Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 Developing New Products and Services

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 After studying this chapter you should be able to: Recognize the different types of new products. Discuss the different sources of new products. Understand the stages in the new-product development process. Describe the way marketing research is used in the new-product development process. Appreciate the keys to new-product success.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 New-Product Overview New products drive sales and profit growth. New products may gain market share from competitors. New Product Failure Rate May Be 80%

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 Types of New Products New to the World Products New Category Entries Additions to Product Lines Product Improvements Repositionings

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 Sources of New Products External Sourcing Collaborative Venture Internal Development

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 New-Product Development Process Idea Generation Idea Screening Concept Development & Testing Business Analysis Prototype Development Test Marketing Commercialization

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 New-Product Development Approaches

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-9 Idea Generation Idea Generation:  The initial stage for the new-product development process. Idea Generation:  The initial stage for the new-product development process.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Idea Screening Idea Screening:  Evaluate the idea pool and reduce it to a smaller and more attractive set of potential new products.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Concept Development and Testing Concept Development:  The process of shaping and refining the idea into a more complete product concept. Concept Development:  The process of shaping and refining the idea into a more complete product concept.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Business Analysis Business Analysis:  Stage of the new-development process that calls for preparing initial marketing plans for the product. Business Analysis:  Stage of the new-development process that calls for preparing initial marketing plans for the product.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Prototype Development Prototype Development:  Converting the concept into an actual product. Prototype Development:  Converting the concept into an actual product.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Test Marketing Test Marketing:  Testing the product prototype and marketing strategy in simulated or actual market situations. Test Marketing:  Testing the product prototype and marketing strategy in simulated or actual market situations. Simulated Test Marketing:  Evaluating a new product in situations contrived to be similar to how consumers would purchase and use it. Simulated Test Marketing:  Evaluating a new product in situations contrived to be similar to how consumers would purchase and use it.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Test Marketing Standard Test Marketing:  Testing a new product and its marketing strategy in actual market situations. Standard Test Marketing:  Testing a new product and its marketing strategy in actual market situations.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Commercialization Commercialization:  The firm introduces the product on a full-scale basis, involving: Understanding Consumer Adoption Timing Coordination Commercialization:  The firm introduces the product on a full-scale basis, involving: Understanding Consumer Adoption Timing Coordination

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved The Consumer Adoption Process Consumer Marketing Strategy Adoption StageObjective AwarenessCommunicate Availability InterestCommunicate Product Benefits EvaluationEmphasize Advantages TrialMotivate Customers to Try AdoptionEnsure Customer Satisfaction

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Keys to New-Product Success

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Organizational Approaches to New Product Development Balanced Matrix Organization Project Matrix Organization Project Team Organization

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Marketing-Research Support Focus Groups Market Definition Studies Target Segment Identification Concept Tests Name & Package Evaluation Product Tests Copy Tests Simulated Test Markets Test Markets Prelaunch

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Market-Research Support Awareness & Attitude Studies Usage Studies Tracking Studies Product Refinement Tests New Advertising Strategy Tests Rollout

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved “The Best Products for 2001” Harmony low-fat cereal from General Mills The Samsung 1300 from Sprint PCS Microsoft’s Xbox Credit Watch Hitachi’s DZ-MV100A Camcorder Apple’s I Pod Listerine’s PocketPaks Harmony low-fat cereal from General Mills The Samsung 1300 from Sprint PCS Microsoft’s Xbox Credit Watch Hitachi’s DZ-MV100A Camcorder Apple’s I Pod Listerine’s PocketPaks