Business Strategy & Policy
Business Strategy & Policy MGMT 425
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This 25 page Class Notes was uploaded by Blaze Kuhlman on Monday October 5, 2015. The Class Notes belongs to MGMT 425 at California State University - Long Beach taught by Staff in Fall. Since its upload, it has received 23 views. For similar materials see /class/218785/mgmt-425-california-state-university-long-beach in Business, management at California State University - Long Beach.
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Date Created: 10/05/15
Professor Sam Min Lecture 2 New Product Concept Concept Generation Form the physical thing created or for a service the set of steps by which the service will be created Technology the source by which the form is to be attained BenefitNeed bene t to the customer for which the customer sees a need or desire Technology permits us to develop a form that provides the benefit Concept Generation 0 Customer need gt rm develops technology gt produces form 0 Firm develops technology gt nds match to need in a customer segment gtproduces form 0 Firm envisions form gt develops technology to product form gttests with customer to see what bene ts are delivered Note the innovation process can start with any of the three inputs New Product Concepts and the New Product A 0quotamp Technology C N Concepts eW Product You need at least two of the three inputs to have a feasible new product concept and all three to have a new product The Soft Bubble Gum Example 0 Bene t Consumers want a bubble gum that doesn t take ve minutes to soften up F orm We should make a softer more exible bubble gum T echnology There s a new chemical mixing process that prevents drying out of food and keeps it moist a Are the followings good concepts LeaIning needs of computer users can be met by using online systems to let them see training Videos on the leading software packages A neW Way to solVe the inhome trainingeducational needs of PC users Let s develop a new line ofinsttuctional Videos Evaluation Process PRODUCT MARKETING Protocol Concept Basic Strategy Testing Prototype Tactical Plans Product Pilot Testing Complete Final Production Marketing Plan Manufactured Market Testing Revised Final Plan Protocol A statement of l The technical requirements or attributes that a new product should have 2 The marketing requirements target market positioning price resistance to be overcome and others Prototype The rst physical form or service description of a new product still in rough or tentative mode For service the prototype is simply the rst full description of how the service will work Pilot Production A trial manufacturing Small scale mode Cumulative Expenditures Curve or expendrtures Many mghrtech products Many consurner products Trrne Launcn RiskPayoff Matrix at Each Evaluation Rolling Evaluation or quotEverything is Tentativequot AB Project is assessed continuously rather than a single GoN o Go decision Financial analysis also needs to be built up continuously Not enough data early on for complex nancial analyses Marketing begins early in the r cess Key new product participanw avoid quotgoodbadquot mindsets avoid premature closure People BA Proposal may be hard to stop once there is buyin on the conce t Need tough demanding hurdles especially late in new producw process Personal risk associated with new product development Need system that protects developers and offers reassurance if warranted Concept Testing A major 39 3 udLnuH m an idea for a Please read the description below helore answering the questluns New Diet Sun Drink Here isa 392 N 39 mire he delightful avor blend 0 orange mint and lime 39 3 Hanung me Mu my run And has of all it contains absolutely no calories Comes in 12minute cans or bottles and costs 60 each I How different lf at all do you think this diet soft drink would be from other avallahle products now on the marketthat might be compared wrtn ll El Very different 7 What different u Slightly different lJ Not at all different 2 Assuming you 39 39 above and like it y y buvil Check one More than once a week II About onceaw Ek J About Wine 3 month J About once a month 3 Less often II Would never buy ll 3 1 Prepare concept statement Concept statement should make the new item s dijfkrence absolutely clear claim determinant attributes those that make a di erence in buying decisions ofer a chord of familiarity by relating in some way to things familiar to the customer and be completely credible and realistic 2 Clarify speci c purposes 0 To identify very poor concepts so that they can be eliminated To estimate at least crudely the sales or trial rate the product would enjoy buying intentions early projection of market share To help develop the idea e g make tradeoffs among attributes Believable Important Interesting Would it work What problems do you see Would you buy 3 Decide formats Narrative drawing model 4 Determine prices 5 Select respondents Target customers Lead users In uencers Survey samples typically run about from 100 to 400 people With a 100 sample size the cost per concept testing is around 3 000 Concept Testing Questions to Ask Purchase Intention If this product were available how likely would you be to buy it 1 De nitely not buy 2 Probably not buy 3 Might or might not buy 4 Probably buy 5 De nitely buy Unigueness Compared to current products this one is highly unique and different 1 Strongly disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree Need I really need this product same scale Data Collection for Concept Testing One to one Interviews expensive but good for industrial products with few buyers Mall Intercepts good if your target population is shopping at that mall at that time Phone Interviews good if you can describe the concept over the phone Mailed Surveys Popular It takes a long time 0 Focus Groups not quantitative can be biased Good for new idea generation Evaluating Concept Testing Results Do not trust consumers when they say they will buy a new product In a concept test 25 of the target consumers said they would de nitely purchase a new product Based on these results we were expecting at least a 15 market share In the first year of sales this product only achieved a disappointing 5 market share What went wrong ATAR MODEL TOTAL POTENTIAL MARKET buying units AVAILABLITY SALES FORECAST Units Sold Number of Buying Units who become aware of the product who opt to try the product if they can get it of intended triers who can get the product of triers who like the item enough to repeat their purchase Number of units that repeaters will buy a year Example Aerosol Hand cleanser A l a can concsni eliminates ihose Ingermg unpleasam odors that come ham handling fish onions garlic 39 polish em Not a 0d 7 Costs 225 1 How interested would you be in buying the product described a ove if it were available at your supermarket Check Responses in one sample I would deilhnaly buy 1 5 I would rohabl bu D D I would probably not buy El 16 El I would dellnilely not buy 10 100 Total What data collection method would you use in the above case Is this concept test product use test or market test Based on averages from data collected on similar products launched in the past about 80 of those people who say they would de nitely buy actually buy the product and 33 of those who say they would probably buy actually buy From this information our rst estimate of the percentage of potential purchasers would be This estimate assumes 100 awareness and availability If we eXpect that 60 of the market will be aware of the product and have it available to them at a nearby retail outlet what would be the predicted percentage of actual purchasers Based on ATAR model unit sales can be estimated if we have the following estimates 0 50 of triers like the product enough and repeat their purchase 0 The average number of units that repeaters will buy a year is 4 units 0 The number of potential buying units is lM What is the estimated unit sales Go Beach Lecture 1 New Products Process What is a new product A product good or service new to the customers A product new to the firm marketing it A product new to the distributors New to the market 0 A really new product or basic innovation creates a new market relies on new technology and requires customer learning 0 An incremental new product or modi cation is designed to satisfy a felt market need and uses existing technology or re nement of it Evaluate whether each of the following products was a really new product or an incremental new product at the time of its initial commercial introduction Laserj et Printer Liquid laundry detergent Instant freeze dried coffee Personal computer Hi ber cereals Walkman Microwave popcorn New to the firm 0 Market Pioneer 0 Quick Second tries to capture a good secondshare position perhaps making no significant improvement 0 Slow Second is safer in the sense that a rm knows the outcome of the pioneer s efforts and has time to make a more meaningful adaptation 0 Late Entry is usually a price entry keyed to manufacturing skills of New Products Pioneer ck Second Slow Second Late Is New Products management art or science Art Intuition experience hunch or gut feeling Science test to determine if the intended user really needs the proposed item test to see if the item developed actually meets that need test to see if the rm has an effective marketing plan New Products Process I Phase 1 Opportunity IdentificationSelection I I Phase 2 Concept Generation I I Phase 3 ConceptProject Evaluation I I Phase 4 DevelopmentI I Phase 5 Launch I Phase 1 Opportunity Identi cationSelection New product manager should take into account at least the followings 1 Company Corporate leaders make many strategy statements These are very important to The followings are examples of actual corporate strengths that management have asked be used to differentiate the f1rm s new products New products in this rm will Use our ne furniture designers Herman Miller Gain value by being bottled in our bottling system Coca Cola Utilize innovative design Braun Be for babies and only babies Gerber Be for all sports not just shoes Nike Be for all people in computers IBM Never be rst to market Cooper Have high value to us and to the customer Kodak Be almost impossible to create Polaroid Offer more protection with less material Sealed Air Not threaten PampG Colgate 2 Technology Exiting technology or New Technology Many firms nd that it is not e cient to develop a single product Platform product families that share similarities in design development or production process Car industry 3 billion price tag on a new car platform is spread out over several models Sony four platforms for Walkman launched 160 product variations Boeing passenger cargo short and longhaul planes made from same platform Black amp Decker uses a single electric motor for dozens of consumer power tools 3 Customers The greatest source of new product ideas is the customers or users of the f1rm s products or services although their ideas are usually only for product improvement or line extensions What are the most popular ways to gather consumer ideas 4 Competitors Competitors new products may be an indirect or even direct source for a leapfrog or addon new product Phase 2 Concept Generation 0 Select a high potentialurgency opportunity and begin 0 Collect available new product concepts that t the opportunity and generate new ones as well Phase 3 ConceptProject Evaluation 0 Evaluate new product concepts on and criteria 0 Rank them and select the best two or three 0 Request project proposal authorization when have product de nition team budget skeleton of development plan and new product strategy The rst stages of the new products process are sometimes called the fuzzy front end because the product concept is still fuzzy By the end of the project most of the fuzz should be removed Phase 4 Development Technical Tasks o Specify the full development process and its deliverables o Undertake to design prototypes test and validate prototypes against protocol design and validate production process for the best prototype slowly scale up production as necessary for product and market testing 0 Revise the plan and stipulate product augmentation service packaging branding etc Phase 5 Launch 0 Commercialize the plans and prototypes from development phase begin distribution and sale of the new product maybe on a limited basis and manage the launch program to achieve the goals and objectives set in the nal business plan The Impact of Simultaneous Operations on the Product Development Process Percent of activity Percent of activity 100 100 Launch Development Conceptproie lua on Concept Opportunity generatlon identification and selection E 0 Total time of product innovation process Genius Thinking Geniuses find many di erent ways to look at a problem Einstein for example and da Vinci were well known for looking at their problems from many different perspectives Geniuses make their thoughts visible Da Vinci s famous sketches and Galileo s diagrams of the planets allowed them to display information visibly rather than relying strictly on mathematical analysis Geniuses produce Thomas Edison had a quota of one invention every ten days Mozart was among the most proli c composers over his short life Geniuses make novel combinations Einstein found the relationship between energy mass and the speed of light the equation Emc2 Geniuses force relationships They can make connections where others cannot Kekule dreamed of a snake biting its tail immediately suggesting to him that the shape of the molecule he was studying benzene was circular Geniuses think in opposites This will often suggest a new point of view Physicist Neils Bohr conceived of light as being both a wave and a particle Geniuses think metaphorically Bell thought of a membrane moving steel and its similarity to the construction of the ear this led to the development of the telephone earpiece Geniuses prepare themselves for chance Fleming was not the rst to see mold forming on a culture but was the rst to investigate the mold which eventually led to the discovery of penicillin Source Michael Michalko Thinking Like a Genius The Futurist May 1998 pp 2125
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