New Product Strategy

1
New Product Strategy
2
New Product Strategy

• General/Background
• Theory of Competitive Rationality
• Responses to Commoditizaton
• Corporate Strategy
• Miles and Snow
• Being First or Being Best?
• Marketing Strategy
• InnovationsTornado Marketing
• Time to Market

3
Theory of Competitive Rationality/Schumpterian
Creative Destruction
Change in consumer demand
Supply shift to meet demand
Constant variation in supply
Sellers innovate
Imitation of innovations
Sellers observe other sellers
4
Commoditization

• Exhausted possibilities in foods
• Soft drinks
• Diet coke, 1982
• Cookies
• SnackWells, 1992
• Cereal market
• Only 1 in 5 achieves .5 share

5
RTE Cereals
Frosted flakes 4.6 1952
Corn flakes 4.3 1898
cheerios 3.5 1941
Frosted mini-wheats 3.5 1969
Raisin bran 3.1 1942
Rice krispies 2.7 1927
Honey nut cheerios 2.7 1979
6
Responses to Commoditization

• Value-added strategy
• Market-focus strategy
• Price compression
• Service compression

7
Market Selection and Entry Timing

• Pioneering vs. Following
• Miles and Snow Typology

8
Dont set too ambitious deadlines
Deadline is deadline !
9
First or Best?

• Conventional wisdom regarding pioneers and
  followers
• Advantage to the pioneers? Measurement problems
• Advantage to Early Leaders

10
Miles and Snow

• Proactive
• Prospectors
• Analyzers
• Reactive
• Defenders
• Reactors

11
Innovations

• Tornado marketing strategy
• Early market
• Chasm
• Bowling alley
• Tornado
• Main street
• Innovators dilemma

12
What suits one customermight not suit the next
13
New uses for old products
14
Time to market

• Time to market cut in half 1991-1997 again
  1997-2001.
• Reasons
• More sales/more profit
• Strategic flexibility
• Market leadership

15
Risks of speed to market

• Miss the boat/sink the boat (hasty and wastey)

16
Urgency Paradox
17
Delay and relevant costs