Download What is a New Product?

CHAPTER
DEVELOPING
NEW PRODUCTS
AND SERVICES
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-2
3M’S NEW GREPTILE GRIP GOLF
GLOVE: HOW TO GET TO THE TOP
OF THE LEADER BOARD
• The Product?
• The Target
Market?
• The Special
Marketing Task?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-5
THE VARIATIONS OF PRODUCTS
• Product
• Product Line and Product Mix
 Product Line
• Product Item
• Stock Keeping Unit (SKU)
 Product Mix
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-6
Little Remedies
How does an extensive product line benefit
both consumers and retailers?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-7
THE VARIATIONS OF PRODUCTS
• Classifying Products
 Type of User
• Consumer Goods
• Business Goods
 Degree of Tangibility
• Nondurable Good
• Services
• Durable Good
 Services and New-Product Development
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-8
CLASSIFYING CONSUMER AND
BUSINESS GOODS
• Classification of Consumer Goods
 Convenience Goods
 Shopping Goods
 Specialty Goods
 Unsought Goods
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-9
FIGURE 10-1 Classification of consumer
goods
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-10
Raymond Weil Watch
What type of consumer good?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-11
CLASSIFYING CONSUMER AND
BUSINESS GOODS
• Classification of Business Goods
 Production Goods
 Support Goods
• Installations
• Accessory Equipment
• Supplies
• Industrial Services
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-12
NEW PRODUCTS AND WHY THEY
SUCCEED OR FAIL
• What is a New Product?
 Newness Compared with Existing Products
 Newness in Legal Terms (Regular Distribution?)
• Regular Distribution
 Newness from the Company’s Perspective
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-16
Sony’s PlayStation 2 and Microsoft’s Xbox
How does the term “new” apply?
PS2
Xbox
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-17
MARKETING NEWSNET
Blindsided in the Twenty-First Century—
The Convergence of Digital Devices
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-18
NEW PRODUCTS AND WHY THEY
SUCCEED OR FAIL
• What is a New Product?
 Newness from the Consumer’s Perspective
• Continuous Innovation
• Dynamically Continuous Innovation
• Discontinuous Innovation
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-19
FIGURE 10-2 Consumption effects define
newness
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-20
NEW PRODUCTS AND WHY THEY
SUCCEED OR FAIL
• Why Products Succeed or Fail
 Marketing Reasons for New-Product Failures
• Insignificant Point of Difference
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-21
FIGURE 10-B What it takes to launch one
commercially successful new product
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-22
MARKETING NEWSNET
What Separates New-Product
Winners and Losers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-23
NEW PRODUCTS AND WHY THEY
SUCCEED OR FAIL
• Why Products Succeed or Fail
 Marketing Reasons for New-Product Failures
• Incomplete Market and Product Definition
Before Product Development Starts
 Protocol
• Too Little Market Attractiveness
• Poor Execution of the Marketing Mix:
Name, Price, Promotion, and Distribution
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-25
NEW PRODUCTS AND WHY THEY
SUCCEED OR FAIL
• Why Products Succeed or Fail
 Marketing Reasons for New-Product Failures
• Poor Product Quality or Insensitivity to
Customer Needs on Critical Factors
• Bad Timing
• No Economic Access to Buyers
 A Look at Some Failures
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-26
MARKETING NEWSNET
When Less is More—
How Reducing the Number of Features
Can Open Up Huge Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-28
Concept Check
1. From a consumer’s viewpoint, what
kind of innovation would an
improved electric toothbrush be?
A: continuous innovation
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-30
FIGURE 10-4 Stages in the new-product
process
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-33
FIGURE 10-C Strategic roles of most
successful new products
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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THE NEW-PRODUCT PROCESS
• Idea Generation
 Customer and Supplier Suggestions
 Employee and Co-Worker Suggestions
 Research and Development Breakthroughs
 Competitive Products
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-35
Volvo’s YCC
How are new-product ideas generated?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-36
THE NEW-PRODUCT PROCESS
• Screening and Evaluation
 Internal Approach
 External Approach
• Concept Tests
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-38
3M Post-it Flag Highlighter
How are new-product ideas screened & evaluated?
+
3M Post-it Notes
=
Felt Tip Highlighters
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
3M Post-it
Flag Highlighters
Slide 10-39
Frito-Lay Natural Snacks
How are new-product ideas screened & evaluated?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-40
THE NEW-PRODUCT PROCESS
• Business Analysis
 Prototype
• Development
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-44
Mattel’s Barbie
Why should laboratory and safety tests be done?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-45
ETHICS AND SOCIAL
RESPONSIBILITY ALERT
SUVs and Pickups versus Cars—
Godzilla Meets a Chimp?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-46
THE NEW-PRODUCT PROCESS
• Market Testing
 Test Marketing
 Simulated (or Laboratory) Test Markets (STM)
 When Test Markets Don’t Work
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-47
FIGURE 10-5 Six important U.S. test
markets and the “demographics winner”:
Wichita Falls, Texas, metropolitan statistical
area
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-48
THE NEW-PRODUCT PROCESS
• Commercialization
 Burger King’s French Fries: The Complexities
of Commercialization
 The Risks and Uncertainties of the
Commercialization Stage
• Slotting Fee
• Failure Fee
 Speed as a Factor in New-Product Success
• Time to Market (TtM)
• Fast Prototyping
• Parallel Development
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-49
FIGURE 10-6 Marketing information and
methods used in the new-product process
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-50
Burger King French Fries
Why is commercialization risky?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-51
Hewlett-Packard Cross-Functional Team
Why is time to market (TtM) important?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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FIGURE 10-D Five alternative structures for
product development projects
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-64
FIGURE 10-E Overall performance of five
structures for product development projects
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Product
A product is a good, service, or idea
consisting of a bundle of tangible and
intangible attributes that satisfies
consumers and is received in exchange
for money or some other unit of value.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-82
Product Line
A product line is a group of products
that are closely related because they
satisfy a class of needs, are used together,
are sold to the same customer group, are
distributed through the same type of
outlets, or fall within a given price range.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-83
Product Mix
The product mix is the number of
product lines offered by a company.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Consumer Goods
Consumer goods are products purchased
by the ultimate consumer.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-85
Business Goods
Business goods are products that assist
directly or indirectly in providing
products for resale. Also called as B2B
goods, industrial goods, or organizational
goods.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-86
Convenience Goods
Convenience goods are items that
the consumer purchases frequently,
conveniently, and with a minimum
of shopping effort.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-87
Shopping Goods
Shopping goods are items for which the
consumer compares several alternatives
on criteria, such as price, quality, or style.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-88
Specialty Goods
Specialty goods are items that a
consumer makes a special effort to
search out and buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Unsought Goods
Unsought goods are items that the
consumer either does not know about or
knows about but does not initially want.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-90
Production Goods
Production goods are items used in the
manufacturing process that become part
of the final product.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Support Goods
Support goods are items used to assist in
producing other goods and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Protocol
A protocol is a statement that, before
product development begins, identifies:
(1) a well-defined target market;
(2) specific customers’ needs, wants,
and preferences; and (3) what the
product will be and do.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-93
New-Product Process
The new-product process consists of
seven stages a firm goes through to
identify business opportunities and
convert them to a salable good or service.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-94
New-Product Strategy
Development
New-product strategy development is
the stage of the new-product process that
defines the role for a new product in
terms of the firm’s overall corporate
objectives.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-95
Six Sigma
Six Sigma is a means to “delight the
customer” by achieving quality through
a highly disciplined process to focus on
developing and delivering near-perfect
products and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-96
Idea Generation
Idea generation is the stage of the newproduct process that involves developing
a pool of concepts as candidates for new
products.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Screening and Evaluation
Screening and evaluation is the stage
of the new-product process that involves
internal and external evaluations of the
new-product ideas to eliminate those
that warrant no further effort.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-98
Business Analysis
Business analysis is the stage of the
new-product process that involves
specifying the product features and
marketing strategy and making
necessary financial projections needed
to commercialize a product.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Development
Development is the stage of the newproduct process that involves turning
the idea on paper into a prototype.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Market Testing
Market testing is the stage of the
new-product process that involves
exposing actual products to prospective
consumers under realistic purchase
conditions to see if they will buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Commercialization
Commercialization is the stage of the
new-product process that involves
positioning and launching a new product
in full-scale production and sales.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Slotting Fee
A slotting fee is a payment a
manufacturer makes to place a
new item on a retailer’s shelf.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Failure Fee
A failure fee is a penalty payment a
manufacturer makes to compensate a
retailer for sales its valuable shelf space
failed to make.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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