Professional Documents
Culture Documents
Markets
Incremental innovation
NPD in alignment with current market
Known customer needs
Traditional market research tools
Focus groups
Customer surveys
Concept tests
Conjoint studies
Test markets
Concept Testing
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Idea generation
Various observational techniques
Brainstorming with CFT
Focus groups members of target mkts define different
product/service ideas
Depth interviews- non-directive interviews regarding needs and
potential solutions
Conjoint Analysis
Decide product characteristics, branding strategy, price
point for the sweet spot- maximize revenue and profits
Survey research tool- statistically predict combination of
product attributes across various brands and prices
customers will prefer to buy.
Tradeoffs and relative importance
Focus groups, customer interviews and internal corporate
expertise use to structure sets of attributes and levels.
OLS data yields consumer utility function- regression
equation.
Company to develop if consumer willingness to pay (WTP)
exceeds cost of development.
Empathic Design
Focus understanding user needs through empathy
with the user world.
Empathic design research allows marketer to
develop an appreciation of current user
environment
To extrapolate the evolution of that environment
in future
To imagine the future needs that technology can
satisfy
Lead Users
Customers who are ahead of market trends, needs
beyond average user and who innovate solutions to
their own problems
Marketers can look forward to lead users for insights
for innovation
Lead user collects information systematically about
needs and solutions where more extreme forms of
problems exist- generate breakthrough innovations.
Firm moves from creating breakthrough products to a
systematic task of identifying lead users and learning
from them. Adapt their ideas and fulfill customer
needs.
Prototype testing
Meets technical design specs
Information Acceleration technique relies on virtual
representation of a new product to assist in product
development and forecasting.
Prototype evaluation by customers for feedback and
improvement
Virtual prototyping enables addressing several issues for
marketers
Biomimicry
Emulating or mimicking ideas from natural
world
Process of looking for natures advice to solve
human challenges
Generates novel insights for disruptive/
breakthrough innovations in many areas-
Biomimcry benefits
Be sustainable
Perform well
Save energy
Cut material costs
Redefine and eliminate waste
Define new product categories and industries
Build a companys brand
Qualitative tools
The Delphi Method
Interview of experts to gain their views like when a new product will gain
widespread acceptance
Experts are interviewed separately. Answers are sent back to participants who
refine their own judgments and comment on others
Analogous data
Information about a related, similar product- to make inferences about the
new technology.
Relevant only when there is a logical connection between the products
similarities of attributes of importance to the consumer in making purchase
decisions and in business factors that contribute to product success.
Important attributes include technical support, ease of use and product/form
design considerations
Critical business factors include distribution considerations, brand name and
model options.
Quantitative Tools
Bass Model
Pre-launch forecasting technique
Model appropriate for forecasting sales of new
technology for which there is no competing
alternative.
Validated approach for forecasting variety of
innovations. Ex Kodak, IBM, RCA, Sears & AT&T
Historical analysis of new product sales curve- Sshaped curve.
Diffusion of Innovation
Formula:
Nt= (p x Remaining potential adopters) + (q x Adopter
proportion x Remaining potential adopters)
Where Nt = the number of adopters at time t(Sales) and p
and q are as above.
Problem
Recognition
Information
Search
Evaluate
Alternatives
Purchase
decisions
PostPurchase
Evaluation
Compatibility
Complexity
Trialability
Observability
Trialability
Ability to communicate customer benefits
Observability
Categories of Adopters
The Chasm
Moore had adapted theory of adoption and diffusion of innovation
for the purchase of high technology products.
This results in identification of unique environment where there
is large gap or chasm between the early market (composed of
innovators and early adopters) and the mainstream market (early
majority, late majority and laggards).
Reasons and specific focus of marketing strategies to cross the
chasm
Innovators- Technology enthusiasts, gadget lovers
Early adopters Visionaries, Revolutionary breakthrough to gain
competitive advantage
Early Majority Pragmatists, motivated by evolutionary changes
When it is time to move, let us all move together. Adoption increases rapidly,
tornado of demand
When we pick the vendor to lead us to the new paradigm, let us all pick the
same. Determines which firm will become market leader.
Once the transition starts the sooner we get over with it, the better.
Risks
Too many market segments at outset
Too high pitched about innovation potential
Hedge bets against selecting wrong market and hence
launch in several markets
Do not learn the industry- (customer-) specific
knowledge and language to be credible
Marketing initiatives do not make an impact.
Spread resources too thinly
Role of partnerships
In early market (enthusiasts & visionaries), power
belongs to technology providers and SI
In crossing the chasm to mainstream pragmatistsPower is centralized in hands of company that picked
the target (beachhead) customers, understand why
they buy and design the whole product
In the pragmatist market, the market leader and its
partners have the power
In later mainstream conservatives market, power is
with distribution channels or companies that provide
superior distribution of the product.
Vertical segments
Identify particular industries or verticals that would receive
disproportionate benefit from adoption of technology.
Customer user varies by industry and they require different value
propositions.
While vertical market segment appears to have smaller potential, high
tech company can garner a large share of market within the segment,
and exploit the leadership position
Recognize smooth
upgrading is unlikely;
therefore, waiting to
purchase an older model at
a lower price may result in
obsolescence