Transcript elc310day21
ELC 310 Day 21 Agenda • Third Student Case – Terra Lycos by Karen – E-mail presentations at least 15 min before class so I may upload to web server • Case studies are tied to proceeding chapters, make sure you discuss the connection • Discussion/lecture New Products Rest of Schedule • Nov 27 – Terra Lycos • K. Pelletier – New Products • Nov 30 – MarketSoft Corporation • L. Dubois – Communication and Selling • Dec 4 – OSRAM Sylvania • G.Sumyla – Pricing and Distribution • Dec 7 – Logistics.com A & B • G. Nagradic – Build a Trusting Relationship with Customer • Dec 11 – Travelocity • K. Pelletier – The Future of Digital Marketing • Dec 14 – Citibank Online • L. Dubois – Written Case Study Due • Dec 20 @ 3PM – Quiz #4 – Case Study Presentations Due Overview • • • • • • Introduction Preventing new product Failures Proactive Product development Reactive Product development Market research techniques Product Life Cycles Introduction • New product development is necessary for continued profitability • Some numbers – 74% of new products are weeded out before reaching the marketplace – 41% new product failure in marketplace – 26%*41% = 10.66% success rate – 49.2% of sales of leading companies are from new products Digital failures • 90% of Internet companies failed in the marketplace – Vs 41% for new products – Problem was with new product selection before marketplace • All Internet products went to market – Failed to • Screen, test and do design work before launch • Dot Coms were very expensive concept test. Preventing new product failure • Reasons – Market too small – Poor positioning – Little benefit relative to the competition – Not New/Not different (enough) – Forecasting error – Poor timing – Shift in technology – Change in Customer Tastes Use a Structured Process Opportunity Identification Market definition Idea Generation NO GO Design Customer needs Sales forecasting Product Positioning Engineering Segmentation Marketing Mix Terminate Reposition GO Testing Advertising and product testing Pretest and prelaunch forecasting Test marketing NO GO Introduction Launch planning Tracking the launch NO GO Life Cycle Management Market response analysis Competitive monitoring and defense Innovation at maturity Harvest • • • • Systematic process Poor projects eliminated Good projects supported Top 33.3% of companies use a disciplined project development approach • 9 step process from elephantX Proactive Market Development • Driven by Marketing Strategy • Opportunity analysis based on consumer needs • Generate a few highpotential ideas Marketing strategy Opportunity Identification R&D Marketing Customers Acquisitions NO GO Design Segment Product Position Total value NO GO Test Engineering Customer NO GO Introduce NO GO Manage Life Cycle Terminate Reactive marketing Strategy Sense Action Evaluate Opportunity Threat NO GO React Copy Improve Defend NO GO Test Fast read Comparion NO GO Introduce NO GO Manage Life Cycle Terminate • Can Reduce Cost and risks • Reactions to competitive moves • Success based on “sensing” ability & quickness Which to use • Prerequisites for Proactive – Strong R&D – Marketing Power – Markets rewards • Premium products • Pioneers – Theory T marketing • Prerequisites for Reactive – Firm is flexible and agile – Market • Price is king • No ability to differentiate products • Products do not require much experience – Theory P marketing Market research techniques for proactive • Listening In – Lowers costs of gathering info on customer needs – Requires monitoring of third party “conversation” with consumers • Blogs • Forums – Replace focus groups – Used by GM trucks • Information acceleration – Used for premarket forecasting of High tech products – Prototypes and virtual models – Measure interactions with virtual models – Used by Toyota for Prius Managing Life Cycles • 4 phases – Introduction – Growth – Maturity – Decline • Diffusion Theory of Innovation – Adopt then communicate – Slow start followed by rapid increase – Leads to saturation then decline Marketing actions for Life cycle • Introduction – Advertising and promotion – Stimulate diffusion of innovation – Increase awareness and positive consumer acceptance – Preempt competitors – Pricing is key • Too high slow sale growth but high margins • Too low penetrate market but differs profits Marketing actions for Life cycle • Growth – Holding and building market share – Product improvement – More differentiation occurs as competitors enter market • Maturity – Competition intensifies prices erode – CAC goes up, loyalty more important • Decline phase – Milk profits – Start new product