New Product Innovation

Agenda

Product Development Market Research Concept Testing Prototype Development Market Testing Product Launch Discussion

Why New Products?

New product development is critical to long-term success

Approximately one-third of the revenue a business generates is coming from products they did not sell five years ago

Changing environment creates new demands and needs

Product Development

Must be alert to quickly develop opportunities Focus on markets or product categories

consistent with organization’s objectives, resources, capabilities and strengths

Securing a competitive advantage

Industrial New Product Ideas

Company sources other than R&D 36.2% Analysis of the competition 27.0% Research & Development 24.3% Product users 15.8% Supplier suggestions 12.5% Product user research 10.5% Published information 7.9%

New Products

A way of getting new and keeping old customers

Effective way of obtaining a competitive advantage

Source of growth and excitement

New Product Categories

New to the world products New product lines Product line extensions Improvements and revisions to existing

products Repositionings Cost reductions

Product Development Process

Market researchand

Opportunity scan

ConceptTesting

PrototypeDevelopment

TestMarketing

Product Launch

Marketing

Very important to product development success Key to successful marketing is imaginative,

effective, creative communication Find a need and fill it. Mutually beneficial exchange relationships Non-profit organizations have sometimes difficult

task

Marketing Strategies

Increase the number of customers Increase the average transaction Increase the frequency of repurchase

Marketing Concepts

Consumer orientation Customer service orientation Profit orientation Society

Marketing Mix

Product

Price

Promotion

Placement

Market Research

Who is my target audience? Are there enough members of this target group to

make the business worthwhile? How large is the potential market and how much of

that potential market can I capture? Who is my competition and what would make

someone choose my product over their current?

Market Opportunity and Threats

Economic Realities•GNP•Disposable Income•Discretionary Income

Legal & Regulatory Condition•Laws•Regulations

Societal Focus•Population Shifts•Values•Attitudes•Competition•Trends

Technological Development•Advance in technology•Market receptiveness to technology

Market Placement

Identify target markets Size and growth potential Ability and ease of reaching segment Good fit with organizational objectives Greatest revenue generation with least investment

Market Placement

Determine opportunity Segment size Annual usage potential Anticipated annual growth rate Margin Value in use

Evaluate competition Strengths/Limitations Implications

Market Research – Pricing Strategies

Goal is to achieve a target profit Can you hold a product’s manufacturing costs

down to less than 25% of its perceived value? Estimating manufacturing costs

Obtain price quotes from several suppliers

Concept Testing

Determine Critical success factors Financial objectives Marketing mix strategies

Product, Pricing, Promotion, Placement Marketing plan initiatives

Activity, Budget, Timing

Prototype and Test Marketing

Survey end-users Do you prefer this product over your current

product? Does this product meet the need you thought it

would? Does the way the product works provide an

important benefit?

Promotion and Product Launch

Publicity Trade journals Conferences

Personal selling Word of mouth

Reasons For New Product Failures

Poor marketing research Technical problems Insufficient marketing effort Bad timing

Marketing Plan

Audit Challenge and refine assumptions from current

plan Evaluate success for input into next year’s plan Revise plan for new year incorporating

marketplace learnings, marketing insights and current plan successes

Summary

New product development drives growth Market research is critical to the success of a

new product launch Market research is a continuous process as

customer needs, your business and the environment changes