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Marketing Management
2nd Edition
Michael R. Czinkota and Masaaki Kotabe
Chapter 9:
New Products
© 2000 South-Western College Publishing
Slide #1
Chapter Outline
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Gap Analysis
Types of New Products
Product Modification
Corporate Factors to New Product Creation
Marketing Factors to New Product Creation
Product Development Process
Strategic Screening
Test Marketing
Product Launch
© 2000 South-Western College Publishing
Slide #2
Gap Analysis
Usage Gap (UG)
Distribution Gap (DG)
Market
potential
(MP)
Existing
(market)
usage
(EU)
EU = DG+PG+CG+ES
Product Gap (PG)
Competitive Gap (CG)
Existing Sales (ES)
© 2000 South-Western College Publishing
MP = UG + EU
Real market share =
ES
---EU
Slide #3
Gap Analysis: Usage Gap
Gap between the
total potential for
the market and the
actual current
usage by
customers.
 Market potential
gap
 Existing usage gap
© 2000 South-Western College Publishing
Slide #4
Gap Analysis: Distribution Gap
Sales potential in
geographic
regions or
distribution
channels where
product is not
currently
distributed.
© 2000 South-Western College Publishing
Slide #5
Gap Analysis: Product Gap
X
© 2000 South-Western College Publishing
Firm does not
have product
offerings in
certain
segments.
Slide #6
Gap Analysis: Competitive Gap
Differences in the
effectiveness of
a firm’s
marketing
strategy relative
to its
competitors.
© 2000 South-Western College Publishing
Slide #7
Broader Objectives of Gap Analysis
Five strategy scenarios:
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Technologically driven strategy (26%)
Balanced, focused strategy (16%)
Technologically deficient strategy (16%)
Low budget, conservative strategy (24%)
High budget, diverse strategy (19%)
© 2000 South-Western College Publishing
Slide #8
Types of “New” Products
Reposition
7%
Improvementto
Existing
Products
26%
New to the
World
10%
© 2000 South-Western College Publishing
New Product
Lines
20%
Cost
Reduction
11%
Additions to
Existing Lines
26%
Slide #9
Product Modification
Feature Modification
Quality Modification
Style Modification
© 2000 South-Western College Publishing
Image Modification
Slide #10
Corporate Factors to
New Product Creation
Production capabilities
 Financial performance
 Investment potential
 Human factors
 Materials supply
 Cannibalism
 Time

© 2000 South-Western College Publishing
Slide #11
Marketing Factors to
New Product Creation
Match with existing ranges
 Price and quality
 Distribution patterns
 Seasonality

© 2000 South-Western College Publishing
Slide #12
Product Development Process
Strategic screening
Concept testing
Product development
Product testing
Test marketing
© 2000 South-Western College Publishing
Slide #13
Strategic Screening
Qualitative
screening
 Financial analysis
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Sensitivity analysis
 Break-even
analysis
 Marginal costing

Product idea
© 2000 South-Western College Publishing
Slide #14
Test Marketing:
Areas
Television viewing
area
 Test city
 Residential
neighborhoods
 Test sites
 Lead countries

*Seattle
*Chicago
*Los Angeles
*Dallas
© 2000 South-Western College Publishing
Slide #15
Test Marketing:
Decisions
What will
be tested?
How long
a test?
© 2000 South-Western College Publishing
Which
Whichtest
test
market?
market?
What success
criteria?
Slide #16
Product Launch
Product replacement
 Risk vs. time
 Japanese-style product development
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© 2000 South-Western College Publishing
Slide #17