Marketing - New Product Management

Front 1

What are the 5 categories of new products?

Back 1

o New to the World
o New Category Entry
o Product Line Additions
o Product Improvements
o Repositionings

Front 2

Explain what each kind of new product is...

o New to the World
o New Category Entry
o Product Line Additions
o Product Improvements
o Repositionings

Back 2

New-to-the-World Products: Digital cameras, Hybrid cars, Apple MacBook Air, Samsung LED TV, BANDZ.
New Category Entries: Adidas deodorant, Microsoft Zune, Amazon Kindle, Ferrari clothing and bicycles.
Product Line Additions: iPod Nano, Nivea for Men, Finding Nemo breakfast cereal, Yoplait Whips.
Product Improvements: 2013 Toyota Camry, Windows : XP, Vista, 7, and 8, iPhone 5, iPhone “basic?”.
Repositionings: Cadillac, Amazon.com, Obama, Newsweek magazine.

Front 3

What are the 5 ways new products can give competitive advantage?

Back 3

o Increase sales revenue / gross margin
o Serve as a competitive weapon (offensive and defensive)
o Move companies to new markets
o Differentiate companies from competitors
o Increase stock price and market capitalization

Front 4

In order to determine whether your new product has given you a competitive advantage around increase stock price and market cap, what can you do?

Back 4

Event studies: something happens (e.g. new product), and you look to see what happens to sales price.

Front 5

What are the 5 phases in the new product launch?

Back 5

• Phase 1: Opportunity Identification / Selection
• Phase 2: Concept Generation
• Phase 3: Concept / Project Evaluation
• Phase 4: Development
• Phase 5: Launch

Front 6

Instead of going to the BOD, where do most new products go?

Back 6

Executive committee

Front 7

What are the basic ideas in phase 1 of the new product process? (3)

Back 7

Phase 1: Opportunity Identification / Selection

• Active and passive generation of new product opportunities
• New production suggestions, changes in marketing plans, resource changes, new needs and wants in the marketplace
• Research, evaluate, and rank opportunities (not specific product concepts, just the opportunities)

Front 8

What are the 7 attributes of attractive product opportunities?

Back 8

• Large Market Potential
• High Market Growth Rates
• Deficiencies in Existing Products
• New Technologies
• Competitive Failures
• Strong Brand Equity
• Creative Individuals Working in Supportive Environments Where Innovation is Expected and Rewarded

Front 9

What are the 4 strategic goals related to opportunities?

Back 9

• Customer Acceptance Goals
• Product Performance Goals
• Financial Performance Goals
• Other Goals

Front 10

Explain each of the 4 strategic goals related to opportunities...

Back 10

Customer Acceptance Goals
o Use
o Satisfaction
o Sales / Market Share
Product Performance Goals
o Cost
o Time to Market
o Performance
o Quality
Financial Performance Goals
o Time to Break Even
o Margins
o ROI, IRR
Other Goals
o Competitive Effect
o Image Change
o Moral Change

Front 11

What is the basic idea of financial analysis of product opportunities? Give a couple examples of financial analysis tools.

Back 11

The basic idea is that we invest assets now in return for a future stream of revenues and costs.
o Payback period, DCF, Pro Forma income statements, IRR (all related to B/E)

Front 12

What is the key information required for financial analysis of product opportunities?

Back 12

o Investments in PPE, inventory, cash, AR
o Price(s) / Unit
o Sales Forecast(s) based on price(s)
o Variable cost(s) per unit
o Fixed (cash) cost estimate(s)
o Use several estimates of investments, price, sales forecasts, and costs for sensitivity analysis in breakeven, DCF, pro forma income statements, ROI, etc

Front 13

How do you estimate market potential?

Back 13

Take data from secondary, past sales, surveys/primary which provides information to calculate and also judge, which results in a potential estimate

Front 14

What are the factors affecting marketing adoption rates? (1)

Back 14

• Easy Trial
• Change Prone Target Market
• Individual Adoption Decision
• Extensive Marketing Effort
• Strong felt needed
• High compatibility
• Large relative advantage (often talked about in market research studies → product feature advantage , like a laptop to a desktop)
• Low complexity (easy to understand)
• High observability (design and benefits are easily observable to customer)
• Low risk

Front 15

What are the 4 main steps to PHASE 2 of the product process?

Back 15

Phase 2 - Concept Generation

• Select a high potential or urgent opportunity
• Collect available product concepts that fit the opportunity
• Generate specific new product concepts
• Begin customer involvement

Front 16

Is there customer involvement in concept generation?

Back 16

SOME customer involvement here

Front 17

What is concept generation?

Back 17

• A new product is a combination of user need (or user benefit), product form, and product technology

Front 18

What is often a starting point for concept generation?

Back 18

Customer's problems

Front 19

What is the general procedure to problem analysis? (e.g. looking for problems customers already have with products) 5 steps

Back 19

• Select the product or service for study
• Identify heavy users of the product or service
• List problems associated with the product or service (avoid choosing frequently occurring small problem)
• Rate the importance of each problem and the levels of dissatisfaction with each benefit
• Rank problems according to the importance of both the problem (IP) and dissatisfaction level (DL) or both

Front 20

What are the ways in which opportunities lead to concept generations?

Back 20

• Emergence of new technologies
• Emergence of market segments
• Access to new human and financial resources
• Innovative organizational cultures
• Benchmarked organizations
• Serendipity

Front 21

What are the basic ideas in phase 3 of the product process?

Back 21

Phase 3: Concept and Project Evaluation

• New product ideas must be evaluated by customers (Concept testing)
• New product concepts must be evaluated by the company (Business Analysis)
• Screened products need estimates of market potential, sales, costs, and profits
• Screen products need several types of testing before product launch

Front 22

Give an example of concept testing

Back 22

Remembering concept testing is testing with the customer, an example of concept testing could be when a football shoe is embedded with a chip that tracks performance and then athletes try it out.

Front 23

What kinds of questions does concept testing ask (using the example above)

Back 23

How different do you think this new shoe is from other football shoes now on the market?
Which feature of the new shoe is most important? Most interesting?
What price would you expect to pay for a pair of these new shoes?

Front 24

Top Two Box Score Used for What?

Back 24

Concept testing. You would look at your score for the top 2 boxes (e.g. definitely buy/try and probably buy/try" and typically accept the project if the score if greater than or equal to 80%

Front 25

What is business analysis?

Back 25

Step in phase 3 of concept and project evaluation that occurs after concept testing. Concepts are evaluated critically from a marketing, finance, and production perspective. Evaluation then is based on managerial judgment.

Front 26

What are aids in business analysis?

Back 26

• 3 managerial viewpoints that help in business evaluation of new product concepts
o Cumulative expenditures and expected rewards
o Decay curve of new product ideas
o Really big problems!
• ATAR model also helps in business evaluation of new product concepts (trial and repeat purchases)

Front 27

What does an ATAR model do?

Back 27

Awareness, Trial, Availability, Repeat
Estimates the unit sales and profits for frequently purchased new products. Used for frequently purchased products.

Front 28

Under the ATAR model, units sold is a function of what?

Back 28

The Number of potential buyers TIMES BY
x percent aware of the new product
x percent who try the new product, if available
x percent to whom the new product is available
x percent of triers who become repeat buyers
x number of units repeaters buy in a year.

Front 29

Explain the different levels of business analysis and how they relate to scoring models.

Back 29

Level One (most abstract) we want to know what the NPV of earnings from product will be
To know NPV, we go to Level 2, which is dependent upon chances of technical accomplishment and chances of commercial accomplishment. Technical accomplishment is on our end, so to know commercial accomplishment, we look to Level 3, which is sales forecasts, margins, and marketing and admin expenses. Sales forecasts are the building blocks to the margins and expenses we control, so in order to estimate sales forecasts, we look to level four factors, which we get from the scoring models.

Front 30

What would a scoring model look like?

Back 30

3 columns: Factor, Rating, and COmments. Factors can include market size, market growth, market regularity, marketing capability, engineering capability. It's what management fills out.

Front 31

Members on the product scoring team should rate products before or after discussion with other scorers?

Back 31

BOTH

Front 32

When would you use a BASS model versus an ATAR model? What phase is this part of in product process?

Back 32

Part of Concept and Project Evaluation Phase - Business Analysis
Use BASS for first purchase and product adoption of new durable goods (early adopters).
and ATAR for trial purchase and repeat purchase

Front 33

What are the 3 kinds of marketing tests?

Back 33

o Pseudo Sale testing where no real sale occurs
o Controlled sale in minimarkets
o Full sale or test marketing, then a rollout

Front 34

What does marketing testing help?

Back 34

o Develop more accurate sales forecasts (improves planning)
o Understand forces that influence sales (helps improve marketing efficiency and effectiveness)

Front 35

What is a pseudosale market test?

Back 35

Most pseudo sale tests are simulated test markets (STMs). STMs use an artificial buying situation where consumers view test ads, receive cash, and then “shop” in a test store.
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Front 36

What is controlled market testing?

Back 36

Controlled market tests collect actual sales data for sales forecasts using controlled channels.

(e.g. supermarket Information Resources that will stock your new product if you want)

Important to note that these tests focus on advertising, pricing, and distribution strategies and tactics. Controlled sales market tests seldom if ever focus on the product.

Front 37

What are full sale test markets?

Back 37

Full sale test markets can test almost everything, in the face of real competition.
Purpose: test small adjustments to a strategic marketing plan that is almost complete (promotion, price, sales changes, but not the product).
Then ROLLOUT the new product to a larger national market--by geography, application, trade channel, or types of customers.

Front 38

What are the advand and disadvans to full sale test markets?

Front 39

Key IDeas on Marketing testing
Market testing provides information at _________.
Pseudo sales market testing is __________ (especially when a history of new product introductions is available), and secret.
Sales of almost any ______ new product can be tested with various costs, time delays, and disclosure of information to competitors.
Technologies to test almost any consumable new product are developed ___________.

Back 39

at a cost ; fast cheap and accurate ; consumable ; continuously

Front 40

What is phase 4 in the product process?

Back 40

New Product Development

Front 41

What does phase 4 in the product process consist of?

Back 41

Technical and marketing development activities including product design, product positioning, and development of a strategic plan.

Front 42

What does design mean in the context of new product development?

Back 42

Design distinguishes or differentiates competing products from each other.

Front 43

Product design is a source of

Back 43

sustainable competitive advantage

Front 44

What actually is design?

Back 44

Design” blends product function and form, engineering and art, technology and style to create something that is . . .
aesthetically pleasing
easy to use
economical to operate and to service
reliable
works as intended (does what it is supposed to do)
easy to manufacture correctly.

Front 45

What are the design activities?

Back 45

Design examines . . .
product features, quality, reliability, durability (i.e., design helps provide Value for Money to buyers and users)
production processes
materials, colors, and textures
physical size and component arrangements
shape, style, and appearance
Design provides function (from form) but also the unexpected or unusual.

Front 46

Why aren't looks everything when it comes to product design?

Back 46

Looks are not everything because you must have function, value for money, reliability, etc.
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Front 47

What is the 5th (and final) phase in the product process?

Back 47

Launch

Front 48

What does the 5th phase in the product process include? (3 things)

Back 48

• Commercialize plans and prototypes from development phase
• Begin distribution and sale of new product (often on a limited basis)
• Manage the launch program to achieve goals and specific objectives set for the new product

Front 49

What are the launch objectives (2 general categories and then subsets)

Back 49

• Customer Acceptance
o Use
o Satisfaction
o Sales (units, revenue)
o Market Share
• Product and Financial Performance
o Time to Market
o Performance
o Quality
o Costs, margins, profits

Front 50

What are 6 reasons new products fail?

Back 50

• Relative product advantage / Customer needs
• Product Idea was not market derived
• Problems at the R&D/Marketing/Manufacuting Interfaces
• Proficiencies of development activities
• Proficiency of product introduction
• Newness of Production process to firm