New-Product Options

There are a variety of types of new products and ways to create them.2 1. MAKE OR BUY A company can add new products through acquisition or development. When acquiring, the company can buy other companies, buy patents from other companies, or buy a license or franchise from another company. Swiss food giant Nestle

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Challenges in New-Product Development

In retailing, consumer goods, electronics, autos, and other industries, the time to bring a product to market has been cut in half.20 For instance, luxury leather-goods maker Louis Vuitton has implemented a new factory format dubbed Pegase so it could ship fresh collections to its boutiques every six weeks—more than twice as frequently as

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Organizational Arrangements

Many companies use customer-driven engineering to develop new products, incorporating customer preferences in the final design. Some, such as SAP, have relied on organizational changes to help develop more successful new products.33 SAP After a series of high-profile acquisitions of firms such as SuccessFactors, Sybase, and Ariba, business software leader SAP set out to

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Managing the Development Process: Ideas

1. GENERATING IDEAS The new-product development process starts with the search for ideas. Some marketing experts believe we find the greatest opportunities and highest leverage for new products by uncovering the best possible set of unmet customer needs or technological innovation.53 New-product ideas can in fact come from interacting with various groups and using

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Managing the Development Process: Concept to Strategy

Attractive ideas must be refined into testable product concepts. A product idea is a possible product the company might offer to the market. A product concept is an elaborated version of the idea expressed in consumer terms. 1. CONCEPT DEVELOPMENT AND TESTING Concept development is a necessary but not sufficient step for new-product success.

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Managing the Development Process: Development to Commercialization

Up to now, the product has existed only as a word description, a drawing, or a prototype. The next step represents a jump in investment that dwarfs the costs incurred so far. The company will determine whether the product idea can translate into a technically and commercially feasible product. If not, the accumulated project

The Consumer-Adoption Process

Adoption is an individual’s decision to become a regular user of a product and is followed by the consumer- loyalty process. New-product marketers typically aim at early adopters and use the theory of innovation diffusion and consumer adoption to identify them. 1. STAGES IN THE ADOPTION PROCESS An innovation is any good, service, or

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MARKETING EXCELLENCE APPLE

Apple has transformed the way people listen to music, play video games, talk on the phone, and even read books. The company’s revolutionary product innova­tions include the iPod, the iMac, the iPhone, and the iPad. They are the reason the company topped Fortune’s Most Admired Companies list every year from 2008 to 2014. The

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MARKETING EXCELLENCE Salesforce.com

Salesforce.com was founded by former Oracle executive Marc Benioff in 1999. Benioff believed software should be free of troublesome installations, maintenance issues, and continuous upgrades. His vision was “to make soft­ware easier to purchase, simpler to use, and more demo­cratic.” With that in mind, Benioff led a start-up company called Salesforce.com that offered software-as-a-service

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Understanding Pricing

Price is not just a number on a tag. It comes in many forms and performs many functions. Rent, tuition, fares, fees, rates, tolls, retainers, wages, and commissions are all the price you pay for some good or service. Price also has many components. If you buy a new car, the sticker price may

Setting the Pricing Strategies and Programs

A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enters bids on new contract work. The firm must decide where to position its product on quality and price. Most markets

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Adapting the Price

Companies usually do not set a single price but rather develop a pricing structure that reflects variations in geographi­cal demand and costs, market-segment requirements, purchase timing, order levels, delivery frequency, guarantees, service contracts, and other factors. As a result of discounts, allowances, and promotional support, a company rarely realizes the same profit from each

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Initiating and Responding to Price Changes

Companies often need to cut or raise prices. 1. INITIATING PRICE CUTS Several circumstances might lead a firm to cut prices. One is excess plant capacity: The firm needs additional busi­ness and cannot generate it through increased sales effort, product improvement, or other measures. Companies sometimes initiate price cuts in a drive to dominate

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MARKETING EXCELLENCE EBAY

In 1995, Pierre Omidayar, a French-Iranian immigrant, wrote the code for an auction Web site where everyone would have equal access to a single global market­place. Omidayar couldn’t believe it when a collec­tor bought the first item, a broken laser pointer, for $14.83.* Soon the site grew into a broader auction site where consumers

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MARKETING EXCELLENCE AIR ARABIA

Air Arabia took-off in 2003 with only two leased Airbus A320 jets. The Sharjah-based airline began as a start­up owned by the government and was the UAE’s third airline. Air Arabia has managed to establish its position in the regional market of low cost carriers (LCC). Recently, Air Arabia’s low-cost rivals, flydubai and flynas,

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Marketing Channels and Value Networks

Most producers do not sell their goods directly to the final users; between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel (also called a trade chan­nel or distribution channel). Formally, marketing channels are sets of interdependent organizations participating in the process of making a product

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The Role of Marketing Channels

Why does a producer delegate some of the selling job to intermediaries, relinquishing control over how and to whom its products are sold? Through their contacts, experience, specialization, and scale of operation, interme­diaries make goods widely available and accessible to target markets, offering more effectiveness and efficiency than the selling firm could achieve on

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Channel-Design Decisions

To design a marketing channel system, marketers analyze customer needs and wants, establish channel objectives and constraints, and identify and evaluate major channel alternatives. 1. ANALYZING CUSTOMER NEEDS AND WANTS Consumers may choose the channels they prefer based on price, product assortment, and convenience as well as their own shopping goals (economic, social, or

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Channel-Management Decisions

After a company has chosen a channel system, it must select, train, motivate, and evaluate intermediaries for each channel. It must also modify channel design and arrangements over time, including the possibility of expansion into international markets. 1. SELECTING CHANNEL MEMBERS To customers, the channels are the company. Consider the negative impression customers would

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Channel Integration and Systems

Distribution channels don’t stand still. We’ll look at the recent growth of vertical, horizontal, and multichannel marketing systems. After considering some e-commerce and m-commerce issues, we next examine how these systems cooperate, conflict, and compete. 1. VERTICAL MARKETING SYSTEMS A conventional marketing channel consists of an independent producer, wholesaler(s), and retailer(s). Each is a

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