Business has only two functions Marketing and innovation

Business has only two functions. Marketing and innovation Peter. F. Drucker

New product l l l The profound impact on society, life… To belie the resistance to change it takes a a very brave or very foolish company Appreciation comes in hindsight.

“The document company”

This is not about copiers…

Xerox l l Country of Origin: USA Brainchild of : Chester Carlson Invented category Past… l l Between 1939 – 1944, rejected by 20 companies like GE, Kodak, IBM 1959 first plain paper copier. Named “ most successful product ever marketed in America” by fortune

xerox l Innovation l l l Marketing l l Xerox Palo Alto Research Centre(PARC) Xerox document University, Virginia Brand Name PR to turn first mover advantage to success It’s a $ 20 billion empire Eco friendly design and manufacturing saved Xerox $2 billion between 1991 - 2001

“Deep down you want a hoover”

Hoover Country of Origin: USA l Brainchild of : Murray Spangler l Invented its category l Visible improvement l Past … l l William hoover patented it in 1908. shifted from harnesses for horses and carts to suction sweepers to vacuum cleaners

Hoover l Innovation Category l wind tunnel system l l Marketing l Try l before you buy. USA ‘s no. 1 Vacuum cleaner

“Don’t leave home without it” “Do more cards”

American Express Country of Origin: USA l Invented category through foresight l l Past l 1850 – Express Freight Company , active in American civil war; 1880 – physical cargo to finance fund transfer;

American Express l l Innovation l 1891 – “travellers’ cheques pioneered l 1958 Am ex card – consumer liberation Marketing l Exclusivity through charge card credit rating l Ultimate status symbol “ membership has its Privileges”; Richard Branson , brand ambassador l Exclusivity and status to inclusivity and convenience Stupendous ability to evolve World’s no. 1 travel agency, financial supermarket

“Ho shuru har din aise…”

Nescafe Country of Origin: Switzerland l Brainchild of : Max Morgenthaler l Invent the category l Past l l 7 years of intensive research on the behest of brazilian government. in the 30’s

Nescafe l Innovation l l Marketing l l l 1952 pure soluble coffee, ‘ 65 freeze dried coffee, ‘ 67 granules, ‘ 94 full aroma Popular and prestige continuum 3, 000 cups of nescafe being consumed every second Staple drink of the US armed force during WW II.

“Intelligence at work”

Sony Country of Origin: Japan l Brainchild of : Akio Morita & Masaru Ibika l Past… l l Radio repair firm 1946, first brand 1950. First pdt rice cooker! l Continuous and radical innovation

Sony l Innovation l l l Marketing l l l second name “pioneering spirit” Transistor radio, transistor TV, 1 st colour video recorder, walk man, sony playstation, now connectivity between computing & home entertainment. Synergy between hardware and content – CBS records, columbia pictures, Sony music, sony pictures etc People buzz and support Slogan “products for people” Distrust for mkt research Walkman launched as soundabout in US, Stowaway in UK, Freestyle in Australia. Sony playstation 2 dominates the game console mkt with 70% global sales

There from the start…

ADIDAS Country of Origin: Germany l Brainchild of : Adolph Dassler l Past… l l 1920. first show at olympics – 1928, Jesse Owens, Armin Hary, 1936 Equipment manager of the world Continuous innovation

Adidas l Innovation l l l Pdt innovation Material innovation Marketing Ideas l l l 3 stripes, david beckham, Tim Duncan Sports brand to fashion brand Shoes to sports wear Sports performance line (70%), sports heritage line ( 25%), Sports Style line (5%). Spotting future trends thru ABCD camps, Basketball skill workshop l l studs, spikes nylon shoes PR, , sponsorship, endorsements, testing of new pdts Second largest in the sportings good industry 13% of group sales spent on marketing 60 new foot wear designs each year

Play safe

Durex l l Country of Origin: UK Founded in 1915 as London Rubber Company Past l Producing condoms since 1929 l First to provide lubricated condoms and also non latex condoms Perceptual improvement

Durex l Innovation l l Marketing l l l l Constant product improvement DUrability, REliability, EXcellence Knowledge and awareness platform for debate and discussion Brand name Sexual health ambassador Association with safety, sexual health, and responsibility Social responsibility to the heart of the business Distribution – supermarkets, bars, pharma chains. Market leader in 40 countries No. 1 brand in the world, accounting for 26% of the 4 Billion market.

“Engineered like no other car in the world…”

Mercedes Benz Country of Origin: Germany l Brainchild of : Karl Benz, Gottlieb Daimler l Past… l l l 1885 G. Daimler- first land vehicle with internal combustion engine, 1886 karl benz first car. 70 miles apart , took 40 years to get together. Continuous innovation

Mercedes Benz l Innovation l l Marketing l l l Electro hydraulic system, fuel injection, sensotronic brake control system, Electronic stability program Explicit focus engineering, intrinsic focus prestige Now extending to penetrate the market- A, C class Mercedes Logo – vision to provide small engines to travel on land, sea and air

So which new products succeed? l Those that offer clear cut relative advantage l l Compatible with existing Consumption patterns l l Adidas Simplicity of Usage l l Hoover Easy to see advantage – observability l l Mercedes benz Trialability l l Xerox American express, nescafe Novelty with a perceptual rationale l Sony, Durex

Most of the times they fail… l l l Inadequate planning Tanishq Insufficient superiority or uniqueness cool cats -polar Poor execution pepsi ruffles Technical problems color safe, cibaca lime Poor timing yoghurt, iced tea distribution betamax technology

What is a new product? l l l New to the world New product lines Addition to existing product line New improved version Repositioning Cost reduction xerox LG Pears surf, lux livon- renue Simputer

Consumers Perspective on newness l Discontinuous innovation l New function never performed ever before l l Dynamically continuous Innovation l Similar consumption pattern l l Hoover, jaipur foot Travellers cheques, Reva, scotch brite Continuous innovation l Product modification l Merc, toyota, Mr. clean

Organisational support to NPD l l Goal definition Budgeting l l Idea screening, concept development, product development, test marketing, commercialisation Organisational structure l l Product managers New product teams Cross functional new venture / project temas

Why new products? l l l Changing consumer demands mobiles allied insurance covers New avenues for profits Combating environmental threats hoover

NPD Process l Idea generation l l Interaction with employees, customers, designers, secondary sources etc walkman - morita and ibuka Creative techniques l Attribute listing and exchange, mind mapping and association, combining objects etc

NPD Process l Idea screening l l Should be reasonable, compatible with organizational goals , appropriate for org. tgt mkt P and G model; l l Is there a real customer need for this product? Does the org. have the techno ability to make the pdt? Is the potential large enough to promise profitability? Drop error or a go error

NPD Process l Concept and strategy development l l l l frito lays and pepsi Detailed concept Rapid prototyping Virtual reality Conjoint analysis Marketing Strategy l l Concept development thru pdt positioning Thru competitive positioning Concept testing- need, liking, willingness to buy l drug delivery systm mkt share, STP, 4 Ps, Business Analysis l l l Cost vs profits. profit goals for 1 -3 -10 years, Breakeven analysis Seasonality, price elasticity, Demand estimation – substitution. End use methods

NPD Process l Product development l Customer attributes to Engineering attributes VOLVO l Real prototype development l Alpha testing melatonin, gilette, cars, durex, l Beta testing clinical trials, Dow liquid tire chain spray

NPD Process l Test marketing l Sales wave research l l Simulated test mktg l l Consumption patterns Promotional effectiveness, trial rates Controlled test mktg l Shelf space success, local advertising and consumer beh.

NPD Process l Commercialisation l When? l l First, parallel, after the competition Where? How ? For whom ? Transelectra’s Good night, allathrin based repellent Brand name Mother and child National TV promotion Dealer network Penetration thru cordless version Skim thru liquidator 50% mkt share of 100 cr. Mosquito repellant market

Product Introduction Sales Low Costs Very high production and marketing costs Profits Negative Customers Innovators, few Competitors Negligible importance Mktg Objectives Creating acceptance- fostreing pdt awarenss, trial purchase Product Basic design with inherent compt. Advantage Place Selective distribution, being slowly built up Price High to recover some expenses promotion Informative, high buzz Advertising To build awareness among customers and dealers Sales promotion Heavy to entice trial.

Growth Sales Rapid growth Costs Lower than intro stage, closer to averaging out Profits Reach peak level as a result of high price and demand Customers Early adopters Competitors Growing Mktg Objectives Mkt penetration and expansion to maximise share Product Pdt improvements , service, warranties, expand pdt line Place Intensive, fewer trade discounts as dealers eager to stock up Price High to take advantage of high demand; turn penetrative promotion Persuasive to build loyalty and pdt differentiation Advertising Enhance awareness and interest Sales promotion Reduce to take advantage of heavy demand

Maturity Sales Slow growth, peak values Costs Low cost per customer Profits High but rising competition begins to eat in Customers Mid majority Competitors Many rivals Mktg Objectives Defense of mkt share, Brand position, maximise profit Product Induce Product differentiation, fuller pdt lines, pdt -brand extns Place Intensive to retain shelf space, heavy trade allowances Price Competitive pricing, what the mkt may bear promotion Extensive to retain key existng cust. And induce br. switch Advertising Stress brand Difference, benefits Sales promotion Enhanced to encourage brand switching

Decline Sales Declining Costs Low Profits Declining volumes lead tom dithering profits Customers Laggards Competitors Few, shakeout of weak members Mktg Objectives Reduce expenses, sqeeze all possible benefits and prepare to withdraw Product sustain best sellers; phase out the rest of pdt lines Place Selesctive , phase out unprofitable ones Price Cut, liquidate inventory promotion Minimal or none Advertising Minimal, local or none Sales promotion Minimal to clear stocks

Consumer adoption Process Innovators l l Venturesome Dare, different, younger Better educated ~fin. stable Early adopters Early Majority l l l Self confident, income Well read, aware High usage rate Opinion leaders influencers l l l Solid, mid. Class consumers Deliberate & cautious Avg. socio status Late majority Laggards l l l Less edu, fin. Stable Older , conservative Reluctant to change l l Lowest in socioeco. Status Highly resistant to go against convention Hold outs