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ELC 310
Day 21
Agenda
• Third Student Case
– Terra Lycos by Randy
– E-mail presentations at least 15 min before class so I may
upload to web server
• Case studies are tied to proceeding chapters, make
sure you discuss the connection
• Discussion/lecture New Products
Case study Grading rubric
•
Grade Generation for analysis
– Two Components
• Instructor Grade for Presenter
– 60% of Total grade
• Instructor Grade for Class Participation
– 40% of Total Grade
•
Grading Rubric for Presenter
–
–
–
–
•
Grading Rubric for Class Participation
–
•
Demonstrated Mastery of Case Study
Understanding of How Case Study Fits
Presentation effectiveness
Quality of PowerPoint
Subjective interpretation
100%
Grades will be posted Nov 25 & Dec 12
30%
30%
20%
20%
Rest of Schedule
•
Today
•
– Terra Lycos (Randy)
– New Products
•
Nov 25
– MarketSoft Corporation (Emlyn)
– Communication and Selling
•
Dec 2
– OSRAM Sylvania (Owen)
– Pricing and Distribution
Dec 5
– Logistics.com A & B (Steve)
– Build a Trusting Relationship with
Customers
•
Dec 9
– Travelocity (Randy)
– The Future of Digital Marketing
•
Dec 12
– Citibank Online (Emlyn)
•
Dec 17 @ 1 PM
– Quiz #4
– Written Case Study &
Presentations Due
® Tony Gauvin, UMFK , 2007
Overview
•
•
•
•
•
•
Introduction
Preventing New Product Failures
Proactive Product development
Reactive Product development
Market Research Techniques
Product Life Cycles
Introduction
• New product development is necessary for
continued profitability
• Some numbers
– 74% of new products are weeded out before
reaching the marketplace
– 41% new product failure in marketplace
– 26%*41% = 10.66% success rate
– 49.2% of sales of leading companies are from
new products
Digital failures
• 90% of Internet companies failed in the
marketplace
– Vs. 41% for new products
– Problem was with new product selection before
marketplace
• All Internet products went to market
– Failed to
• Screen, test and do design work before launch
• Dot Coms were very expensive concept test.
Preventing new product
failure
• Reasons
– Market too small
– Poor positioning
– Little benefit relative to the competition
– Not New/Not different (enough)
– Forecasting error
– Poor timing
– Shift in technology
– Change in Customer Tastes
Use a Structured Process
Opportunity Identification
Market definition
Idea Generation
NO
GO
Design
Customer needs
Sales forecasting
Product Positioning
Engineering
Segmentation
Marketing Mix
Terminate
Reposition
GO
Testing
Advertising and product testing
Pretest and prelaunch forecasting
Test marketing
NO
GO
Introduction
Launch planning
Tracking the launch
NO
GO
Life Cycle Management
Market response analysis
Competitive monitoring and defense
Innovation at maturity
Harvest
•
•
•
•
Systematic process
Poor projects eliminated
Good projects supported
Top 33.3% of companies
use a disciplined project
development approach
• 9 step process from
elephantX
Proactive Market
Development
• Driven by Marketing
Strategy
• Opportunity analysis
based on consumer
needs
• Generate a few highpotential ideas
Marketing strategy
Opportunity Identification
R&D
Marketing
Customers
Acquisitions
NO
GO
Design
Segment
Product
Position
Total value
NO
GO
Test
Engineering
Customer
NO
GO
Introduce
NO
GO
Manage Life Cycle
Terminate
Reactive marketing Strategy
Sense Action
Evaluate
Opportunity
Threat
NO
GO
React
Copy
Improve
Defend
NO
GO
Test
Fast read
Comparion
NO
GO
Introduce
NO
GO
Manage Life Cycle
Terminate
• Can Reduce Cost and
risks
• Reactions to
competitive moves
• Success based on
“sensing” ability &
quickness
Which to use
• Prerequisites for
Proactive
– Strong R&D
– Marketing Power
– Markets rewards
• Premium products
• Pioneers
– Theory T marketing
• Prerequisites for
Reactive
– Firm is flexible and
agile
– Market
• Price is king
• No ability to
differentiate products
• Products do not require
much experience
– Theory P marketing
Market research techniques
for proactive
• Listening In
– Lowers costs of
gathering info on
customer needs
– Requires monitoring of
third party
“conversation” with
consumers
• Blogs
• Forums
– Replace focus groups
– Used by GM trucks
• Information
acceleration
– Used for premarket
forecasting of High
tech products
– Prototypes and virtual
models
– Measure interactions
with virtual models
– Used by Toyota for
Prius
Managing Life Cycles
• 4 phases
– Introduction
– Growth
– Maturity
– Decline
• Diffusion Theory of Innovation
– Adopt then communicate
– Slow start followed by rapid increase
– Leads to saturation then decline
Marketing actions for Life cycle
• Introduction
– Advertising and promotion
– Stimulate diffusion of innovation
– Increase awareness and positive consumer
acceptance
– Preempt competitors
– Pricing is key
• Too high  slow sale growth but high margins
• Too low  penetrate market but defers profits
Marketing actions for Life cycle
• Growth
– Holding and building market share
– Product improvement
– More differentiation occurs as competitors enter
market
• Maturity
– Competition intensifies  prices erode
– CAC goes up, loyalty more important
• Decline phase
– Milk profits
– Start new product