Chapter 10 Marketing

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2320A/B
Professor
Angela White
Semester
Summer

Description
Chapter 10- New-Product Development and Life Cycle Strategies New-Product Development Strategy Firms can obtain new products in two ways, through acquisition or development New-Product development: The development of original products, product improvements, modifications and new brands through the firm’s own product development efforts. - 90% of new products fail. Idea generation is the systematic search for new‐product ideas Sources of new‐product ideas - Internal sources refer to the company own formal research and development, management and staff, and intrapreneurial programs - External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms Idea Screening: Screening new-product ideas to spot good ideas and drop poor ones as soon as possible - R‐W‐W Screening Framework: – Is it real? (Is there a need and will customers buy it) – Can we win? (Will it satisfy the market) – Is it worth doing? (Does it offer sufficient profit potential) Product concept is a detailed version of the idea stated in meaningful consumer terms - Product image is the way consumers perceive an actual or potential product - Product idea is an idea for a possible product that the company can see itself offering to the market Concept Testing: Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. Marketing Strategy Development: refers to the initial marketing strategy for introducing the product to the market • Marketing strategy statement includes: – Description of the target market – Value proposition – Sales and market share and profit goals Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company objectives. Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments • Requires an increase in investment Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings – Provides the marketer with experience in testing the product and entire marketing program before full introduction Standard Market Test: Company finds a small number of representative test cities, conducts a full marketing campaign in those cities, uses store audits, consumer and distributor surveys and other measures to gauge performance – Long time – Competitors can monitor/ interfere – Shows competitor product – Most used approach Controlled Test Markets: Track individual consumer behavior for new products from the television to the checkout counter, through collaboration with stores carrying this new-product. – Less costly than standard – Quicker than standard – Competitors can still view and monitor the product – May not be as representative or the market or consumers Simulated Test Markets: Gives consumers a small amount of money and invites them to a store where they may keep the money or use it to buy items. Notes how many consumers by the product, compared to competition, interviews after to find level of satisfaction. • Advantages of simulated test markets – Less expensive than other test methods – Faster – Restricts access by competitors • Disadvantages – Not considered as reliable and accurate due to the controlled setting Commercialization is the introduction of the new product • When to launch • Where to launch • Planned market rollout Managing New-Product Development Successful new‐product development should be: • Customer centered • Team centered • Systematic Customer centered new product development: focuses on finding new ways to solve customer problems and create more customer satisfying experiences • Begins and ends with solving customer problems Sequential new product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage • Increased control in risky or complex projects • Can be dangerously slow Team based new product development is a development ap
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