Organizations Also Vary in Readiness to Adopt Innovations

The creator of a new teaching method would want to identify innovative schools. The producer of a new piece of medical equipment would want to identify innovative hospitals. Adoption is associated with variables in the organization's environment (community progressiveness, community income), the organization itself (size, profits, pressure to change), and the administrators (education level, age, sophistication). Other forces come into play when trying to get a product adopted into organizations that receive the bulk of their funding from the government, such as public schools. A controversial or innovative product can be squelched by negative public opinion. This was certainly the case with Christopher Whittle's Channel One, a television station for secondary schools.

Do you remember Channel One? This was Christopher Whittle's grand plan to put free television sets in every secondary school. The catch? Teachers would have to flick on a twelve-minute news broadcast every morning, including two minutes of paid ads. Whittle came across as a slick huckster and drew protests from parents and teachers who didn't think commercials had any place in the school. It also didn't help that the original Channel One newscast, with its thumping rock music, looked more like a setting for the ads than for news. Whittle's media empire crumbled in 1994. However, in an interesting epilogue, and a testimony to the lessons to be learned from product failure, another company has bought Channel One and managed to gain adoption in enough schools to reach 8 million kids, 40 percent of the nation's teenagers.

K-III Communications Corporation listened to teachers and parents and made news programming more serious. There is still paid advertising, but the public furor had died down, and, as one principal says, "Even the commercials let us talk about how images are constructed." So maybe Whittle had the right product idea; he just flubbed the execution.47

SUMMARY

1. Once a company has segmented the market, chosen its target customer groups, identified their needs, and determined its desired market positioning, it is ready to develop and launch appropriate new products. Marketing should actively participate with other departments in every stage of new-product development.

chapter 11

Developing New Market

2. Successful new-product development requires the company to establish an effective organization for managing the development process. Companies can choose to use product managers, new-product managers, new-product committees, new-product departments, or new-product venture teams.

3. Eight stages are involved in the new-product development process: idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, market testing, and commercialization. The purpose of each stage is to determine whether the idea should be dropped or moved to the next stage.

4. The consumer-adoption process is the process by which customers learn about new products, try them, and adopt or reject them. Today many marketers are targeting heavy users and early adopters of new products, because both groups can be reached by specific media and tend to be opinion leaders. The consumer-adoption process is influenced by many factors beyond the marketer's control, including consumers' and organizations' willingness to try new products, personal influences, and the characteristics of the new product or innovation.

APPLICATIONS

CONCEPTS

1. To generate really good new-product ideas you need inspiration, perspiration, and good techniques. Some companies struggle with trying to develop new-product ideas because they place more emphasis on inspiration and perspiration than they do on technique. Attribute listing, Alex Osborn's powerful creative tool, can activate the creative juices in just about everyone. Identify a product or service that you are familiar with and list its attributes. Then modify each attribute in search of an improved product. The following form will be useful in your deliberations. If you are having trouble getting started, consider a famous example

Attribute Listing Worksheet

Attributes Magnify Minify Substitute Adapt Rearrange Reverse Combine New Uses Replace of attribute alteration and expansion: that of Oreo cookies. From the simple, black-and-white Oreo, Nabisco has developed double-stuff Oreos, chocolate-covered Oreos, giant-size Oreos, mini-size Oreos, low-fat Oreos, lower-calorie Oreos, different packaging and package sizes, Oreo cookie ice cream, Oreo cookie ice cream cones, Oreo granola bars, Oreo cereal, and Oreo snack treats.

2. Prepare a list of questions that management should answer prior to developing a new product or service. Organize the questions according to the following categories: (a) market opportunity, (b) competition, (c) production, (d) patentable fea-Developing tures, (e) distribution (for products) or delivery (for services), and (f) finance. Then

^^^ Marketing answer each question for a new-product idea you have. Would the development

Strategies and testing of a new service differ from those of a new product?

NOTES

1. New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).

2. Christopher Power, "Flops," Business Week, August 16, 1993, pp. 76-82.

3. "Smokeless Cigarettes Not Catching on with Consumers," Marketing News, August 4, 1997, p. 21; Robert McMath, "Smokeless Isn't Smoking," American Demographics, October 1996.

4. Erika Rasmussen, "Staying Power," Sales & Marketing Management, August 1998, pp. 44-46.

5. Robert G. Cooper and Elko J. Kleinschmidt, New Products: The Key Factors in Success (Chicago: American Marketing Association, 1990).

6. Modesto A. Madique and Billie Jo Zirger, "A Study of Success and Failure in Product Innovation: The Case of the U.S. Electronics Industry," IEEE Transactions on Engineering Management, November 1984, pp. 192-203.

7. Michelle Conlin, "Too Much Doodle?" Forbes, October 19, 1998, pp. 54-55; Tim Stevens, "Idea Dollars," Industry Week, February 16, 1998, pp. 47-49.

8. See David S. Hopkins, Options in New-Product Organization (New York: Conference Board, 1974); Doug Ayers, Robert Dahlstrom, and Steven J. Skinner, "An Exploratory Investigation of Organizational Antecedents to New Product Success," Journal of Marketing Research, February 1997, pp. 107-16.

9. See Robert G. Cooper, "Stage-Gate Systems: A New Tool for Managing New Products," Business Horizons, May-June 1990, pp. 44-54. See also his "The New Prod System: The Industry Experience," Journal of Product Innovation Management 9 (1992): 113-27.

10. Robert Cooper, Product Leadership: Creating and Launching Superior New Products (New York: Perseus Books, 1998).

11. Eric von Hippel, "Lead Users: A Source of Novel Product Concepts," Management Science, July 1986, pp. 791-805. Also see his The Sources of Innovation (New York: Oxford University Press, 1988); and "Learning from Lead Users," in Marketing in an Electronic Age, ed. Robert D. Buzzell (Cambridge, MA: Harvard Business School Press, 1985), pp. 308-17.

12. Constance Gustke, "Built to Last," Sales & Marketing Management, August 1997, pp. 78-83.

13. Mark Hanan, "Corporate Growth through Venture Management," Harvard Business Review, January-February 1969, p. 44. See also Carol J. Loomis, "Dinosaurs?" Fortune, May 3, 1993, pp. 36-42.

14. "The Ultimate Widget: 3-D 'Printing' May Revolutionize Product Design and Manufacturing," U.S. News & World Report, July 20, 1992, p. 55.

15. Tom Dellacave Jr., "Curing Market Research Headaches," Sales & Marketing Management, July 1996, pp. 84-85.

16. Dan Deitz, "Customer-Driven Engineering," Mechanical Engineering, May 1996, p. 68.

17. The full-profile example was taken from Paul E. Green and Yoram Wind, "New Ways to Measure Consumers' Judgments," Harvard Business Review (July-August 1975), pp. 107-17. Copyright © 1975 by the President and Fellows of Harvard College; all rights reserved. Also see Paul E. Green and V. Srinivasan, "Conjoint Analysis in Marketing: New Developments with Implications for Research and Practice," Journal of Marketing, October

1990, pp. 3-19; Jonathan Weiner, "Forecasting Demand: Consumer Electronics Marketer Uses a Conjoint Approach to Configure Its New Product and Set the Right Price," Marketing Research: A Magazine of Management & Applications, Summer 1994, pp. 6-11; Dick R. Wittnick, Marco Vriens, and Wim Burhenne, "Commercial Uses of Conjoint Analysis in Europe: Results and Critical Reflections," International Journal of Research in Marketing, January 1994, pp. 41-52.

18. See Robert Blattberg and John Golanty, "Tracker: An Early Test Market Forecasting and Diagnostic Model for New Product Planning," Journal of Marketing Research, May 1978, pp. 192-202; Glen L. Urban, Bruce D. Weinberg, and John R. Hauser, "Premarket Forecasting of Really New Products," Journal of Marketing, January 1996, pp. 47-60; Peter N. Golder and Gerald J. Tellis, "Will It Ever Fly? Modeling the Takeoff of Really New Consumer Durables," Marketing Science, 16, no. 3 (1997): 256-70.

19. See Roger A. Kerin, Michael G. Harvey, and James T. Rothe, "Cannibalism and New Product Development," Business Horizons, October 1978, pp. 25-31.

20. The present value (V) of a future sum (I) to be received t years from today and discounted at the interest rate (r) is given by V = It/(1 + r)t. Thus $4,761,000/(1.15)5 = $2,346,000.

21. See David B. Hertz, "Risk Analysis in Capital Investment," Harvard Business Review, January-February 1964, pp. 96-106.

22. See John Hauser, "House of Quality,"Harvard Business Review, May-June 1988, pp. 63-73. Customer-driven engineering is also called "quality function deployment." See Lawrence R. Guinta and Nancy C. Praizler, The QFD Book: The Team Approach to Solving Problems and Satisfying Customers through Quality Function Deployment (New York: AMACOM, 1993); V. Srinivasan, William S. Lovejoy, and David Beach, "Integrated Product Design for Marketability and Manufacturing," Journal of Marketing Research, February 1997, pp. 154-63.

23. Marco Iansiti and Alan MacCormack, "Developing Products on Internet Time," Harvard Business Review, September-October 1997, pp. 108-17; Srikant Datar, C. Clark Jordan, and Kannan Srinivasan, "Advantages of Time Based New Product Development in a Fast-Cycle Industry," Journal of Marketing Research, February 1997, pp. 36-49; Christopher D. Ittner and David F. Larcker, "Product Development Cycle Time and Organizational Performance," Journal of Marketing Research, February 1997, pp. 13-23.

24. Tom Peters, The Circle of Innovation, (New York: Alfred A. Knopf, 1997), p. 96.

26. Faye Rice, "Secrets of Product Testing," Fortune, November 28, 1994, pp. 172-74; Lawrence Ingrassia, "Taming the Monster: How Big Companies Can Change: Keeping Sharp: Gillette Holds Its Edge by Endlessly Searching for a Better Shave," Wall Street Journal, December 10, 1992, p. A1.

27. Gerry Khermouch, "Plate Tectonics," Brandweek, February 12, 1996, p. 1.

28. Audrey Choi and Gabriella Stern, "The Lessons of Rügen: Electric Cars are Slow, Temperamental and Exasperating," Wall Street Journal, March 30, 1995, p. B1.

29. John Schwartz, "After 2 Years of Market Tests, Olestra Products Going National; Consumer Advocates Still Concerned About Health Risks," Washington Post, February 11, 1998, p. A3.

30. Christopher Power, "Will it Sell in Po-dunk? Hard to Say," Business Week, August 10, 1992, pp. 46-47.

31. See Kevin J. Clancy, Robert S. Shulman, and Marianne Wolf, Simulated Test Marketing: Technology for Launching Successful New Products (New York: Lexington Books, 1994); and V. Mahajan and Jerry Wind, "New Product Models: Practice, Shortcomings, and Desired Improvements," Journal of Product Innovation Management 9 (1992): 128-39; Glen L. Urban, John R. Hauser, and Roberta A. Chicos, "Information Acceleration: Validation and Lessons from the Field," Journal of Marketing Research, February 1997, pp. 143-53.

32. Power, "Will It Sell in Podunk," pp. 46-47.

33. Robert McMath, "To Test or Not to Test . . . ," American Demographics, June 1998, p. 64.

34. Corie Brown, "The Lizard Was a Turkey," Newsweek, June 15, 998, p. 71; Tim Carvell, "How Sony Created a Monster," Fortune, June 8, 1998, pp. 162-70.

35. For further discussion, see Robert J. Thomas, "Timing—The Key to Market Entry," Journal of Consumer Marketing, Summer 1985, pp. 77-87; Thomas S. Robertson, Jehoshua Eliashberg, and Talia Rymon, "New Product Announcement Signals and Incumbent Reactions," Journal of Marketing, July 1995, pp. 1-15; Frank H. Alpert and Michael A. Kamins, "Pioneer Brand Advantages and Consumer Behavior:A Conceptual Framework and Propositional Inventory," Journal of the Academy of Marketing Science, Summer 1994, pp. 244-36.

36. Mickey H. Gramig, "Coca-Cola Unveiling New Citrus Drink," Atlanta Journal and Constitution, January 24, 1998, p. E3.

37. See Cooper and Kleinschmidt, New Products, pp. 35-38.

38. Erika Rasmusson, "Staying Power," Sales & Marketing Management, August 1998, pp. 44-46.

39. Quentin Hardy, "Iridium's Orbit to Sell a World Phone, Play to Executive Fears of Being out of Touch: Satellite Consortium Chooses That Pitch for Bid to Build a Global Brand Overnight," Wall Street Journal, June 4, 1998 p. A1; Sally Beatty, "Iridium Is Betting Satellite Phone Will Hook Restless Professionals," Wall Street Journal, June 22, 1998, p. B6.

40. Philip Kotler and Gerald Zaltman, "Targeting Prospects for a New Product," Journal of Advertising Research, February 1976, pp. 7-20.

41. Jim Carlton, "From Apple, a New Marketing Blitz," Wall Street Journal, August 14, 1998, p. B1.

42. For details, see Keith G. Lockyer, Critical Path Analysis and Other Project Network Techniques (London: Pitman, 1984). Also see Arvind Rangaswamy and Gary L. Lilien, "Software Tools for New Product Development," Journal of Marketing Research, February 1997, pp. 177-84.

43. The following discussion leans heavily on Everett M. Rogers, Diffusion of Innovations (New York: Free Press, 1962).

Also see his third edition, published in 1983.

44. Gillian Newson and Eric Brown, "CD-ROM: What Went Wrong?" NewMedia, August 1998, pp. 32-38.

45. Rogers, Diffusion of Innovations, p. 192. Also see S. Ram and Hyung-Shik Jung, "Innovativeness in Product Usage: A Comparison of Early Adopters and Early Majority," Psychology and Marketing, January-February 1994, pp. 57-68.

46. See Hubert Gatignon and Thomas S. Robertson, "A Propositional Inventory for New Diffusion Research," Journal of Consumer Research, March 1985, pp. 849-67; Vijay Mahajan, Eitan Muller, and Frank M. Bass, "Diffusion of New Products: Empirical Generalizations and Managerial Uses," Marketing Science, 14, no. 3, part 2 (1995); G79-G89; Fareena Sultan, John U. Farley, and Donald R. Lehmann, "Reflection on 'A Meta-Analy-sis of Applications of Diffusion Models,'" Journal of Marketing Research, May 1996, pp. 247-49; Minhi Hahn, Sehoon Park, and Andris A. Zoltners, "Analysis of New Product Diffusion Using a Four-segment Trial-repeat Model," Marketing Science, 13, no. 3 (1994), 224-47.

47. Joshua Levine, "TV in the Classroom," Forbes, January 27, 1997, p. 98.

SECTION THREE

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