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 longterm 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 organizations 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 Product Placement 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
Population Shifts Values Attitudes Competition Trends

Economic Realities
GNP Disposable Income Discretionary Income

Technological Development
Advance in technology Market receptiveness to technology

Legal & Regulatory Condition

Laws 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 Strengths/Limitations Implications

Evaluate competition

Market Research Pricing Strategies

Goal is to achieve a target profit Can you hold a products 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 years 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