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Marketing Research In New Product Development

Marketing Research In New Product Development

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Marketing Research In New Product Development

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  1. Marketing Research In New Product Development Jason Burke Stacy Siefer Hari Kodakalla Lucy Powell Richard Warriner

  2. Marketing Research in New Product Development- Why? • Provides direction for development • Helps restrain tendency for product-only focus • Helps communication between R&D, sales, and marketing

  3. Marketing Research in Product Development • The marketing research activities associated with new product development are divided into four areas: • Strategic issues • Marketing research processes/methods • Organizational issues • Measurement

  4. Strategic Issues • The strategic role is to provide marketing information for managing new product risk • Top management emphasis on being “customer driven” is required for successful integration on market research into NPD • Internal marketing is important to maintain support • Investing in experience is a key factor for success

  5. Marketing Research Processes/ Methods • Unique marketing research activities are conducted at each stage of the NPD process • Flexibility is key • Top companies test products/concepts in realistic environment for NPD process • Marketing knowledge database provides for organizational learning

  6. Relationship of Market Research R&D “An Important question to Ponder on “ • Is R&D independent of Market Research and Vice versa ? w. r. t Specialty or Performance chemicals companies e. g. : [ Pharmaceutical Industry ]

  7. Some Key questions to be asked before embarking NPD • What strategic roles do we expect new products to fulfill? • What are our financial expectations for new product performance? • What are our core technological competencies? • Are we the leaders in the Market? • What criteria will we adopt to objectify issues and to prioritize all subsequent ideas? • Do we anticipate alliances, joint ventures, or acquisitions, or do we do it ourselves? • Are we better suited for custom development or very narrow markets (with very high per-unit prices) or for broader markets with, possibly, lower per unit prices? • Do we know what our customers want?

  8. R&D Spending And New Product Development Success

  9. R&D Spending And New Product Development Success

  10. Key Items for New Product Development

  11. 4 Approaches to Budgeting: • Finance as many projects as possible, hoping to achieve a few winners • Set the budget by applying a conventional percentage of sales figures • Spend what the competition is spending • Decide how many successful new products you need and work backward to estimate the required investment

  12. Organization • Product managers • New-product managers • New-product committees • New-product departments • New-product venture teams

  13. The New Product Development Decision Process: • Idea generation • Idea screening • Concept development and testing • Business analysis

  14. The New Product Development Decision Process: • Marketing strategy development • Product development • Market testing • Commercialization

  15. NPD Challanges • New product failure rate of 67-80% • PDMA study • Key factors in success and failure of new products • Market research is key

  16. NPD Challenges • New Product Development Process during Problem Definition: • Market research should be specific in what questions it is trying to answer during Information Needs: • Use of different alternatives and scenarios during Analysis and Collection: • Marketing research mistakes for NPD are hard to foresee and extremely costly

  17. NPD Challenges • Market potential is difficult to quantify • Lack of sales patterns, difficult calculation mechanisms, and skepticisms • Shorter life cycles and faster technological obsolescence is driving how we look at market research

  18. Market Research in Pharmaceuticals

  19. Market Research in Pharmaceuticals • 64% of pharmaceutical companies are using market research in the early stages • 21% in pre-clinical stages • Market gaps  new potentials to pursue • Product positioning • Research roles • Uses for Market research

  20. Case Study: 3M • Minnesota Mining and Manufacturing fosters a culture of innovation and improvisation. This $15 billion company’s goal is to have each of its divisions generate atleast 30 percent of sales from products that have been on the market for less than 4 years.

  21. 3M Case

  22. 3M Strategy: • “You have to kiss a lot of frogs to find prince.” • Employees are allowed to spend up to 15% of their time working on projects of personal interest. • Promising new ideas are assigned to multidisciplinary venture teams.

  23. 3M Continued • 3M developed its idea for the hugely successful Scotch-Brite Never Scratch soap pads from listening to customers complaints about current products. • 3M arranged eight focus groups with consumers around the country and found that they had a problem with traditional soap pads scratching expensive cookware.

  24. 3M Continued • 3M was able to grab a foothold in a market previously dominated by SOS and Brillo. • Sales of the Scotch-Brite Never Scratch soap pad have exceeded 3M’s expectations by 25 percent.

  25. Conclusion • A market- and customer-driven new product development process that increases efficiency in two ways • First, it identifies key targets at the very beginning and provides form and definition to the process. • Second, it marshals all of the internal expertise and knowledge-based assets of the organization at the outset of the development process, where they can be used more effectively to capitalize on the highest-potential solutions early in the process