LECTURE 1 New Product Marketing Introduction

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Ilene Heath
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1 LECTURE 1 New Product Marketing Introduction New Products A new product can be constituted as: New to the world. New to the firm or new product line. Addition to existing product line. Product improvement. Repositioning (e.g. baking soda). Cost reductions. About 20-40% of sales and profits are from new products. The terms "product idea," "product concept," and "product prototype" are not interchangeable and they are not all about the same thing. Three Levels of Product (Rings of Augmentation) Core product (i.e. core benefit or service). Actual product: Packaging Styling Brand name Features Quality Augmented product: Installation After sales service Warranty Delivery and credit New Product Failures Examples: New Coke. Apple Newton. Sony Betamax. Reasons for failures: Overestimated market size. Incorrect position. Ineffective promotion. Overpriced or too much cost. Poor timing of distribution. Misinterpretation of marketing research. Underestimated competition. The New Products Process 1. Opportunity identification and selection. 2. Concept generation. 3. Concept/project evaluation. 4. Development (technical and marketing). 5. Commercialisation/Launch. 1

LECTURE 2 New Product Team and New Product Process New Product Team Cross-Functional Interface/Environment 3M encourage early, informal communication among marketing, technical, and manufacturing

New Product Organisation Projectisation the level of commitment to the new product project. High projectisation (venture teams): High level of (long-term) commitment. Cross-functional integration.

2 LECTURE 2 New Product Team and New Product Process New Product Team Cross-Functional Interface/Environment 3M encourage early, informal communication among marketing, technical, and manufacturing staff. Many new facilities are designed with coffee bars on every floor for cross-functional interaction. Many companies including Sony rotates their managers through different functions. New Product Organisation Projectisation the level of commitment to the new product project. High projectisation (venture teams): High level of (long-term) commitment. Cross-functional integration. Strong power of the project leader and less voice of functional manager. Speed to market is critical. New-to-the-world or new-to-the-firm products. The members of functional new products organisations are most likely to be almost totally oriented/loyal to their departments. Globally Dispersed Teams (GDTs) and Global Product Development Product development has become more challenging due to increased globalisation. Many multinational firms seek to leverage their product development skills across their subsidiaries and gain competitive advantage by setting up global new product teams. E.g. Hyundai: Tech centres in Germany and America. Japan R&D centre. Manufacturing in Czech, Russia, and America. India engineering centre. Firms with a global innovation culture have the most effective global new product programs. 2

3 Social Loafing Social loafing when team members reduce their effort because they feel less responsible for the output. Research shows that people tend to prefer teams of four or, at most, five members. Anything lower than four was felt to be too small to be effective, whereas teams larger than five became ineffective. How to prevent or tackle social loafing: Divide up a complex task into manageable bits, where every member of the team is accountable for one bit of it. Generate a sense of urgency. Make weaker team members feel disproportionately responsible for the team underperforming. Provide greater transparency by opening up your feedback mechanism. Brainstorming Brainstorming one person presents a thought, another reacts to it, another reacts to the reactions, and so on. Must not promote consensus, but collaboration. Recently, people are more creative when they enjoy privacy and freedom from interruption and so, one may want to avoid Groupthink by: Assembling a diverse team: o Explorers: extroverted, inquisitive, comfortable with ambiguity, freethinking. o Developers: creative problem-solvers, sometimes introverted, quieter, but love being given a problem to solve. o Commercialisers: realists, business-minded, practical problem-solvers. Focusing on roles: o The client: exercise leadership and make the decisions, and pick the final concepts to recommend or implement. o The facilitator: in charge of the process, facilitating the interaction, drawing out the range of perspective, and managing the brainstorming process non-judgmentally. o Resources: listening, learning, ideating, building on other offers, and advocate, but do not decide. Encouraging passionate/product champions: o Requires leadership, vision, enthusiasm, and commitment. o Acts as a good facilitator. o Accepts responsibility of the product. o Communicates with the team, the customers, management, sales, and marketing. 3

4 New Product Process Strategic elements of new product development: Strategic focus for product and innovation: o Product development strategy aligned with corporate strategy. o Situation analysis can identify opportunities in current products and some obsolete products. o Supply chain analysis and market demand forecast. New product process: o Path from idea to launch and beyond. o The five-phase process. New product portfolio: o Assurance of the right product development with respect to its product portfolio. Development Strategy Framework Development strategy framework The Five-Phase Process 1. Opportunity identification and selection. 100 new ideas 2. Concept generation. 70 passed 3. Concept/Project evaluation. <50 tested 4. Development (both technical and marketing). 30 through 5. Commercialisation/Launch. 25 released, 15 succeed The New Products Process Opportunity Identification and Selection 100 new ideas Concept Generation 70 passed Concept/Project Evaluation <50 tested Development (both technical and marketing) 30 through Commercialisation/Launch 25 commercialised 15 succeeds 4

For New-To-The World Products The phased process may not work as well with new-to-the-world products due to the high levels of technical and market uncertainty and associated risks.

5 For New-To-The World Products The phased process may not work as well with new-to-the-world products due to the high levels of technical and market uncertainty and associated risks. Firms that launch pioneering new-to-the-world products into the market incur a significantly lower long-term survival rate than those that enter the market later. The long-term advantage of going first is greater for firms that launch incrementally new products than for those that launch really new ones. Still, the lower survival rate for a new-to-the-world product is offset by higher profits, since the market for such a product is often larger and also often offers bigger profit margins. For Breakthrough Innovations The process for managing breakthrough innovation differs from managing ongoing product development processes. The goal is to consider the innovation, together with the identified business opportunities, and to develop from this a new business model that provides the market with breakthrough value and, ultimately, is profitable for the firm. Managing Triple Stream Process New product development process. Evaluation tasks; Go/No Go. Marketing planning. Parallel Processing Third generation new product process: Overlapping phases. Fuzzy gate (conditional go ). Flexibility. Accelerated Product Development (APD): First to market vs. First to mindshare. Product Life Cycle Management 5

Essentials For New Product Management High level strategy. Commitment to a superior product. Opportunity identification. Marketing focused and driven. Active corporate support.

6 Essentials For New Product Management High level strategy. Commitment to a superior product. Opportunity identification. Marketing focused and driven. Active corporate support. Continuous new product evolution. Continuous stakeholder involvement. Effective New Product Proces Voice of Customer (VOC). Process: 1. Awareness. 2. Interest. 3. Evaluation. 4. Trial. 5. Adoption. New Product Adoption 6

CGMA Competency Framework

CGMA Competency Framework Leadership skills CGMA Competency Framework 1 Leadership skills : This requires a basic understanding of the business structures, operations and financial performance, and includes