MKT3418

Product & Brand Management

Lecture 4
Lecturer: Ms Pauline Ong

1
Product Development
Concept development
Product Stages

1. Idea generation
2. Concept development
3. Feasibility screening
4. Concept testing
5. Product development
6. Product testing prototype
7. Market testing actual product
8. Go-no-go decision launching the new product
Proactive Idea Generation
1. Customer analysis how often do they buy, why are they not
buying from you
2. Competitor analysis -
3. Active search from the net (the trend, the new technology)
4. Category analysis will customer buy?
5. Brainstorming
 Reactive Idea Sources

1. Customers
2. Employees
3. Suppliers
4. Distribution channels
5. Operations people
6. Internal and External R&D
7. Design
8. Entrepreneurs
Common Formal Tests

Concept testing
Surveys
Focus groups
Demonstrations
Product testing
Product tests
Discrimination and preference testing
Market tests
Decisions for a Market Test

Action standards
Where to test markets
What to do
How long
Cost
Information gathering
Obstacles to Idea Generation

Group think
Targeting error
Poor customer knowledge
Complexity
Lack of empathy
Too many cooks

Source: Jerry W. Thomas, In Tough Times, Hyper-Creatives Provide an Advantage, Visions, 33(3), October 2009, 24-
26.
 Barriers to Firm Creativity

Cross-functional diversity

Allegiance to functional areas

Social cohesion

Role of top management

The Role of Management in
Stimulating Creativity
Recognize individuality

Be tolerant of mistakes

Be supportive under stress

Techniques include:
Competitive teams
Idea bank of unused ideas for possible reuse
Encourage interaction even in how offices are laid out
Required Inputs to the Creation Process
Form (the physical thing created, or, for a service, the set of
steps by which the service will be created)

Technology (the source by which the form is to be attained)

Benefit/Need (benefit to the customer for which the customer

sees a need or desire)

Technology permits us to develop a form that

provides the benefit.
Some Patterns in Concept Generation
Customer need firm develops technology
produces form

Firm develops technology finds match to need

in a customer segment produces form

Firm envisions form develops technology to

product
form tests with customer to see what benefits are
delivered
Note: the innovation process can start with any of the three inputs.
What is a Product Concept?

A product concept is a verbal or prototype statement of what is going

to be changed and how the customer stands to gain or lose.

Rule: You need at least two of the three inputs to have a feasible
new product concept, and all three to have a new product.
Getting Ideas for Really New Products

1. Asking (or listening to) dissatisfied customers

2. Asking nonrepresentative customers
3. Using open-ended, qualitative (vs. structured
survey) procedures
4. Involving customers as co-developers
5. Listening to scientists and newcomers rather
than engineers and experts
6. Scanning the literature for interesting
possibilities
 Evaluating Really New Products
1. Relative advantage
2. Compatibility
3. Risk
4. Complexity
5. Observability/communicability
6. Trialability/divisibility
Evaluating New Products
Evaluation Criteria for New Products

Customer Level
1. Do customers like it?
2. Is it unique?
3. Will they buy it?
4. How soon/fast will they buy it?
Evaluation Criteria for New Products (cont.)

Firm Level
1. Does it add to our customer base through
Acquisition?
Expansion?
Loyalty/retention?
Enhanced brand equity?
2. Does it detract from our customer base through
Cannibalization?
Customer defections?
Lowered brand equity?
3. Do we have the capabilities to
Develop it?
Produce it?
Distribute and sell it?
Buy or partner to do a-c?
Evaluation Criteria for New Products (cont.)

Firm Level
4. Will it be profitable
On a stand-alone basis?
Long-run impact on produce line?
5. Are there other benefits associated with it
Learning/capacity enhancement?
PR?
6. Are there other costs associated with it
Legal liability?
PR?
7. Can we control the market in the long run?
The Designer Decaf Example

Benefit: Consumers want decaffeinated espresso

that tastes identical to regular.
Form: We should make a darker, thicker, Turkish-
coffee-like espresso.
Technology: Theres a new chemical extraction
process that isolates and separates chemicals from
foods; maybe we can use that for decaffeinating
espresso coffee.
The Toilet Brush Example
Idea: A new and improved toilet brush.
Concept: A toilet brush that contains detergent, refillable, and easy
for the customer to attach to the handle.
Product (executions of this concept):
Lysol Ready Brush
Scrubbing Bubbles Fresh Brush
Clorox Toilet Wand
Best Sources of Ready-Made New Product
Figure 4.5

Concepts

Miscellaneous Categories
Consultants
Advertising agencies
Marketing research firms
Retired product specialists
Industrial designers
Other manufacturers
Universities
Research laboratories
Governments
Printed sources
International
Internet
 Crowdsourcing as a Creative Source
Crowdsourcing: open idea solicitation from customers.
Dells Idea Storm: encouraged customers to submit ideas for new products
and improvements to existing products online. Over 10,000 ideas were
obtained from sources around the world.
Apple used crowdsourcing in generating ideas for the iPad. Apple
monitored reviews and blogs and also obtained Voice of the Customer data
to understand the needs of potential users.
Fiat solicited design ideas via their website when relaunching the 500
subcompact, and claims 500,000 combinations in their car configurator.
Threadless invites contributors for T-shirt designs, encourages users to vote
for favorite designs, and produces and sells the favorites.
Drawbacks of User Crowdsourcing

Most likely to generate modest product improvements rather than

new-to-the-world products.
Typical user less likely to come up with ideas that are easily developed
into real products.
Professionals, or experienced users may have a more realistic view of
what is feasible.
The new coke

1. Do you think Coke followed the different stages of product

development for the new coke

2. Evaluate the new coke using the following criteria for customers and
within the company:
Relative advantage
Compatibility -
Risk
Complexity
Observability/communicability high and customer can taste the
difference
Trialability high as the new coke is not expensive

Managing Consumer Markets 25

3. Do you think the launch of the new coke is intentional to create more awareness?
Obvious underlying motive as the coke sales have fallen
It is too costly for it to be intentional
Too risky
The CEO acknowledge that it was a mistake

Created a lot of buzz

Reminded people of the original coca cola

4. What did you learn from this case study? How would you do it differently
Launch a test market
Seek more public opinion
Expert were more concern about the drop in market share
Changing the product changing the brand and core competency

Managing Consumer Markets 26