PHARMASIM NEW PRODUCTS

1
PHARMASIMNEW PRODUCTS

• Advanced Marketing Management
• Marketing 6202

2
What Is A New Product?

• New to the world
• New to the company
• Brand extension (Period 6)
• Line extension (Period 4)
• Repositioning (Period 2)
• Model changes

3
The Risks of New Products

• Failure rates
• no more than 10 of all new products or
  services are successful -- that is, still on the
  market and profitable after three years -
  Marketing Management (2003)
• 95 of new consumer products in US fail90 of
  new consumer products in Europe fail 46 -
  Nielsen BASES and Ernst Young study (2002)

4
The Risks of New Products

• Costs
• Introducing a new national brand can cost 20
  million Marketing Management
• New Product News It probably costs 100
  million to introduce a truly new soft drink
  nationally and it costs 10,000 to introduce a
  new flavor of ice cream in Minneapolis. Somewhere
  in between is a worthless 'average' cost to
  introduce a new product

5
Why New Products Fail

• Poor planning and strategy
• Market is not attractive
• Poor concept
• Poor execution
• Poor use of research
• Poor technology
• Poor timing
• Changes in tastes/environment
• Bad support from channel

6
Brand Equity

• The value your customers perceive to be uniquely
  associated with your brand
• Awareness Associations
• Awareness
• Recall
• Recognition
• Associations
• Perceived Quality
• Image

7
The Importance of Brand Associations

• Profitability (ROI)
• PERCEIVED RELATIVE QUALITY
• inferior moderate superior
• RELATIVE high 26 29 37
• MARKET medium 18 20 26
• SHARE low 10 16 18
• SOURCE PIMS (Profit Impact of Market
  Strategies based on 2,200 business units)
• Future Profitability (Stock Price)
• Stock Price f(ROI, perceived quality)
• ROI and perceived quality exert approximately
  equal effects
• SOURCE Aaker, D. A. and R. Jacobson (1994
  based on daily measures of NYSE, AMEX, and
  NASDAQ).

8
Brand Associations and Line/Brand Extension

• Brand associations help determine which line and
  brand extensions will be successful

Source Wes Hutchinson
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Brand Associations and Line/Brand Extension
Close-Up's singles-oriented, "romantic" image
extended best to breath mints Crest's
family-oriented "dental health" image extended
best to toothbrushes.
Apple's "user-friendly" image extended best to
video games IBM's "serious business" image
extended best to cellular phones.
Source Wes Hutchinson