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3 IMNPD
Innovation Management and New Product Development
An introduction to New
Product Development (NPD)
Learning Objectives
Recognize that new products serve a variety of purposes
depending on what is seen to be strategic imperative
Examine the concept of platforms in new product
development
Assess the importance of brand strategy in product
development
Explain how differentiation and positioning contribute
to a product’s success in the market place
Recognize the importance of marketing research in the
effective development of new products
Source: Baker & Hart. (1989) Product Strategy & Management. Prentice Hall Harlow.
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Managing brands
A successful brand combines an effective
product, distinctive identity and added values
as perceived by customers
Brand manager decide how much to invest
and develop brand. Involving all aspects of
marketing mix (4 Ps).
Buyers consider benefits and values being
promoted and make choices - buyer behavior.
Choices affect firm revenue and future
investment decisions – brand performance
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Brand Extension
The use of an established brand name on a new
product in the same product field or in a related field
Eg, a new unconventional size, with a prefix on the
original brand name: giant, jumbo, fun
Attempting to attract new market segment: modified
design or added words for target market.
Take advantage of carry-over effects from the
original brand. Pool of goodwill among consumers
and distributors
Philips: electrical and electronic devices, Canon
market cameras and copiers.
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Brand Extension
Carry-Over Effect
1. Expertise- Original product had established and
maintained itself, the product is likely to have a reputation
for high level competence in its field. Users therefore feel
comfortable and assured in making repeat buys
2. Prestige- Some customers believe that brand’s images
confer status on those that use of them. Brands benefit
from particular kinds of associations and symbolism
which they may have become
3. Access- Well established original product have access to
the best suppliers and distributors. An extension would
capitalize on these relationship may have better reception
to its initial launch
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Market Entry
Decisions about how and when to enter a market can
make or break an innovation.
Entry Timing- “Pioneer” or “First mover advantage”
‘Pioneers’ can set the standards, establish a
distinctive quality position, take the lead in the
continuing evolution of technology, and gain valuable
experience in manufacturing and distribution (Buzzell
and Gale, 1987)
A weak, tentative ‘first mover, without the motivation
or resources to grow the market, can spend years
making losses only to be superseded by a stronger
follower. (Green et al, 1995)
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Launch and Continuing Improvement
An innovation is not a success until it has established and fixed
its place in the market, depends on how it is launched, its
reception by customers and continuing improvement.
1. Product platform evolution and brand extensions –
What is the next generation of the product? Can the basic
product platform be enhanced and should this lead to
brand extension?
2. Market evolution – Will there be a lengthy introductory
period before any rapid growth? Will new market segment
become apparent or can they be created? How should the
geographic scope be widened?
3. Competitive Evolution – How soon will competitors
arrive? How predictable is their entry? What distinction will
they bring? What entry barriers are in place to deter rivals?
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Withdrawing Products
Chronic poor sales performance is a good
indicator of withdrawing products
Investigation should focus on how organization
managed its efforts
Exit cost would feature strongly e.g. Contract
with suppliers/distributors/lease
Consider active commitment to stay in declining
industry in anticipation of increasing market
share
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