© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-2
DEVELOPINGNEW PRODUCTSAND SERVICES
CHAPTER
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-5
3M’S NEW GREPTILE GRIP GOLFGLOVE: HOW TO GET TO THE TOPOF THE LEADER BOARD
•The Product?
•The TargetMarket?
•The SpecialMarketing Task?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-7
Little Remedies How does an extensive product line benefitboth consumers and retailers?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-10
FIGURE 10-1 FIGURE 10-1 Classification of consumergoods
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-11
Raymond Weil Watch What type of consumer good?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
NEW PRODUCTS AND WHY THEYSUCCEED OR FAIL
Slide 10-16
Newness Compared with Existing Products
•What is a New Product?
Newness in Legal Terms (Regular Distribution?)
Newness from the Company’s Perspective
• Regular Distribution
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-17
Sony’s PlayStation 2 and Microsoft’s Xbox How does the term “new” apply?
Xbox
PS2
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-18
MARKETING NEWSNET
Blindsided in the Twenty-First Century—The Convergence of Digital Devices
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
NEW PRODUCTS AND WHY THEYSUCCEED OR FAIL
Slide 10-19
•What is a New Product?
• Continuous Innovation
Newness from the Consumer’s Perspective
• Dynamically Continuous Innovation
• Discontinuous Innovation
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-20
FIGURE 10-2 FIGURE 10-2 Consumption effects definenewness
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
NEW PRODUCTS AND WHY THEYSUCCEED OR FAIL
Slide 10-21
•Why Products Succeed or Fail
• Insignificant Point of Difference
Marketing Reasons for New-Product Failures
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-22
FIGURE 10-BFIGURE 10-B What it takes to launch onecommercially successful new product
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-23
MARKETING NEWSNET
What Separates New-ProductWinners and Losers
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
NEW PRODUCTS AND WHY THEYSUCCEED OR FAIL
Slide 10-25
•Why Products Succeed or Fail
Marketing Reasons for New-Product Failures
• Too Little Market Attractiveness
• Incomplete Market and Product Definition Before Product Development Starts
• Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
NEW PRODUCTS AND WHY THEYSUCCEED OR FAIL
Slide 10-26
•Why Products Succeed or Fail
Marketing Reasons for New-Product Failures
• Bad Timing
• Poor Product Quality or Insensitivity to Customer Needs on Critical Factors
• No Economic Access to Buyers
A Look at Some Failures
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-28
MARKETING NEWSNET
When Less is More—How Reducing the Number of FeaturesCan Open Up Huge Markets
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-30
Concept Check
1. From a consumer’s viewpoint, whatkind of innovation would animproved electric toothbrush be?
A: continuous innovation
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-33
FIGURE 10-4 FIGURE 10-4 Stages in the new-productprocess
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-34
FIGURE 10-CFIGURE 10-C Strategic roles of mostsuccessful new products
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-36
Volvo’s YCC
How are new-product ideas generated?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-39
3M Post-it Flag Highlighter
How are new-product ideas screened & evaluated?
+
=
3M Post-itFlag Highlighters
3M Post-it Notes
Felt Tip Highlighters
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-40
Frito-Lay Natural Snacks
How are new-product ideas screened & evaluated?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-45
Mattel’s Barbie
Why should laboratory and safety tests be done?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-46
ETHICS AND SOCIALRESPONSIBILITY ALERT
SUVs and Pickups versus Cars—Godzilla Meets a Chimp?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-48
FIGURE 10-5FIGURE 10-5 Six important U.S. testmarkets and the “demographics winner”:Wichita Falls, Texas, metropolitan statisticalarea
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-50
FIGURE 10-6 FIGURE 10-6 Marketing information andmethods used in the new-product process
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-51
Burger King French Fries
Why is commercialization risky?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-52
Hewlett-Packard Cross-Functional Team
Why is time to market (TtM) important?
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-64
FIGURE 10-DFIGURE 10-D Five alternative structures forproduct development projects
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-65
FIGURE 10-EFIGURE 10-E Overall performance of fivestructures for product development projects
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-82
Product
A product is a good, service, or ideaconsisting of a bundle of tangible andintangible attributes that satisfiesconsumers and is received in exchangefor money or some other unit of value.
A product is a good, service, or ideaconsisting of a bundle of tangible andintangible attributes that satisfiesconsumers and is received in exchangefor money or some other unit of value.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-83
Product Line
A product line is a group of productsthat are closely related because theysatisfy a class of needs, are used together,are sold to the same customer group, aredistributed through the same type ofoutlets, or fall within a given price range.
A product line is a group of productsthat are closely related because theysatisfy a class of needs, are used together,are sold to the same customer group, aredistributed through the same type ofoutlets, or fall within a given price range.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-84
Product Mix
The product mix is the number ofproduct lines offered by a company.
The product mix is the number ofproduct lines offered by a company.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-85
Consumer Goods
Consumer goods are products purchasedby the ultimate consumer.
Consumer goods are products purchasedby the ultimate consumer.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-86
Business Goods
Business goods are products that assistdirectly or indirectly in providingproducts for resale. Also called as B2Bgoods, industrial goods, or organizationalgoods.
Business goods are products that assistdirectly or indirectly in providingproducts for resale. Also called as B2Bgoods, industrial goods, or organizationalgoods.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-87
Convenience Goods
Convenience goods are items thatthe consumer purchases frequently,conveniently, and with a minimumof shopping effort.
Convenience goods are items thatthe consumer purchases frequently,conveniently, and with a minimumof shopping effort.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-88
Shopping Goods
Shopping goods are items for which theconsumer compares several alternativeson criteria, such as price, quality, or style.
Shopping goods are items for which theconsumer compares several alternativeson criteria, such as price, quality, or style.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-89
Specialty Goods
Specialty goods are items that aconsumer makes a special effort tosearch out and buy.
Specialty goods are items that aconsumer makes a special effort tosearch out and buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-90
Unsought Goods
Unsought goods are items that theconsumer either does not know about orknows about but does not initially want.
Unsought goods are items that theconsumer either does not know about orknows about but does not initially want.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-91
Production Goods
Production goods are items used in themanufacturing process that become partof the final product.
Production goods are items used in themanufacturing process that become partof the final product.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-92
Support Goods
Support goods are items used to assist inproducing other goods and services.
Support goods are items used to assist inproducing other goods and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-93
Protocol
A protocol is a statement that, beforeproduct development begins, identifies:(1) a well-defined target market;(2) specific customers’ needs, wants,and preferences; and (3) what theproduct will be and do.
A protocol is a statement that, beforeproduct development begins, identifies:(1) a well-defined target market;(2) specific customers’ needs, wants,and preferences; and (3) what theproduct will be and do.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-94
New-Product Process
The new-product process consists ofseven stages a firm goes through toidentify business opportunities andconvert them to a salable good or service.
The new-product process consists ofseven stages a firm goes through toidentify business opportunities andconvert them to a salable good or service.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-95
New-Product StrategyDevelopment
New-product strategy development isthe stage of the new-product process thatdefines the role for a new product interms of the firm’s overall corporateobjectives.
New-product strategy development isthe stage of the new-product process thatdefines the role for a new product interms of the firm’s overall corporateobjectives.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-96
Six Sigma
Six Sigma is a means to “delight thecustomer” by achieving quality througha highly disciplined process to focus ondeveloping and delivering near-perfectproducts and services.
Six Sigma is a means to “delight thecustomer” by achieving quality througha highly disciplined process to focus ondeveloping and delivering near-perfectproducts and services.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-97
Idea Generation
Idea generation is the stage of the new-product process that involves developinga pool of concepts as candidates for newproducts.
Idea generation is the stage of the new-product process that involves developinga pool of concepts as candidates for newproducts.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-98
Screening and Evaluation
Screening and evaluation is the stageof the new-product process that involvesinternal and external evaluations of thenew-product ideas to eliminate thosethat warrant no further effort.
Screening and evaluation is the stageof the new-product process that involvesinternal and external evaluations of thenew-product ideas to eliminate thosethat warrant no further effort.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-99
Business Analysis
Business analysis is the stage of thenew-product process that involvesspecifying the product features andmarketing strategy and makingnecessary financial projections neededto commercialize a product.
Business analysis is the stage of thenew-product process that involvesspecifying the product features andmarketing strategy and makingnecessary financial projections neededto commercialize a product.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-100
Development
Development is the stage of the new-product process that involves turningthe idea on paper into a prototype.
Development is the stage of the new-product process that involves turningthe idea on paper into a prototype.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-101
Market Testing
Market testing is the stage of thenew-product process that involvesexposing actual products to prospectiveconsumers under realistic purchaseconditions to see if they will buy.
Market testing is the stage of thenew-product process that involvesexposing actual products to prospectiveconsumers under realistic purchaseconditions to see if they will buy.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-102
Commercialization
Commercialization is the stage of thenew-product process that involvespositioning and launching a new productin full-scale production and sales.
Commercialization is the stage of thenew-product process that involvespositioning and launching a new productin full-scale production and sales.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-103
Slotting Fee
A slotting fee is a payment amanufacturer makes to place anew item on a retailer’s shelf.
A slotting fee is a payment amanufacturer makes to place anew item on a retailer’s shelf.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Slide 10-104
Failure Fee
A failure fee is a penalty payment amanufacturer makes to compensate aretailer for sales its valuable shelf spacefailed to make.
A failure fee is a penalty payment amanufacturer makes to compensate aretailer for sales its valuable shelf spacefailed to make.