2. NEW PRODUCTS IN THE MARKET
Every year around 5000 new products appear
in the market. However, most fail and only a
few remain ( around 20%). Products which are
innovative.
3. Why does this happen?
Marketing issues
Valuable resources are wasted which might have
been deployed towards more productive uses
Products that might have helped people do things
more productively or attain higher levels in their
quality of life, fail to be used.
4. Marketing issues
Successful new product development is an
important element in achieving long term
competitive superiority and profitability, especially
in low growth markets
A successful new product can be the beginning of a
whole new company
5. THE VALUE CHAIN
Contemporary firms are being attacked by
competitively on every dimension and from every
direction. The only way to survive this onslaught is to
create a ‘value chain’ to serve the customer, which will
serve to differentiate the successful firm from its
competitors and will provide competitive superiority
on the critical attributes of importance to the consumer
6. WHAT IS AN INNOVATION?
It is any idea or product perceived by the
potential adopter to be new. New products
are ideas, behaviour or things that are
qualitatively different from existing forms
7. Diffusion of innovation
A process by which a new product moves from
initial introduction to regular purchase and use
A process by which an innovation (idea) is
communicated through certain channels over time
among the members of a social system – Everett Rogers
9. Types of Innovations
Continuous – modification or improvement of an existing
product
Dynamically continuous – may involve the creation of
either a new product or the alteration of an existing one ,but
does not generally alter established patterns of customer
buying and product use
Discontinuous – production of an entirely new product that
causes customers to alter their behaviour patterns significantly
10. INNOVATIONS INCLUDE BOTH A
HARDWARE AND A SOFTWARE
COMPONENT
The hardware are the physical and tangible
aspects of a product. The software is the
understanding consumers’ values and lifestyles
11. Likelihood of innovation success
Relative advantage – new products that are most likely to
succeed are those that appeal to strongly felt needs
Compatibility – degree to which the product is consistent with
existing values and past experience of the adopters
Complexity – degree to which an innovation is perceived
as difficult to understand and use
Trialability – the ability to make trials easy for new
products without economic risk to the consumer
Observability – reflects the degree to which results from
using a new product are visible to friends and neighbours
12. Types of Innovators
Cognitive – problem solving, cerebral, new mental
experience
Sensory – fantasy, day dreaming, thrill seeking
Monomorphic - consumers who are innovators for one type
of product
Polymorphic – consumers who are innovators for more
than one type of product
14. Communication of new products
Mass media
WOM
Homophily – degree to which pairs of individuals who
interact are similar in beliefs, education and social status
Heterophily – inconsistent with own beliefs and views
15. The Adoption – Decision Process
Knowledge/Awareness
Interest
Evaluation
Trial
Decision
Confirmation
16. Adopter classes
Innovators - 2.5%
Early adopters – 13.5%
Early majority – 34%
Late majority – 34%
Laggards – 16%
17. Innovativeness
This is the degree to which an individual adopts an
innovation relatively earlier than others
Based on time of adoption
Based on number of new product adoption
19. Socio – economic variables
Education
Literacy
Higher social status
Upward social mobility
Larger-sized units
Commercial orientation
Favourable attitude towards credit
Specialized operations
20. Personality and attitude
Empathy Ability to cope with
Ability to deal in uncertainty
abstraction Favourable attitude
Rationality towards education
Intelligence Favourable attitude
Favourable attitude towards science
towards change High aspirations
21. Communication variables
Social participation Exposure to interpersonal
Interconnectedness with the communication channels
social system Knowledge of innovations
Cosmopoliteness Opinion leadership
Change agent contact Belonging to highly
Mass media exposure interconnected systems
22. POLYMORPHISM
The degree to which innovators and early
adopters for one product are likely to be
innovators for other products. Consumers
who are innovators for one product are
monomorphic. Consumers who are
innovators for more than one product are
polymorphic.