Segmentation example: Rollerblade

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Segmentation example Rollerblade
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Repositioning example Hyundai cars

• What consumers perceive
• An association with cheap vehicles.
• Still seen as an entry-level car and brand
• Only 23 of all new-car buyers last year even
  bothered to consider a Hyundai. Comparable
  figures are 65 for Toyota and gt 50 for Honda
• A group was shown a new Hyundai crossover SUV
• without any identifying logos on it ? 71 said
  they'd buy it
• With the Hyundai logo ? 52 said theyd buy it

Source Business Week
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Repositioning Hyundai cars

• Actual quality
• Hyundai's quality is actually ahead of Toyota's
  in J.D. Power's Initial Quality Study, and behind
  only Lexus and Porsche.
• Consumer Reports tapped two of Hyundai's new
  vehicles as "Most Impressive" among five 2007
  models it recently singled out

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Repositioning Hyundai cars

• Objective
• Reposition Hyundai as an overachieving,
  underappreciated brand that smart people are
  discovering
• Marketing campaign (Think about it)
• Ad campaign (2007)
• Launch of Genesis and advertising on 2008 Super
  Bowl (Ad)

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New Product Development

• 03/02/09

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Product

• Anything that satisfies consumer needs
• Bundle of benefits vs. Bundle of attributes
• Consumers focus on attributes as a way to achieve
  benefits
• Example Cars
• Economic transportation ? Price
• Sporty feeling ? Engine capacity, Horsepower,
  styling
• Luxury ? Heated leather seats, GPS

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Products Terminology

• Product mix
• All product lines offered by a company (all
  products offered by PG)
• Product line
• Group of closely related products (laundry
  detergents from PG)
• Product item
• A specific product within a product line (Tide
  with bleach laundry detergent)
• SKU (Stock keeping unit)
• Each size of a product item (77 oz size of Tide
  with bleach)

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Classifying products

• Nondurable goods
• Durable goods
• Services
• Which of these are high vs. low involvement
  purchases?

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Consumer products
Very expensive, uniqueness and status emphasized
Inexpensive, purchased frequently, widely
available
More expensive, purchased infrequently, more
shopping time
Convenience Products
Specialty Products
Shopping Products
Level of Effort expended
Unsought products Consumers unaware of need or
not seeking solution
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What is a new product?

• New compared with existing products (customer
  perspective)
• New from the companys perspective

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Consumption Effects Define Newness
LOW DEGREE OF CHANGE BEHAVIOR AND LEARNING
NEEDED BY CONSUMER HIGH
CONTINUOUS INNOVATION
BASIS OF COMPARISON
DYNAMICALLY CON- TINUOUS INNOVATION
DISCONTINUOUS INNOVATION
Disrupts consumers normal routine but does not
require totally new learning
Establishes new consumption patterns among
consumers
Definition Examples Marketing emphasis
Requires no new learning by consumers
Gillette Fusion and New Improved Tide
Oral-B Electric toothbrush
PDA, and the Internet, Segway
Generate awareness among consumers and obtain
widespread distribution
Advertise benefits to consumers, stressing points
of difference and consumer advantage
Educate consumers through product trial
personal selling
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New Product development Its hard to forecast the
future

• I think there is a world market for maybe five
  computers.
• There is no reason anyone would want a computer
  in their home.
• Who the hell wants to hear actors talk?
• Well informed people know it is impossible to
  transmit the voice over wires, and even if it
  were possible the thing would have no practical
  value

Thomas Watson, chairman of IBM, 1943
Ken Olson, chairman and founder of Digital
Equipment Corp., 1977
H.M. Warner, Warner Brothers, 1927
Editorial in the Boston Post, 1865
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What it takes to launch one commercially
successful new product
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Product development risks

• 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 fail 90 of
  new consumer products in Europe fail - Nielsen
  BASES and Ernst Young study (2002)
• 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

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Why do products fail?

• Too small a target market
• Insignificant point of difference
• Poor product quality
• Poor use of research
• Bad timing
• Poor execution of the marketing mix
• Distribution issues

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Why new products succeed?

• Top-management commitment
• Start with the consumer -- not the factory
• Intelligent use of research
• Exploit a competitive advantage
• Speed to market

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NPD process
New product strategy development
Idea generation
Screening and evaluation
Business analysis
Development
Market testing
Commercialization
Commercialized products
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Strategic roles of most successful new products
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Sources for ideas

• Technology
• PG Connect Develop program
• Market needs and user solutions
• Heinz EZ Squirt
• Competitors and other firms
• Microsoft Internet Explorer
• Management and employees
• TIs Speak n Spell toys
• Environmental changes
• TSA approved locks for travel

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Sources for ideas

• You can't just ask consumers what they want or
  need, because they often have only the foggiest
  idea.
• To get around that conundrum, 3M sends its 9,000
  technical employees into customers' workplaces in
  34 countries to work alongside people and see
  what their problems are. Procter Gamble does
  something similar.