Transcript New Products

8-1
Topic:6
Planning for
New Products
Dr. Ehsanul Huda Chowdhury
Course: Strategic Marketing
Program: BBA
IBA
Importance
of
New Products

Innovation at top of potential
value drivers (Ernst & Young)
Innovation initiatives extend
beyond new goods and services
to include ideas, processes, and
business practices

8-2
Organizations must build a
culture of innovation
New Product Planning
as a Customer Driven
Process
New product
classifications:

Newness to market
2. Newness to company
1.
New product types:

–
–
–
–
Transformational
innovations
New product category
Product line extensions
Incremental improvements
8-3
Finding Customer
Value Opportunities
8-4
Customer value analysis
Objective is to identify
needs for:
New products
2. Improvements to existing
products
3. Improvements in
production processes
4. Improvements in
supporting services
1.
8-5
Matching Capabilities to
Customer Value Opportunities
–
Fit between capabilities and
product offering
Transformational Innovations
–
–
“new-to-the-world” ideas
Customers not always the
best guides
8-6
Customer
Expectations
Customer
Satisfaction
Gap
Actual
Product
Performance
OPPORTUNITIES
(1) New Products
(2) Improvements
(3) New and Improved
Processes
Characteristics of
Successful
Innovations
8-7
Creating an
Innovative
Culture
Leveraging
Capabilities
STRATEGIC
INITIATIVES
Making Resource
Commitments
Selecting the
Right
Innovation
Strategy
Developing and
Implementing
Effective New
Product
Processes
Developing an
Innovation Culture
8-8

Innovation Workshop for
top executives to develop
an innovation plan.

Innovation Statement
highlighting objectives and
senior management’s role
and responsibilities.

Training programs for
employees and managers.

Communicate the priority of
innovation.

Speakers to expose
employees to innovation
authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April
2003, 43.
NEW PRODUCT
PLANNING PROCESS
8-9
Customer
Needs
Analysis
Idea
Generation
Screening
and
Evaluation
Marketing
Strategy
Development
Business
Analysis
Product
Development
Testing
Commercialization
Achieving CrossFunctional Interaction
and Coordination
R&D
Operations
Marketing
Finance
8-10
8-11
BENETTON’S STRATEGY
TO REVIVE APPAREL IDEA
GENERATION
“We didn’t take advantage of the [industry’s] quick
transformation,” says Silvana Cassano, the ex-Fiat
manager who assumed the post of chief executive of
Benetton Group on May 5.
The transformation saw the best retailers turn
into cutting-edge users of digital technology.
Benetton’s competitors-notably Spain’s Zara and
Sweden’s H&M Hennes & Mauritz-have raised the bar
for the entire industry. These retailers can beam new
styles from the catwalk to the shop floor in less than a
month-and at bargain prices. Both deploy
sophisticated technology to track which items are
selling and which aren’t, so winners can be speedily
restocked and slow movers yanked down from the
racks. They’ve got the look down, too-cool and
minimal for the working women who love Zara, and
over-the-top trendy for H&M’s teen fans. And
Benetton’s look? Blan. “The Benetton brand is out of
fashion,” says Sagra Maceira de Rosen, retail analyst at
J.P. Morgan Chase & Co. in London.
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Benetton’s Strategy
(continued)
Cassano is out to change that. The message
he delivered in his first encounter with shareholders
was short and powerful: Benetton is going to refocus
on the apparel business, which encompasses the Sisley
and Benetton brands.
It’s no secret that Benetton’s core casual wear
business has suffered neglect. In 1994, founder
Luciano Benetton launched an ill-fated diversification
into sports equipment, snapping up trophy brands such
as Prince (tennis rackets), Rollerblade (in-line skates),
and Killer Loop (snowboards). But the strategy
foundered and last year, Benetton sold the entire
equipment division, booking $190 million in write-offs.
The company posted its first annual loss-$10.5 million,
on revenues of $2.3 million.
Source: “Has Benetton Stopped Unraveling?” Business Week, June 30, 2003, 76.
8-13
Alliances/
Acquisition/
Licensing
National
Policy
Direct
Search
Technological
Innovation
METHODS
OF
GENERATING
IDEAS
Creative
Methods
Linking
Marketing
and Technology
Exploratory
Customer
Studies
Facilitating
Lead User
Analysis
8-14
SCREENING, EVALUATING,
AND BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
8-15
Business Analysis

Revenue Forecasts

Preliminary Marketing
Plan

Cost Estimation

Profit Projections

Other Considerations
PRODUCT AND PROCESS
DEVELOPMENT
8-16
NEW
PRODUCT
CONCEPT
PRODUCT
DEVELOPMENT
AND USE
TESTING
MARKET
TESTING
LAUNCH
MARKETING
STRATEGY
DEVELOPMENT
Product and
Process
Development

Development of the new product
includes:
– Product design
– Packaging design
– Decisions to make or purchase
product components

Product Development Process:
–
–
–
–
–

8-17
Product Specifications
Industrial Design
Prototype
Use Tests
Process Development
Collaborative Development
MARKETING
STRATEGY AND
MARKET TESTING

Marketing Strategy Decisions
– Market Targeting
– Positioning Strategy

Market Testing Options
– Simulated Test Marketing
– Scanner – Based Test Marketing
– Conventional Test Marketing
– Testing Industrial Products
– Selecting Test Sites
– Length of the Test
– External Influences
8-18
8-19
COMMERCIALIZATION
The Marketing Plan
– Complete marketing strategy
– Responsibilities for execution
– Cross – functional approach
Monitoring and Control
– Real – time tracking
– Role of the Internet
– Include product performance
metrics with performance
targets