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 Objectives 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 Around 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 New-Product Development Process Idea Generation: every new product begins as someone’s idea. Lots of ideas are generated for a single new product development. Idea Screening: screening is to evaluate and shortlist from the lot of ideas. Concept Dev. & Testing: 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 New-Product Development Process Business Analysis: this stage calls for preparing initial marketing plans and tentative marketing strategy for the product. Prototype Dev: converting the concept into an actual product. Test Marketing: it involves testing the product prototype and marketing strategy in simulated or actual market situations. Commercialization: at this stage the firm introduces the product on a full-scale basis. Investment and risk are very high at this stage.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Successful Commercialization Successful commercialization requires understanding:  Consumer Adoption: describes the steps consumers follow in deciding whether or not to use a new product.  Timing: deciding about the time of entering the market is very crucial.  Coordination: a firm needs to coordinate all functions to implement commercialization strategy effectively.

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 Product Development Balanced Matrix Org:  It calls for a project manager to oversee the project and to share responsibility and authority with functional managers. Decision making and approval are joint process. Project Matrix Org:  It assigns a project manager to take primary responsibility and authority for the process. functional managers assign personnel as needed to perform various activities. Project Team Org:  A project manager heads a core group of people selected from various functional areas. Managers from functional areas are not formally involved in the process.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Marketing Research Support Concept tests and test marketing activities as discussed earlier. Prelaunch activities refer to marketing research studies prior to commercialization. Rollout studies are performed after the product ahs been introduced in the commercialization stage.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Successful New Products Xbox iPod iPhone LCD tv LED tv