders
• Studying competitors
• Adopting creativity
techniques

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 Ways to Find New-Product Ideas
• Informal customer
sessions
• Time off for technical
people to putter
• Customer brainstorming
• Survey your customers
• “ Fly on the wall”
research
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• Iterative rounds with
customers
• Keyword search to scan
trade publications
• Treat trade shows as
intelligence missions
• Have employees visit
supplier labs
• Set up an idea vault
15-9
Ways to draw new ideas from
customers
 Observe customers using product
 Ask customers about product problems
 Ask customers about dream products
 Use customer advisory board
 Use Web sites
 Form brand community of enthusiasts
 Challenge customers to improve product

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Adopting creativity techniques

Attribute Forced
listing relationships

Mind Morphological
mapping analysis

Reverse-
New contexts assumption
analysis

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 Figure 15.2
Forces Fighting New Ideas

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Using Idea Screening

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 Using Idea Screening
• The company can monitor and revise its estimate of
the product’s overall probability of success, using the
following formula:

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 Concept to Strategy
• Concept development

– Figure 15.3(a): product-

positioning map

– Figure 15.3(b): brand-

positioning map

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 Concept to Strategy
• Concept testing responses

Communicability &
Perceived value
believability

Need level Purchase intention

User targets, purchase

Gap level
occasions & frequency

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 Concept to Strategy
• Conjoint analysis
– Deriving the utility
values that
consumers attach
to varying levels of
a product’s
attributes

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 Concept to Strategy
• Marketing strategy development following a
successful concept test
1. Target market’s size, structure, & behavior;
the planned brand positioning; the sales,
market share & profit goals in first few years
2. Planned price, distribution strategy, and
marketing budget for the first year
3. Long-run sales & profit goals and marketing-
mix strategy over time

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 Concept to Strategy
• Business analysis

– Estimating total sales

– Figure 15.6: Product Life-

Cycle Sales for Three Types
of Products

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 Concept to Strategy
• Estimating costs and profits

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Development to Commercialization

• Product development

– Physical prototypes

– Customer tests: alpha &

beta testing

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Development to Commercialization

• Market testing

– Consumer-goods market
testing

– Business-goods market
testing

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Methods of Consumer-Goods
Market Testing

Sales-wave research

Simulated test marketing

Controlled test marketing

Test markets

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Development to Commercialization

• Commercialization: When (Timing)

First entry

Parallel entry

Late entry

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Development to Commercialization

• Commercialization
– Where (Geographic
Strategy)
– To Whom (Target-
Market Prospects)
– How (Introductory
Market Strategy)

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 The Consumer-Adoption Process
• Adoption
– An individual’s decision to become a regular
user of a product

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 Stages in the
Adoption Process
Awareness

Interest

Evaluation

Trial

Adoption

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 Factors Influencing the Adoption
Process
• Readiness to try new products and personal
influence

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 Factors Influencing the Adoption
Process
• Characteristics of the innovation

 Relative advantage
 Compatibility
 Complexity
 Divisibility
 Communicability

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 Factors Influencing the Adoption
Process
• Organizations’ readiness to adopt innovations

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