new product development strategy. why develop new products? in 1982 timex turned down the...
TRANSCRIPT
New Product New Product Development Development
StrategyStrategy
WHY DEVELOP NEW PRODUCTS?
In 1982 Timex turned down the opportunity to market "Swatches". Timex was resting on its laurels, simple low cost watches.Digitalisation revolutionized industry while Timex stuck with analog.
DID NOT KEEP UP WITH WATCHES EVOLUTION FROM A FUNCTIONAL OBJECT TO A FASHION ACCESSORY.
Today Global consumer owns 5 watches up from 1.5 watches 30 years ago.
Move from chronometer to fashion accessory
Timex then acquired Guess and Monet Jewellers
Why New Products Fail?
Lack of differentiating advantage – RASna JUc FIT, HLL Ayush
Poor marketing plan – Yamaha RX -100, Real Value Vaccumiser, Appy, Evita, Appy, HLL Max Biscuit
Target market too small – Viruddh, Livon
Poor product quality – Annapoorna RTEC, Dandi Namak, Real Juice
New Product – Value Proposition
Value Proposition = Perceived Differential Advantage
Consumer Buying Process
Need Recognition
InformationSearch
Evaluationof
Alternatives
Purchase
Post-PurchaseBehavior
Successive Sets Involved in Customer Decision Making
FISHBEIN MULTI-ATTRIBUTE MODEL FOR BUYING
PhilipsLGSamsungSansuiOnidaVideoconSonyBPLHitachiAkaiNationalAiwa
LGSamsungSansuiOnidaVideoconSonyBPLAkaiAiwa
LGSamsungSansuiOnidaVideoconAiwa
SansuiOnidaVideocon
?
TotalSet
AwarenessSet
ConsiderationSet
ChoiceSet
Decision
Differentiation Variable- Product
Delivery
War
rant
yInstallation
After-sales
Credit
Training
Features
Style
Design
Packaging
Branding
•Repositioning
•Cost reductions
New Product Development
•New-to-the-world products
•New product lines
•Additions to existing product lines
•Improvements and revisions of existing products
Six categories of new products
NEW PRODUCTS - TYPES OF INNOVATION
A new product can be:
• Continuous Innovation.
• Dynamic Continuous Innovation
• Discontinuous Innovation
NEW PRODUCT DEVELOPMENT PROCESS
Idea Generation
Idea Screening Caution : Go Error / Drop Error
Concept DevelopmentCategory concept / Brand ConceptConcept Testing
Marketing Strategy
Market Testing
When / Where / Whom / How ?Commercialisation
How many test cities? Which cities?Length of test?What information?What action to take?
Business Analysis
Product Development
Relative Weight
Product Score
Product Rating
Key Success Factors (a) (b) (c = a x b)
Level of Differentiation .35 7 2.45
Value for Money .25 8 2.00
Marketing strength .25 6 1.50
Competitive Intensity .15 6 .90
Total 1.00 6.85
Rating scale: 0 - 3.0 poor 3.1 - 6.0 fair 6.1 - 8.0 good.
Minimum acceptance rate: 6.1
Product-Idea Rating Device
Awareness
Interest
Trial
Evaluation
Adoption
New Product –Innovation Diffusion
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
New Product Adoption
RATE OF ADOPTION AFFECTED BY
New Product Adoption
ADOPTER CATEGORIES
A life cycle plots sales of an offering or a product class over a period of time.
There are FOUR main stages:
1. Introduction
2. Growth
3. Maturity (Saturation)
4. Decline
The Product Life Cycle
Profits
Sales
Introduction Growth Maturity Decline
Sales
The Product Life Cycle
INTRODUCTION GROWTH MATURITY DECLINE
Marketing Objective
Market Development
Build Brand Loyalty
Convert the Competitor’s Customer
Reduce Inventory
Sales Low High High Low
Costs High Moderate Low Low
Profits Low Moderate High Low
Competitors Very Few Increasing Many Few
Product Basic Product Differentiate Line Extensions Reduce Variants
Price Penetration/Skimming
Maintain Prices
Lower Prices Lower Prices
Place Selective Distribution
Extensive Distribution
Extensive Distribution
Selective Distribution
Promotion High Advertising Sales Promotion
Moderate AdvertisingPR/Publicity
High Advertising Trade Promotion
Low
LIFECYCLE STRATEGIES
The Product Life Cycle
Product hierarchy Need family Product family Product class Product line Product type Item