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Self-Introduction
Course: New Product Development Lecturer: Mr.Eng Leaphea, MBA Tel: 012 722076 Email: engleaphea@gmail.com rikreaymagazine (skype) Facebook.com/eng.leaphea
Instructors Profile
Name: Date of Birth: Sex: Nationality: Contact: Email: Eng Leaphea (Mr.) February 05, 1979 Male Cambodian H/P: 012 722076 engleaphea@gmail.com
Educational Background
Working Experiences
02-04-2010 to 02-12-2010 10-12-2010 to Present
Working Experiences
2005 Present Lecturer Human Resources University
Course: Basic Marketing; Marketing Management; Public Relation; Strategic Marketing; New Product Development. Human Resource Management
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Grading
Your course grade will be determined as follows:
20% on your attendance; 15% on
the quality of your individual assignment solutions 15% on the midterm test; and 50% on the final exam.
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Course Outline
Week 1 Description Course Introduction Chapter01: New Product in Global Marketing New Products Why New Product Succeed? Risks of New Product Development NEW PRODUCT LAUNCHES Chapter01: New Product in Global Marketing CHALLENGES IN NEW PODUCT DEVELOPMENT Why do new products fail? Several factors tend to hinder new-product development IDENTIFYING NEW PRODUCT IDEAS The following questions are relevant to this task: Hours 3 hours
3 hours
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Course Outline
Week 3 Description Chapter02: New Product Development Process ORGANIZATIONAL ARRANGEMENT Organizing new-product development MANAGING THE DEVELOPMENT PROCESS: IDEAS Ten Ways to Create New-Product Ideas Idea Screening screening ideas, the company must avoid two types of errors MANAGING THE DEVELOPMENT PROCESS Concept Development and Testing Chapter02: New Product Development Process Concept Testing Marketing Strategy Business Analysis Hours 3 hours
3 hours
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Course Outline
Week 5 Description Chapter03: Overview in New Product Development Creating New Products CORPORATE RESPONSE MARKETING RESPONSE VARIABLES AFFECTING NEW PRODUCT DEVELOP Change and Complexity Invisibility Expense Control Hours 3 hours
Course Outline
Week 6 Description Hours 3 hours
Chapter04:Design
What is Design? The Role of Design in the New Products Process Contributions of Design to the New Products Process Product Architecture
3 hours
Chapter04:Design ( continue) Managing the Interfaces in the Design Process Participants in the Design Process Improving the Interfaces in the Design Process Computer-Aided Design and Design for Manufacturability
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Course Outline
Week 8 Description Hours 3 hours
Chapter05: Special Issues in Development Functional Interface Management 1- Managing the Interfaces 2- Overall Principles and Guidelines Strategies for Global Product Innovation
3 hours
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Course Outline
Week 10 Description Hours 3 hours
Chapter06: Product Use Testing What Is Product Use Testing Is Product Use Testing Really Necessary? 1- Regarding Competitors Reactions 2- Customer Needs Are Complex Sets 3- Can We Deliver A Total Quality Product?
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Course Outline
Week 11 Description Hours 3 hours
Chapter06: Product Use Testing Knowledge Gained from Product Use Testing Beta tests Gamma Testing Diagnostic Information Decisions in Product Use Testing How Should We Reach the User Group?
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Course Outline
Week 12 Description Hours 3 hours
Chapter06: Product Use Testing How Much Explanation Should We Provide? How Much Control over Product Use Should There Be? Special Problem Be Alert to Strange Conditions Strategies for Global Product Innovation
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Course Outline
Week 13 Description Hours 3 hours
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Course Outline
Week 15 Description Hours 3 hours
15 weeks 45 hours 3
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Chapter
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-----------------------------What Is a New Product ? New products can be new to the marketplace or new to a company.
NEW PRODUCTS
A new product for a company may or may not be a part of an existing product line. A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are distributed through the same dealers, or all within certain price ranges.
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New products can be classified as: New-to-the-world products: New product lines: Additional to existing product lines: Improvements in or revision to existing products: Repositioning: Lower cost products:
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These are:
Introducing a unique but superior product. Having market knowledge and marketing proficiency. Having technical and production synergy and proficiency. Being in a large, high-need growth market. Avoiding introducing a high-priced product with no economic advantage.
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Costs will continue to rise. Competition will intensify, particularly from foreign producers. The life of products is likely to become shorter as competitors duplicate existing products more quickly. The need for a more rapid pace in new product development may not be met by the development of new technologies. Markets will continue to be fragmented, requiring companies to aim new products as smaller target segments. Investment risks are likely to increase because of high interest rare.
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NEW PRODUCT LAUNCHES --------------------- Evidence of Market Interest Accurate Market Evaluation Good Judgment in Development Reasons for Success Position, Promotion, and Pricing
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----------------------
Fragmented markets
Social and governmental constraints Cost of development
Capital shortages
Faster required development time
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IDENTIFYING NEW PRODUCT IDEAS -------------Major sources of new-product ideas include internal sources, customers, competitors, distributors and suppliers, and others It can pick the brains of its executives, scientists, engineers, manufacturing, and salespeople. Some companies have developed successful entrepreneurial programs that encourage employees to think up and develop new-product ideas.
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Good new-product ideas also come from watching and listening to customers. The company can analyze customer questions and complaints to find new products that better solve consumer problem. Competitors are another good source of newproduct ideas. Finally, distributors and suppliers contribute many good new-product ideas Other idea sources include trade magazines, shows, and seminars; government agencies; new-product consultants; advertising agencies; marketing research firms; university and commercial laboratories; and inventors.
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An organizational design for addressing these requirements is a new-product development. the function of such a department is four fold To ensure that all relevant information sources are continuously tapped for new-product ideas; To screen these ideas to identify candidates for investigation; To investigate and analyze selected new-product ideas; To ensure that the organization commits resources to the most likely new-product candidates and its continuously involved in an orderly program of newproduct introduction and development.
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Assignment
Find out a company in Cambodia, then do as follows:
List their products they are operating; Analyze their product Lines
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Chapter 2
New Product Development Process (NPDP)
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ORGANIZATIONAL ARRANGEMENT
New-product development requires senior management to define business domains, product categories, and specific criteria. Budgeting for new-product development Senior management must decide how much to budget for new-product development. R&D outcome are so uncertain that it is difficult to use normal investment criteria.
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Idea Generation
The new-product development process starts with the search of ideas. New-product ideas can come from interacting with various groups and from using creativity generating techniques. Interacting with Others Ideas for new products can come from customers, scientists, competitors, employees, channels members, and top management.
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Use iterative rounds: a group of customer in one room focusing on identifying problems, and a group of your technical people in the next room, listening and brainstorming solutions. The proposed solutions are then tested immediately on the group of customers. Set up keyword search that routinely scans trade publications in multiple countries for new-product announcements and so on. Treat trade shows as intelligence missions, where you view all that is new in your industry under one roof. Have your technical and marketing people visit your suppliers labs and spend time with their technical people-find out what is new. Set up an idea vault, and make it open and easily accessed. Allow employees to review the ideas and add 3/27/2012 constructively to them. 38
By: Eng Leaphea, MBA
Idea Screening
A company should motivate its employees through rewards to submit their new ideas to an idea manager. Idea should be written down and reviewed each week by an idea committee. The company then sorts the proposed ideas into three group: promising ideas, marginal ideas, and rejects. Each promising idea is researched by a committer member, who report back to the committee.
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Concept Development
A product idea can be turned into several concepts. The first question is: Who will use this product? The powder can be aimed at infants, children, teenagers, young or middle-aged adults, or older adults. Second, what primary benefit should this product provide? Taste, nutrition, refreshment, energy? Third, when will people consume this drink? Breakfast, midmorning, lunch, mid afternoon, dinner, late evening?
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Concept Testing
Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. The concept can be presented symbolically and physically. However, a more concrete and physical presentation of the concept will increase the reliability of the concept test. Today, some marketers are finding innovative ways to make product concepts more real to consumer subject. Many companies routinely test new-product concepts with consumers before attempting to turn them into actual new products.
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After receiving information, researchers measure product dimensions by having consumers respond to the following questions: Communicability and believability Need level Gap level
Perceived value Purchase intention User targets, purchase occasions, purchasing frequency
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Marketing Strategy
Marketing strategy development is the designing an initial marketing strategy for a new product based on the product concept
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Following a successful concept test, the newproduct manager will develop a preliminary marketing-strategy plan for introducing the new product into the market. The plan consist of three steps: The first part describe the target markets size, structure, and behavior; the planned product positioning; and the sales, market share, and profit goals sought in the first few years. The second part outlines the planned price, distribution strategy, and marketing budget for the first year. The third part of the marketing strategy plan describes the long-run sales and profits goals and 3/27/2012 48 marketing-mix strategy over time
Business Analysis
Business analysis involves a review of the sales, costs, and profits projections for a new product to find out whether they satisfy the companys objectives. If they do, the product can move to the product development stage. To estimate sales, the company might look at the sales history of similar products and conduct surveys of market opinion
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It can then estimate minimum and maximum sales to assess the range of risk. After preparing the sale forecast, management can estimate the expected costs and profits for the product, including marketing, R&D, operations, accounting and finance costs. The company the sues the sales and costs figures to analyze the new products financial attractiveness.
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Chapter 3
Overview in New Product Development
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CORPORATE RESPONSE
Production Capabilities
MARKETING RESPONSE
Match with Existing Product Lines Price and Quality Distribution Patterns Seasonality
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Negative conformity typically starts with a directive from someone. Second is the customer is always right point of view. Third, there is a tendency in business to aim for what seems to be the safe bet.
The last major conformity issue of this type is to adapt to (MIS).
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Invisibility
Where do we begin to make visible such organization quality as communication, teamwork, leadership, force multipliers, roles within the work society, and structural interaction? What about the invisible structure associated with technology, markets, economics, and systems that is virtually impossible to model in the development of new products?
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Expense Control
The creation of new high technology products is very expensive process! Most likely there will be a need to network computer and provide for electronic information transfer.
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Can Do
Experience shows that this attitude will grow and develop over time if people
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Think highly of themselves. Perform their work because they are internally motivated. Strive to realize a driving vision. Establish short-, intermediate-, and longrange goals. Develop a realistic appraisal of progress toward achievement of their goals Take time to have fun.
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PATHS TO SUCCESS
Winning Ways of Doing New Product Development
Make new product development a control process. Keep an eye on the world Involve all relevant people from the start. Assemble and act out information in concert. Have a representative object of the end product in view.
Learn how to make decision quickly. Work with competitive tools and methods. Entrust execution to competent people. In the event of problems, adjust only the effected areas. Maintain the can do vitality in the organization
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Chapter 4
Design
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Course Outline
Week 5 Description Hours 3 hours
Chapter04:Design
What is Design? The Role of Design in the New Products Process Contributions of Design to the New Products Process Product Architecture
3 hours
Chapter04:Design ( continue) Managing the Interfaces in the Design Process Participants in the Design Process Improving the Interfaces in the Design Process Computer-Aided Design and Design for Manufacturability
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What Is Design?
the synthesis of technology and human needs into manufacturable products.
What is design? One writer define it as
In practice, however, design as a term has many uses. To the car companies, it can mean the styling department. To a container company it means their customers packaging people. To a manufacturing department it most likely means the engineers who set final product specifications.
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Product Architecture
Product architecture has been described as the process by which a customer need is developed into a product design. This is a critical step in moving toward a product design as solid architecture improves ultimate product performance, reduces the cost of changing the product once it is in production, and can speed the product to market. A process for product architecture development can be applied to make sure the products design will be in keeping with customer needs and, ultimately, the product innovation charter
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1- Create the Product Schematic. The schematic shows the components and functional elements of the product and how they are interconnected. Several alternative schematics may be developed and explored at this stage. 2-Cluster the Schematic Elements. Here the chunks (or modules) are defined. In the figure, input, disk, output, and power chunks are identified. Interaction among the chunks should be simple to changes can be easily effected, and one should take advantage of manufacturing capabilities whether possible.
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SW2
SW2 (TO ERASE GROUP CONTROL ADDRESS)
Outdoor air intake temperature sensor Outdoor heat exchanger temperature sensor Outdoor defrost temperature sensor
Indoor gas pipe sensor Oil separator Indoor intake air temperature sensor
4-way valve
Accumulator
Muffler Discharge pipe temperature sensor Outdoor expansion valve
Receiver Strainer
Strainer
3-Create Geometric Layout. Here, using simulations, computer-aided design, or other techniques, the product arranged in several configurations to determine the best solutions. For example, should the disk load in the front or the side of the CD player? 4-Check Interactions between Chunks. Understand what happens at the interfaces between chunks. In the CD player, sound flows as a digital signal to the disk during recording and also as a 3/27/2012 digital signal from the disk during 73
ADDRESS
1 2
1 2
ADDRESS
Press and hold Auto Switch button at the indoor unit until 3 beeps sound is heard (~11secs).
ADDRESS
GROUP
Press any button of remote controller. Ensure the indoor is acknowledged by a beep sound.
Supportive Participants Design consultants Marketing Personnel Resellers Vendors/ Suppliers Governments Customers Company Attorneys Technical Service
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Colocation helps integrate departments and improve information flow and also allows the team members to identify and resolve product development problems more quickly. It must, be carefully planned and handled. In many firms, the effects of collocation are achieved without actual physical proximity of team members, using the resources of communications technology. This is sometimes known as digital colocation. As a final note, there is a recent increase in the use of global teams (that is, teams comprising individuals from at least two different countries).
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Improved information technologies such as e-mail, and company databases combine with phone calls and regular mail to make global teams an increasingly feasible option.
In addition, partnering upstream with vendors is a possibility. Most companies tell us they are doing it, by using reverse marketing, technology searches, demands that suppliers value engineer their product, and by putting supplier people 3/27/2012 79 on the new product teams.
By: Eng Leaphea, MBA
Chapter 5
Special Issues in Development
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Course Outline
Week 6 Description Hours 3 hours
Chapter05: Special Issues in Development Functional Interface Management 1- Managing the Interfaces 2- Overall Principles and Guidelines Strategies for Global Product Innovation
3 hours
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Many different industry settings that cross-functional teams contribute greatly to increasing speed to market. Far better is to use such devices as benchmarking, where a firm studies other firms The way management measures speed to market (or, frequently, time to market), is often getting the idea to the shopping dock faster..
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Speed to Market
Hearing about the value of being first to mindshare rather than being first to market.
The firm with mindshare in a given product category is the one that the target market associates with the product category, and that is seen as the standard for competitors to match. Firms that strive for mindshare think not about the speed of an individual products development and launch, but rather about creating a dominant position in the mind of the customer.
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-Do the job right the firs time. - Training of everyone involved. - Communication. - Flexibility. - Fast decision.
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It is too easy to say that marketings role is to gather information from the marketplace. Too often, that means that marketing plays a gatekeeper role, funneling information from the marketplace to the new products team Marketing eventually found out that there was a bigger market out there that was very interested in, but not for the attributes originally thought to be most important. Clearly, the original technology-push innovation had done and market needs were now driving further technical development.
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In new product development, we often hear of manufacturing rampup- the stage at which manufacturing personnel plan the full-scale production of the product. Just like manufacturing ramps up from prototypes to full production, marketing can be said to ramp up for product launch- and marketing rampup begins here.
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Specifically, how can top management help? They should be smart, experienced general managers, for starters. They should know how to make timely decisions, and realize the unique and extraordinary need of the new product staff for strategy direction. The top manager should support (in fact, demand) a product innovation charter. Add, too, a longer-term financial view and a managerial style that supports risk-taking and good communication. Top managements interest and support should be clearly signaled by open statements of confidence, by appointments of people who clearly are comers in a firm.
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- Participants who continue to be a problem should be taken out of new products team situations; they get some perverse satisfaction out of reactions to their behaviors.
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Structurally, global product innovation can be handled in several ways: 1-Make no special arrangements. Export what is developed for the home market. On the one hand this is called the export approach, yet when market conditions around the world are substantially the same, then this approach of one product for all countries is called global strategy.
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2- Keep structure the same, but develop versions of the new item to meet the needs of viable foreign markets. This approach is usually thought of as a variation of the export approach or called international strategy.
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3- Use the facilities of the home firm, but have separate projects directed by managers in each viable foreign area. These foreign managers learn of available technologies in the home firm, study their local markets to see how each might apply, and then set up projects to develop what is needed there. This is often called a multinational strategy.
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4- Assign the basic responsibility for product innovation to each foreign business larger enough to have the resources for it. This usually means some local R&D, local manufacturing, and almost totally local marketing.
Operational cultures and policies will vary greatly from country to country. This strategy ha no common name, but local drive would fit.
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5- The last alternative is a mix of the above, variously called matrix, country of excellence. Essentially, the firm wants to be a major player in all viable markets of the world, but wants to develop strategies appropriate to each of those markets. It is often done by world region, continent, or other larger geographical division.
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Chapter 6
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3- Can We Deliver A Total Quality Product? Recall the idea of the augmented productwhere there is a core benefit, then a formal product, and then the many augmentations of service, warranty, image, financing, and so on. The new product process tends to focus on the core benefit and the formal product, and even that may have implementation problems. But firms often just assume they will be able to deliver outer ring of augmented product quality
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the sales force will be able to explain the new item well, early product breakdowns will not chase other potential buyers away, the finance division will approve generous financing arrangements, the advertising effectively answers competitors claims, and warehouse personnel wont make a simple mistake and destroy half the product.
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Diagnostic information
Diagnostic information
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Beta tests
The ultimate use test of the protocol is to try it out at customers sites, to evaluate whether the product solves whatever problems led to development of the product in the first place.
These are short-term use tests at selected customers sites (external customers or, sometimes, employees serving as internal customers). In fact, some have their people competing to see who can find the most bugs in a new item-better now than later. The tests are not designed to tell them about meeting customer needs and solving problems-such testing takes longer than the few weeks usually allowed on 3/27/2012 computer products. 112
Gamma Testing
Beta testing may not meet all of the developers needs. In a beta test, users may not have had time to judge whether the new product met their needs or was cost-effective for them. As a result, a third is becoming popular, gamma testing (gamma being the third Greek letter after alpha and bets). It designates the ideal product use test, where the item is put through its paces and thoroughly evaluated by the end-user. To pass this test, the new item must solve whatever problem the customer had, no matter how long it takes. Gamma testing is so critical on new medicines and medical equipment that the United States demands it; such testing can take up to 10 years. 3/27/2012 113
Diagnostic Information
New products managers are looking for how items are used, what mistakes are made. Use tests often suggest ways to improve performance or to reduce cost. New product developers also seek specific pieces if information needed to back up their claims. Marketers want confirmation of target markets and product positioning.
Product integrity is also on trial during a use test, since only the users perceptions tell us whether the parts tie together into a meaningful whole, and whether product fist application. Last, developers are watching for many other red flag, a signal that users had some problems understanding the new item or where show to accept the results they got, and so on.
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The third test group option, employees, is widely utilized thought often criticized. Company loyalties and pressures and employees lifestyles and customer may distort opinions and attitudes. Obvious problems of possible bias can be overcome to some extent by concealing product identities and by carefully training and motivating the employee panel. Stakeholder are the next choice, and the set includes customers and non-customers, users and nonusers, resellers. End-user advisers (such as architects), users of competitive products, repair organization, and technical support specialists whose reactions to new products have been sought.
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Second, there is a choice between individual contact and group contact. Most firms prefer individual contact, especially at this critical point in the development cycle, but it may be cheaper to deal with groups. (traditional focus group is not a place for use testing.)
Third, the individual mode of contact brings up the question of location. Should the test be conducted at the point of use (home, office, or factory), or should it be conducted at a central location (test kitchen, shopping center, theater, or van)? The point-of use location is more realistic and permits more variables to operate. But it offers poor experimental control and permits easy misuse.
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Some use tests require a single product experience; some require use over short periods of up to a week; and some require use over extended periods of up to six months. The initial, quick test predicts the early reactions of those people we call innovators. Failure here, even if perceptions are unjustified, will often doom a good product. Tests over a month long are rare on consumer product and difficult to defend to management. But if a new piece of business equipment will be positioned on its cost-cutting advantage, the use test had better run long enough for the user to see a significant cost reduction.
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Rejections?
Essentially, three options are available. First, a five-or seven-point verbal rating scale is generally used to record basic like/dislike data.
Second, the respondent is usually asked to compare the new product with an other product, say, the leader or the one currently being used, or both; this is a preference score; which can be obtained several ways. Third, for diagnostic reasons, testers usually want descriptive information about the product that covers any and all important attributes.
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A research firm was involved in studying opportunities for a new sausage and had previously asked consumers to rate the sausage products then available on a variety of attributes, including greasiness. The results showed strong aversions to both of those attributes, which were associated with low overall scores for product quality.
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Special Problem
Dont Change the Data Just Because They Came Out Wrong
One firm discovered a user in a use, but the president said, Theyre just going to have to have to live with it. Unfortunately, the use test did not ask whether users were willing to live with it. They werent, and the product failed. In some tests technical and marketing people warn of user problems only to be told that they are being negative-a real-life case of kill the messenger.
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Chapter 7
Strategic Launch Planning
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I. Setting
At this point in the new products process, the team is ready to build the actual marketing plan. The task should be easy if the new item is an improvement to items already in the line. Weak strategic planning then shows up when the product reaches the market, and tactical error (such as insufficient resource allocation) can compound the problem.
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Strategic launch decision include both strategic platform decisions that set overall tones and directions, and strategic action decisions that define to whom we are going to sell and how.
Tactical launch decisions are marketing mix decisions such as communication and promotion, distribution, and pricing that are typically made after the strategic launch decisions, and define how the strategic decisions will be implemented.
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The point is, they need to be identified and studied. If the launch team wants to challenge such restrictions, fine, but it should do so early and should be prepared to lose.
Ultimately, as company organizations are now changing, most of these restrictions will yield. They are silo or chimney holdings, and the horizontal management philosophy of today is designed to bypass just such restrictions.
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Therefore, at this early stage in the launch planning process, the goals should be revisited and updated. Unfortunately, business firm use a complex set of measures as goals and of measures for individual products is as follows: 3/27/2012 135
Customer Acceptance Measures Customer acceptance (use) Customer satisfaction Revenue (dollar sales) Market share Unit volume Financial Performance Margins Profitability
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Product Level Performance Product cost Time to launch Product performance Quality guidelines Other Nonfinancial measures peculiar to the new product being launched Example: competitive effect, image change, and morale change.
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2. Permanence 3. Aggressiveness 4. Competitive Advantage 5. Product Line Replacement 6. Competitive Relationship 7. Scope of Market Entry 8. Image
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A current twist in target market selection is the trend toward smallness. These clusters have been labeled micro-markets. Direct marketers have always used tiger segments than have mass media marketers, stemming from their databases.
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The ultimate smallness, and the ultimate in building in customer value, is mass customization Great advances in information technology and changes in work processes make mass customization feasible for many products; the challenge is for managers to decide how best to proceed.
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New products are innovations, and we call the spreading of their usage the diffusion of innovation. Lets look closer now at the factors that affect this speed of the product adoption process: the characteristic of the innovation product, and the extent to which early users encourage other to follow
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Product characteristic
There are at least five factors that measure how soon a new product will receive trial. 1. The relative advantage of the new product. 2. Compatibility. 3. Complexity. 4. Divisibility (also called trial ability). 5.Communicability (also called observability).
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The first is to position to an attribute (a feature, a function, or a benefit). Attributes are the traditional positioning devices and are most popular.
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The second alternative in positioning is to use surrogates (or metaphors). This says the product is better are not given; the listener or viewer has to provide those. If the surrogate is good, the listener will bring favorable attributes to the product.
The market research techniques we encountered early on can be profitably put to use in developing a positioning strategy.
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VII. Creating Unique Value for the Chosen Target Once a market segment has been targeted and a positioning statement created for it, we have a chance to cycle back to the product itself and see if we can enhance its value to the chosen market.
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As the first product is coming down the pike, the first couple of line extensions should be in development. Then, after launch, when competitors are casting around for ways to come out with catchup versions, we market them first. In the remainder of this section, we will focus our attention on two of the ways in which we can increase unique value to the targeted customerbranding and packaging.
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IX. Packaging
1. What Is Packaging?
These are easy to see. The major ones are containment (hold for transporting), protection (from the elements and the careless), safety (from causing injury), display (to attack attention), and to inform and persuade. All are important to a new product manager, sometimes enough so that there are legal problems; packaging design is a part of logo and trademark, where rights can be valuable.
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