Product Innovation

New Product Innovation
March 23, 2004

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
Product
Launch
Test
Marketing
Prototype
Development
Concept
Testing
Market research
and
Opportunity scan
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
Price Placement
Product Promotion
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
Societal Focus Economic Realities

• GNP
• Population Shifts
• Disposable Income
• Values
• Discretionary Income
• Attitudes
• Competition
• Trends
Technological
Development
• Advance in Legal & Regulatory
technology Condition
• Market receptiveness • Laws
to technology • Regulations
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

Product Innovation

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New Product Innovation

March 23, 2004

 Increase the number of customers

Societal Focus Economic Realities

Identify target markets

 Goal is to achieve a target profit

 Poor marketing research

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