Market Segment

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Company need to define and assesses the target market, product requirements and benefits before proceeding.

Challenges in NPD

• The innovation imperative

▫ Rapid change is the “norm”, and continuous innovation is necessary in many industries.

• New-product success

▫ New companies more disruptive

• New-product failure

▫ 90-95% of new-to-world ideas fail

Idea generation:

- Internal idea sources

- External idea sources

- Crowdsourcing

- Lead users

Concept development:

▫ Product idea

▫ Category concept

▫ Brand concept

▫ Concept testing

Quality function deployment (QFD)

▫ Customer attributes, turned into

▫ Engineering attributes

▫ Measures the costs in meeting customer requirements

Customer testing

• One result of QFD is a prototype

▫ Alpha testing – within the company

▫ Beta testing – with customers

Bring customers into a lab

Testing in home

Mobile test sites

Trade shows

Managing new-product development:

- Customer-centred--- underlying philosophy

- Team-based--- cross-functional teams, overlapping the steps in NPD

- Systematic NPD--- helps create innovation culture and produces more ideas

- New-product development in turbulent times--- innovation more often helps than hurts.

Great innovation:

• Relative advantage

▫ How much better is it, really

• Compatibility

▫ Does it match my values and experiences

• Complexity

▫ Do I have to get my 10 year old to make it work?

• Trialability

▫ Can I sample it first

• Observability

▫ Can I see and describe the benefits

Marketing throughout the product life cycle:

- Introduction stage

- Growth stage

- Maturity stage

- Decline stage

Chp 12:

Internal Marketing objectives:

- Survival

- Current profit maximization

- Market-share leadership

- Quality leadership

Company Costs - generally set the long term “floor

External factors affecting pricing decisions:

- Pricing in different types of markets

- Consumer perceptions of price and value

- Pricing and consumption

- Analyzing the price-demand relationship

- Price elasticity of demand

- Economic conditions

- Government

Generally, the more competitors the more influential price is as a strategic element

• The competitive information needed for a pricing strategy includes:

▫ Published competitive price lists and advertisements

▫ Competitive reaction to price moves in the past

▫ Timing of competitors’ price changes and initiating factors

▫ Information on competitors’ special campaigns

Demand:

The relationship between price and demand is called elasticity of demand or sensitivity of price. It refers to the number of units of a product that would be demanded at different prices.

Customer value and competition:

- Prices for comparable substitute products create the price ceiling

- The price range allows for pricing to match customer perceived value

New-product pricing strategies:

- Market-skimming pricing--- Initial high prices to recoup costs

- Market-penetration pricing--- Lower priced to gain market share

Product mix and service mix pricing strategies:

- Product/service-line pricing

- Optional product/service pricing

- Captive product/service pricing

- By-product pricing

- Product/service-bundle pricing

Price adjustment:

- Cash discounts

- Quantity discounts

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