Professional Documents
Culture Documents
Introduction
Launch planning
Tracking the launch
Testing
Advertising & product testing
Pretest & pre-launch forecasting
Test marketing
Design
Customer needs Sales forecast
Product positioning Engineering
Segmentation Marketing mix
Opportunity Identification
Market definition
Reposition
Idea generation
The NewProd Scoring Model
To help evaluate ideas generated
Very Good Good Average Poor Very Poor
(10) (8) (6) (4) (2)
Sub-factor Sub-factor EP EV EP EV EP EV EP EV EP EV TOTAL Sub-factor
Weight EV Evaluation
Product 1 .1 1 .2 1.6 .5 3.0 .2 0.8 - - 6.4 6.4
Superiority
Unique 1 .1 1 .2 1.6 .4 2.4 .2 0.8 .1 0.2 6.0 6.0
features for
users
Reduce 3 .3 3 .4 3.2 .2 1.2 .1 0.4 - - 7.8 23.4
customer
costs
Higher 1 .1 1 .2 1.6 .5 3.0 .2 0.8 - - 6.4 6.4
quality than
competitors
Does unique 2 .5 5 .4 3.2 .1 0.6 - - - - 8.8 17.6
task for user
Priced lower 2 - - .2 1.6 .5 3.0 .3 1.2 - - 5.8 11.6
than
competition
10 TOTAL 71.4
Steps in the Design Process
Customer Measurement
Opportunity
1. Qualitative measurement to identify
Definition issues
2. Quantitative measurement for input
to models
Summary of Customer
Refinement HONDA Perception Product Features
Marketing
R&D Preference Segments
Engineering
Production
Choice
What-if Forecasts
1. Aggregate Individuals
Evaluation 2. Awareness & Availability
Quality Function Deployment (QFD)
Questions 1~3 are based on the customer responses. From this we can identify
opportunities for improvement - Easy to close from outside which we are
weak on, and Stays open on hill which all 3 cars are weak on. To improve
these attributes, we now need to enter the engineering domain.
Building the House of Quality Continued
Q4: How can we change the product?
Open-Close Sealing
Effort Insulation
Relative Importance
No road noise 2 BA O
Building the House of Quality Continued
Q5: How much do engineers influence customer perceived qualities?
Open-Close Sealing
Relationships
Effort Insulation
+ Strong Positive
Relative Importance
Engineering
No road noise 2 + + BA O
Open-Close Sealing
Relationships
Effort Insulation
+ Strong Positive
Relative Importance
Engineering
No road noise 2 + + BA O
Our Car 11 12 6 3 9
As Car 9 12 6 2 5
Bs car 9.5 11 7 2 6
Q6: How does one engineering change _
affect other characteristics? _ Roof Matrix
_
+ +
Open-Close Sealing
Relationships
Effort Insulation
+
Relative Importance
Strong Positive
+
Isolation & Close Door
_
Easy to Open
ABO
Doesnt leak in rain 3 +
BA O
No road noise 2 + +
Measurement Units ftlb lb lb lb/ft db
Objective
Measures
Our Car 11 12 6 3 9
As Car 9 12 6 2 5
Bs car 9.5 11 7 2 6
Q7: What are the technical limitations and _
costs associated with various changes _ Roof Matrix
_
+ +
Open-Close Sealing
Effort Insulatio Relationships
+
Relative Importance
Strong Positive
Characteristics
n
Engineering
+ _ O BA
& Close Door
Easy to Open
No road noise 2 + + BA O
Our Car b
11 12 b6 3 b9
As Car 9 12 6 2 5
Bs car 9.5 11 7 2 6
Technical Difficulty
Estimated Cost
Targets
4-Approaches to Mass Customization
Representation
no change change
Flexible Product Development
Integration
Stabilization/Ramp Up
Cyclical Workload Mismatch
hi
Product Definition Product Development Product Launch
marketing
Workload
break
engineering
lo
Time
New Product / Service Development Process
Life Cycle Management
Market response analysis
Competitive monitoring & defense
Innovation at maturity
Introduction
Launch planning
Tracking the launch
Testing
Advertising & product testing
Pretest & pre-launch forecasting
Test marketing
Design
Customer needs Sales forecast
Product positioning Engineering
Segmentation Marketing mix
Opportunity Identification
Market definition
Reposition
Idea generation
Pre-Test & Pre-Launch Forecasting
Used by firms introducing high-tech products; telecom products; consumer
apparel; utilities; financial services; medical services; insurance; software;
durable goods; entertainment products
Based on primary data collection
Concept Exposure
Offering
Price Key Measures
Seek Info?
Intent Survey Data
Liking Adjustment
Demographics Total Sales
Price / Value 100% Aware
Uniqueness Price / Value 100% Available
Believability Perception
Need fulfillment Absolute Price
Category Usage Market Adjustment
Advertising
Distribution
Competition
Sales
Pre-Test & Pre-Launch Forecasting .. Continued
Further, companies like Vantis (division of Bases) have a database of 15000 new product introductions
to benchmark success of new product. The product scores will be compared to a subset of the database
of about 30-50 studies of related, similarly priced products
The database is divided into thirds for comparison. Placement in the upper third of the database
indicates that the test product scored higher than two-thirds of previous studies on that measure. An
example:
In the above example, the new product scores high on several measures. However, its
Premium positioning results in average purchase intent
Pre-Test & Pre-Launch Forecasting .. Continued
Forecasting the sales of a new frequently purchased product
Forecast sales, P for a new product depends upon
Awareness of new brand (Aw)
Availability of new brand (Av)
Ultimate trial proportion conditional on awareness and availability (T)
Long run share of purchases of new brand among those who try (R)
Total category sales (C)
P = C Aw Av T R
Promotion
Distribution
Predictions from Assessor
St = ( + (Yt-1/M)) (M - Yt-1)
Introduction
Launch planning
Tracking the launch
Testing
Advertising & product testing
Pretest & pre-launch forecasting
Test marketing
Design
Customer needs Sales forecast
Product positioning Engineering
Segmentation Marketing mix
Opportunity Identification
Market definition
Reposition
Idea generation
Cross-Functional Integration in New Product Strategy
R&D
Engineering De
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Marketing Production
Inventory
Bud
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Fu d ge e ts
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Re e q
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Finance
New Product Development - Plan Vs. Reality
Exultation
Exultation
Idea
IdeaGeneration
Generation
Disenchantment
Disenchantment
Screening
Screening&&
Refinement Confusion
Confusion
Refinement
Test Search
Searchfor
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Measuring Brand Equity
Excess-Price Approach
Observation of Prevailing Prices
Customer Research
Tradeoff / Conjoint Analysis
Replacement Cost Approach
Cost of Introducing New, Comparable Product
Stock-Price Approach
Market Value of Firm - Replacement Value of Tangible Assets = Intangible
Assets
Intangible Assets = Brand Equity + Value of Patents, etc. + Value of Industry
Factors that permit monopoly profits (imperfect competition)
Brand Equity = F(Advertising, Age, Order of Entry..)
Future -Earnings Approach
Measuring Brand Equity: Clout - Vulnerability Analysis
There are several measures of brand equity. One such measure is a
brands ability to take sales away from rivals via a price reduction
versus its competitors ability to take sales away via the competitors
price reduction
Based on segment-level price elasticities
Compute the price elasticities for all the competing brands in the market
Compute CLOUT which is the effect of my brands price reduction on
the sales of all competing brands
CLOUTi = j,j ne i [e2ji]
Compute VULNERABILITY which is the effect on my sales of a price
reduction by all competing brands
VULNERABILITYi = j,j ne i [e2ij]
A Clout - Vulnerability Map
A E
CLOUT
C
F
G
VULNERABILITY
Brand Management: 2 Dimensions, 4 Strategies
Innovate Innovation
Niche strategies Judicious Pricing
Price follower Raise Entry Barriers
Slash price/cost
Cut Costs
Value
Move Right
Lower Prices
Trump category Your Brands
Category Drifts Up?
Move Up Best Strategy
low Vishwanath &
high Mark
Relative Market Share HBR 1997
Product Line Decisions
Going Upscale
Problem with credibility
Reposition entire brand - almost impossible
Sub-brands
Parent (driver) - Child (descriptor)
Strategies for Sub-Brands: Minimizing Risk
When moving down market
Try to create a qualitatively different offering aimed at a distinct
segment
Think about elevating the parent brand when the value entry is
launched
Be cautious about price premiums
Use the parent-child metaphor
How do you use new products as marketing weapons How frequently do you launch new products and
1. Company often last to enter new categories brands
2. The company follows the leader closely 1. Company relies only on tried & trusted brands
3. Company sometimes a pioneer by chance 2. Rate of launches is below industry average
4. Company launches new products, with new 3. Rate of launches is on par with average
concepts, albeit occasionally 4. New products are launched when considered
5. Company usually launches new products with new necessary
concepts 5. Company responds to every market change with a
launch
How do you work on product improvement & How does your company test market new
modification products
1. No organized process in the company 1. Occasional, non-institutionalized process
2. Products allowed to run through life cycle with 2. Conducted regularly with small samples
few changes
3. Marketing mix seldom modified after test
3. Products improved in decline stage marketing
4. Products have periodic changes based on customer 4. Regular test marketing - only for products
feedback
5. Products constantly changing based on feedback & 5. All elements of the marketing mix are test-
opportunities marketed and suitably modified
How closely is the customer involved in product How do you customize products for different buyers
testing 1. Product offering is homogeneous
1. Feedback obtained after launch 2. Differentiation via external factors such as
2. Customer involved in test-marketing stage package size
3. Customer consulted in the beginning for product 3. Service envelope is customized
ideas
4. Product-service combo is tailored to individual
4. Customer involved from prototype to test marketing buyer
5. Customer involved at every stage from idea 5. Customization is offered to every buyer
generation
How do you familiarize channel with new products How do you respond to new products from
competitors
1. Products are introduced into channel with little 1. No serious attempt to develop new product
innovation 2. Company checks whether a new product is necessary
2. Channel members are told of the product after 3. Customer needs are re-examined before developing a
launch competing product
3. Some advance notification is provided 4. New product launched with more benefits
4. Informed but not involved in the planning 5. Response via counter-innovation with extra benefits
5. Work closely with company on new products