BA355 #2

• Goods


  Have tangible attributes.
• Services


  Intangible activities or benefits.
• Ideas


  Thoughts that lead to products or action.

  
  

  Ex: Concept for a new invention or getting people out to vote.
• Continuous/ Incremental Innovation


  Simplest kind of innovation.

  
  

  Ex: Coming up with a new flavor of Cap'n crunch cereal.
• Dynamically Continuous Innovation


  Still in the same business model that you have been in, but you do something that is a lot different.

  
  

  Ex: The hand dryer in the bathroom. Dramatically changed the dry time.

  
  

  Ex: Paperback book.
• Discontinuous Innovation


  A totally new business model.

  
  

  Ex: Uber

  
  

  Ex: Bird
• Product line extension


  Same brand and category.

  
  

  Ex: Kisses with Almonds = A product line extension of Kisses.

  Ex: iPad mini.
• Brand extension


  Same brand name, whole new category.

  
  

  Ex: Hershey's Spreads = brand extension of Hershey's.

  Ex: Tesla made a surfboard.
• Line extensions can build brand franchise, however...


  1. Each new extension increases cost.

  2. Need to make sure cannibalization is not excessive.
• Challenges in new product success


  -Difficult to produce a successful new product/

  -Consumers tend to be "creatures of habit."

  -New products can succeed and have a big impact on an organization.

  Ex: LaCroix sparkling water.
• Why do new products fail?


  -Insignificant point of difference.

  Ex: Microsoft Zune had no major benefits that were different from the iPod.

  -New product doesn't address a real consumer need.

  Ex: Softer version of Starburst.

  -Bad timing. Product may be ahead of its time.

  Ex: Technology not advanced enough in 1997 for Ask Jeeves search engine.

  -Insufficient trade support.

  Ex: Product does not get on shelf.

  -Product quality.

  Ex: Frito Lay Wow chips were fat-free, but had a laxative effect.

  -Too little market attractiveness.

  Ex: Market too small or competitive.
• "Groupthink" in project meetings


  Group becomes swayed to a false consensus because individuals don't think on their own or speak up.
• "Not Invented Here" (NIH) syndrome


  People don't accept an idea because it does not come from them or their idea.

  
  

  Good ideas get thrown away due to egos.
• Not learning from past failures

  Easiest lessons are from "intelligent failures"- ones that happen early in the new-product process.

  At this point these failures are less expensive and immediately give better understanding of customers' wants and needs.
• Seven stages in the new-product process leading to success

  1. New-product strategy development.

  2. Idea generation.

  3. Screening and evaluation.

  4. Business analysis.

  5. Development.

  6. Market testing.

  7. Commercialization.
• New Product Strategy Development

  -Environmental Scanning.

  -SWOT analysis.

  -Define strategic role of new product.
• Idea Generation Sources


  -Internal brainstorming.

  -Discussions with trade customers and end consumers (research).

  -Analysis of competition.

  -Research and Development laboratories.

  -Crowdsourcing: Getting ideas from outside the company. A new approach to developing ideas.
• Screening and Evaluation


  -Internal approach: Organization teams evaluate and select best ideas.

  -External approach (consumers): Concept and concept/product tests. Research and development labs create prototypes.
• Business Analysis


  -Does the new product fit the company's mission/objectives/strategies.

  -Financial projections for new product.
• Development


  -Advance from initial prototype to final product.

  -Run additional laboratory and consumer tests.
• Market Testing


  -Simulated Test Markets (STMs): Most popular since firms generally do not want to test in-market. Gives competitors chance to steal product.

  -In STMs, consumers take products home after initial surveys, so both trial and repeat purchase can be evaluated.

  -This is the stage where you do Beta testing.
• Commercialization


  -Bringing a product into the market.

  -Development of packaging.

  -Development of pricing, distribution, and integrated marketing communication strategies.
• Product Life Cycle


  A product, or a brand, goes through the four stages: Introduction, Growth, Maturity, Decline
• Total Industry Sales Revenue


  Increases through all stages, begins to decline during maturity and continues to decline through decline stage.(Begins at positive sales revenue).
• Total Industry Profit


  Increases through all stages, begins to decline during maturity and continues to decline through decline stage. (Begins at negative sales revenue).
• How stages of the product life cycle relate to a firm's marketing objectives

  Chart
• Primary Demand


  Demand that you have to create for a whole category.

  
  

  Ex: Tesla for electric cars.
• Selective Demand


  Demand that you have to create for a brand.
• Skimming Strategy


  (High Price)
• Penetration Pricing


  (Low Price)
• Growth Stage


  -Rapid sales growth

  -More competitors

  -Potential strategies: Achieve broadest possible distribution, add new features to differentiate from competition.

  
  

  Ex: Bird, Uber, Google
• Maturity Stage


  -Industry/product sales slow.

  -Defending market share a key objective.

  -Differentiation a key strategy.

  
  

  Ex: Toyota, Gillette, Tide
• Decline Stage


  -Industry/product sales drop.

  -Potential strategies: Harvesting or deletion.

  
  

  Ex: Fax machines,
• Innovators


  Early adaptors. First ones to get a smart phone. Higher educated.
• Early Adopters


  People who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters.
• Early majority


  Individuals who adopt a new product just prior to the average person.
• Late Majority


  The last group of buyers to enter a new product market; when they do, the product has achieved its full market potential.
• Laggards


  Consumers who like to avoid change and rely on traditional products until they are no longer available.
• Product Modification


  Changing one or more of a product's characteristics
• Quality Improvement


  Improving something. Ex: Increasing better taste, longer shelf life, etc.