Consumer Behavior: People in the MarketplaceWho should ultimately design the product? The customer, of course.
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What challenges does a company face in developing new products?
What organizational structures are used to manage new-product development?
What are the main stages in developing new products, and how can they be managed better?
What factors affect the rate of diffusion and consumer adoption of newly launched products?
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Developing New Market Offerings
New-to-the-world products
Improvements and revisions of existing products
Repositioning
Why do new products fail?
A high-level executive pushes a favorite idea through in spite of negative research findings.
The idea is good, but the market size is overestimated.
The product is not well designed.
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Challenges in New-Product Development
The product is incorrectly positioned in the market, not advertised effectively, or overpriced.
The product fails to gain sufficient distribution coverage or support.
Development costs are higher than expected.
Competitors fight back harder than expected.
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Challenges in New-Product Development
Fragmented markets
The product can be introduced within five years
The product has a market potential of at least $50 million and a 15 percent growth rate.
The product would provide at least 30 percent return on sales and 40 percent on investment.
The product would achieve technical or market leadership.
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3M’s approach:
Expect some failures
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Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas)
Stage
Idea Generation
Techniques for stimulating creativity
in individuals and groups
screening ideas
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Some of the most notable “drop-errors” have come from the most recognizable names in American business. Xerox saw the potential of the copy machine, IBM and Eastman Kodak did not. IBM thought the personal computer market would be miniscule.
Can you think of any
“drop-errors” that the
Relative Weight
Product Score
Product Rating
.30
.6
.18
.10
.5
.05
Total
1.00
.69
Rating scale: .00-.30 poor; .31-.60 fair; .61-.80 good. Minimum acceptance rate: .61
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Concept Development and Testing
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Sometimes a new product is developed, like the felt-tip pen and the “walkman” style personal music device. Consumers weren’t clamoring for either of these products before they came to market. Most people hadn’t even conceived of such an item. Careful planning developed markets
for these new lines. Can you
think of more recent
Concept Testing
Rapid prototyping
Virtual reality
Customer-driven engineering
Communicability and believability
Perceived value
Purchase intention
Conjoint Analysis
Marketing Strategy
Business Analysis
Survival-age distribution
See text for complete table
Year 0
Year 1
Year 2
Year 3
0
3,981
5,150
6,581
Break-even analysis
Risk analysis
Product Development
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Customer tests
Alpha testing
Beta testing
Market Testing
Trial
Simulated Test Marketing
Controlled Test Marketing
Philips’ Pronto Web site
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To Whom (Target-Market Prospects)
How (Introductory Market Strategy)
Critical path scheduling (CPS)
The iMac, launched with a dramatic countdown campaign
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Innovation
through five stages
Readiness to Try New Products and Personal Influence
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Figure 12.7: Adopter Categorization on the Basis of Relative Time of Adoption of Innovation
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