Chapter

15
Introducing New
Market Offerings

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Learning Objectives
1. How can new products be categorized?
2. What challenges does a company face in
developing new products and services?
3. What organizational structures and processes
do managers use to oversee new-product
development?
4. What are the main stages in developing new
products and services?
5. What is the best way to manage the generation
of new ideas?
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Learning Objectives

6. What is the best way to manage concept and

strategy development?
7. What is the best way to manage the
commercialization of new products?
8. What factors affect the rate of diffusion and
consumer adoption of newly launched products
and services?

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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 Iterative rounds with
sessions customers
Time off for technical Keyword search to
people to putter scan trade
Customer publications
brainstorming Treat trade shows as
Survey your intelligence missions
customers Have employees visit
Fly on the wall supplier labs
research Set up an idea vault
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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 products 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 products
attributes

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 Figure 15.5
Utility Functions in Conjoint Analysis

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 Concept to Strategy
Marketing strategy development following
a successful concept test
1. Target markets 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 individuals 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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Copyright 2016 Pearson Education Ltd. 15-34