CURRENT ISSUES IN MANANGEMENT

GROUP 2

PRODUCT DEVELOPMENT

“NEW” PRODUCT

Five different categories of new products.1. New to the world Products2. New Category entries3. Addition to products lines4. Product improvements5. Repositioning

TEN FACTORS ASSOCIATED WITH NEW PRODUCT SUCCESS

1. Product superiority/quality2. Economic advantage to user3. Overall company/project fit4. Technological compatibility5. Familiarity to the company6. Market need, growth and size7. Competitive situation8. Define opportunity9. Market-driven process10. Customer service

IMPORTANCE OF PRODUCT INNOVATION

As emphasized by a top executives at Pillsbury, “In the end, the company with the most new products wins”

The head of P&G stated “The core business is innovation. If we innovate well, we will ultimately win”

“3M COMPANY”

The largest manufacturer in Minnesota, the 110th largest U.S. company overall, and a member of the Dow Jones "30," 3M Company (known officially as Minnesota Mining and Manufacturing Company from its founding in 1902 until 2002) is Wall Street's epitome of high-tech/low-tech business and solid blue-chip performance. In the years since their successful introduction of the world's first waterproof sandpaper, they evolved into a diversified technology company with leading positions in a broad range of important markets. Today, they produce thousands of innovative products and have companies in more than 60 countries. In extending their market reach, 3M's formula for success has remained the same: first, identify customer needs, and second, use 3M technology to pioneer innovative solutions to meet these needs. The company also practices social responsibility by supporting community efforts to improve education as well as to further economic and social development.

NEW-PRODUCT STRATEGY

Is a statement identifying the role a new product is expected to play in achieving corporate and marketing goals. This strategy can be used to determine which prospective products should receive special attention, which should go on the “back burner,” and which should be scrapped.

NEW PRODUCT DEVELOPMENT PROCESS

A new product is best developed through a series of seven stages that provides benefits such as improved teamwork, less rework, earlier failure detection, shorter development times, and – most important – higher success rates.

COMMANDMENTS IN MARKETING

First

“KNOW THY CUSTOMER,” and the Second is

“KNOW THY PRODUCT”

New-product development process

Idea generation

Test marketing

Concept development

& testing

Commercialization

Business analysis

Prototype development

Idea screening

IDEA GENERATION

Is the initial stage of the new-product-development. In one study, 80% of companies pointed to customers as their best source for new-product ideas.

SOME SOURCES OF NEW PRODUCT IDEAS

1. CUSTOMERSa. Customers requestsb. Customer complaints/complimentsc. Market surveysd. Focus groups

2. COMPETITORSe. Monitoring competitor’s developmentsf. Monitoring testing of competitors’

productsg. Monitoring of industry movements

SOME SOURCES OF NEW PRODUCT IDEAS

3. DISTRIBUTION CHANNELSa. Suppliers b. Distributorsc. Retailersd. Trade shows

4. RESEARCH AND ENGINEERING a. Product testingb. Product endorsementc. Brainstorming meetingsd. Accidental discovery

SOME SOURCES OF NEW PRODUCT IDEAS

5. OTHER INTERNAL SOURCESa. Managementb. Sales forcec. Employee suggestionsd. Innovation group meetinge. Stockholders

6. OTHER EXTERNAL SOURCESf. Consultantsg. Academic journalsh. Periodicals and other press

L.A. Mitchell, Account Executive for large Business Accounts, Lucent Technologies, discusses sources for new product ideas: “New-product ideas come from just about anywhere. Lucent has entire organizations whose sole functions is to continually explore and develop new-products ideas. Some of the best ideas come from needing to solve a significant customer problem. For example, the increase in automobile accidents due to people talking on cell phones while driving has generated many ideas for new products and features. Some of these include products that allow cell phones to be used “hands free” and new features that make it possible to dial number by simply speaking the name of the person or business you wish to call.”

IDEA SCREENING

At this stage, new product ideas are evaluated to determine which ones warrant further study. Typically, a management team relies on experience and judgment, rather than on market or competitive data, to screen the pool of ideas.

CONCEPT DEVELOPMENT AND TESTING

Is the process of shaping and refining the idea into a more complete product concept.

1. Develop Product Ideas into Alternative

Product Concepts

1. Develop Product Ideas into Alternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

3. Choose the Best One3. Choose the Best One

BUSINESS ANALYSIS

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If Yes, Move to Product Development

If Yes, Move to Product Development

If No, Eliminate Product Concept

If No, Eliminate Product Concept

PROTOTYPE DEVELOPMENT

Means converting the concept into an actual product. The objective is to use the information obtained from the concepts tests to design an actual product that can be further tested.

TEST MARKETING

Involves testing the product prototype and marketing strategy in simulated or actual market situations. Test and marketing can be both expensive and risky.

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

TEST MARKETING

1. PSEUDO SALES potential buyers are asked to answer survey questions or pick items off a shelf in a make believe store.

2. CONTROLLED SALES here the buyer must make a purchase

3. FULL SALE the firm has decided to fully market the product, but on a limited basis first, to see if everything is working right

4. NATIONAL LAUNCH the firm launches the product on a national scale and make adjustments as needed.

COMMERCIALIZATION

This is the launching step. During this stage, heavy emphasis is place on the organization structure and management talent needed to implement the marketing strategy.

CAUSES OF NEW PRODUCT FAILURE

1. No competitive point of difference, unexpected reactions from the competitors or both.

2. Poor positioning3. Poor quality of the product 4. Non delivery of promised benefits of product5. Too little marketing support6. Poor perceived price/ quality relationship7. Faulty estimates of market potential and other marketing

research mistakes8. Faulty estimates of production and marketing costs9. Improper channels of distribution selected10. Rapid change in the market(economy) after the product

was introduced

THANK YOU