1. DEVELOPING NEW PRODUCTS AND SERVICES
CHAPTER
DEVELOPING NEW PRODUCTS AND SERVICES

2. Product Item Product Line Product Mix
Product Items, Lines, and Mixes
Product Item
Product Line
Product Mix
A specific version of an organization’s products.
A group of closely-related product items.
All products that an organization sells.
(SKU)
Each has a unique number and bar code

4. Classifying Products Type of User Degree of Tangibility Consumer Goods
Business Goods
Degree of Tangibility
Nondurable Good-used up in a few uses
Durable Good-lasts over many uses
Examples??
Services

5. The Characteristics of Services
Intangibility
Inseparability
Heterogeneity
Perishability
Services that cannot be touched, seen, tasted, heard, or felt in the same manner as goods.
A characteristic of services that allows them to be produced and consumed simultaneously.
A characteristic of services that makes them less standardized and uniform than goods.
A characteristics of services that prevents them from being stored, warehoused, or inventoried.

6. THE VARIATIONS OF PRODUCTS
Intangibility
Inseparability
Inconsistency
Inventory
Idle Production Capacity-
like stock out costs and holding costs for goods
The Four I’s of Services
Can be reduced by using commission and part time workers

7. CLASSIFYING GOODS AND SERVICES
Convenience
Product
Shopping
Specialty
Unsought
A relatively inexpensive item that merits little shopping effort.
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.
A particular item that consumers
search extensively for and are reluctant to accept substitutes.
A product unknown to the potential buyer or a known product that the buyer does not actively seek.

8. Classification of consumer goods

9. Why new-product development can be a dice roll: some forecasts
These quotations—from very knowledgeable people—were made at the time these four new inventions appeared in the marketplace. The quotations show the difficulty of forecasting future technological revolutions—those usually involving discontinuous innovations.

10. What Is A New Product Functionally Different from Existing Products
FTC: Newness = 6 Months or less After Regular Distribution
Company: Simply Anything Different

11. FIGURE 10-D What it takes to launch one commercially successful new product
The thousands of product failures that occur every year cost American business billions of dollars. Research research summarized in this figure suggests that it takes about 3,000 raw unwritten ideas to produce a single commercially successful new product.

12. Reasons for New Product Failures
Bad Timing
Too Little Market Attractiveness
Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution
No Access to Buyers
Insignificant Point of Difference
Poor Product Quality
Insensitivity to Customer Needs on Critical Factors

13. Why Did These Products Fail?

14. Why did this new product fail?

15. Stages in the New Development Process

16. Strategic roles of most successful new products
Booz, Allen, and Hamilton, a global consulting firm, asked firms what strategic role was served by their most successful recent product. These roles, shown in the figure, help define the direction of new-product development in terms of externally- and internally-driven factors.

17. THE NEW-PRODUCT PROCESS-
Idea Generation
Customer and Supplier Suggestions
Employee and Co-Worker Suggestions
Research and Development Breakthroughs
Competitive Products

18. THE NEW-PRODUCT PROCESS- Screening and Evaluation
The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason.

19. THE NEW-PRODUCT PROCESS-
Business Analysis
if positive, build a prototype
Considerations in Business Analysis Stage
Demand
Cost
Sales
Profitability

20. THE NEW-PRODUCT PROCESS-Development
Safety Tests
“Failure Analysis”
Marketing strategy
Packaging, branding, labeling
Manufacturing feasibility
Final government approvals if needed

21. THE NEW-PRODUCT PROCESS- Test Marketing
The limited introduction of a product
and a marketing program to determine
the reactions of potential customers
in a market situation.

22. When Test Markets Don’t Work
Limited time to market
Service nature of the item
Time to see product benefit is long
Number of units produced is small

23. Six important U.S. test markets “demographics winner”: Wichita Falls, Texas, metropolitan statistical area

24. THE NEW-PRODUCT PROCESS-
Commercialization
Most expensive stage
Ramp Up and Regional Rollouts
Product Positioning is marketing’s job here
Speed as a Factor in New-Product Success
Time to Market- important high tech items
Parallel Development – Gantt chart usage
Fast Prototyping – do it, try it, fix it

25. To Review: The New Product Process

26. 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.

27. 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.

28. Product Mix
The product mix is the number of product lines offered by a company.

29. Consumer Goods
Consumer goods are products purchased by the ultimate consumer.

30. 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.

31. Services
Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.

32. Idle Production Capacity
Idle production capacity occurs when the service provider is available but there is no demand.

33. 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.