1. Ch. 23, Developing New Products

2. Developing New Products
Part 4 Product Dynamics
Chapter 23
Developing New Products

3. Chapter Objectives
Explain why marketers use a product development process.
Summarize the eight steps in the new-product development process.

4. Marketing Terms creativity competitive advantage prototype trial run
test marketing

5. What makes a product “new”?

6. What Is a “New” Product?
In one sense, there is nothing new under the sun
Practically speaking, a new product is one that differs in some way from existing products
Many new-product developers take an existing product and change one or two things in it
(Continued)

7. Describe some new products.
What Is a “New” Product?
Ways to make existing products new
repackage
make minor variations
give the product a new design
use new technology
Describe some new products.

8. Risk of New Products Developing and selling a new product is risky
Over 75% of new products fail
Famous new-product failures
Ford Edsel, New Coke, and McDonald’s Arch Deluxe
To reduce the risk of failure
many businesses use an eight-step process

9. New-Product Process Idea generation Idea screening Business analysis
Product design
Production
Test marketing
Introduction
Evaluation

10. How would you develop ideas for new products?
Idea Generation
Goal: to create a large list of ideas from which to choose
Product ideas usually result from
observation
research
creative thinking
How would you develop ideas for new products?

11. Idea Generation: Observation
Observe customers, friends, and colleagues to find unfilled customer needs
Observe and listen to customers
Observe your competition

12. Idea Generation: Research
Conduct research by
analyzing your business records
surveying your customers
reading articles on trends and new-product development
keeping up with technology and inventions
Hire a marketing research firm that specializes in trend research

13. Idea Generation: Creative Thinking
Creativity
ability to produce something new
Creativity is a talent
Creativity is also a set of skills that can be learned or developed
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14. Idea Generation: Creative Thinking
Techniques used to develop creativity
brainstorming
learning
questioning
journaling
participating in new activities
taking a different point-of-view
What could you do to improve your creativity?

15. Idea Screening
Goal: to choose the best idea with the most potential for profits
Review all ideas
For each one, ask
Will our customers buy it?
Can our company produce and sell it profitably?
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16. Idea Screening Do more marketing research
Try out product ideas on a sample of potential customers

17. Business Analysis
Goal: to make sure the new-product idea can be done by the company
A new product should be appropriate to the company’s
image
goals
strengths
resources
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18. Business Analysis Consider your company’s image
Does the new product fit in with the other products?
Consider your company’s goals
Does the new product fit our goals?
Does the new product provide a competitive advantage?
some feature that makes our product more desirable than competing products
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19. Business Analysis Consider your company’s strengths
Do we have the expertise to create the new product?
If we don’t have the expertise, can we buy the expertise?
Consider your company’s resources
Can we afford to produce and market the new product?

20. Product Design Goal: convert the product idea into reality
Goods and services go through slightly different product design processes

21. Product Design: Goods
For tangible goods, the first step is usually to develop a prototype
a working model of the actual product
Designers experiment with the prototype to see if it performs as expected
Marketers try the prototype on potential customers to see if they like and will buy the new product
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22. Product Design: Goods
For a good, the brand name, logo, slogan, and packaging
may be developed at this time
Photo by Steve Olewinski

23. Product Design: Services and Ideas
Product design for a service
planning what will be included in the service
training the service providers
creating the space where the service will be provided including equipping and decorating the space
setting up the system for delivery and payment
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24. Product Design: Services and Ideas
For a service, the equivalent of the prototype is the trial run
like a dress rehearsal for a play

25. Production Goal: to make products in large enough quantities to sell
For goods, the production step consists of
deciding how many to make
manufacturing the good in large quantities
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26. Production Problems can occur during production
difficulties getting raw materials
machines break down
final goods do not work as expected
These problems must be solved
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27. Production During the production step
the rest of the marketing mix—place, price, and promotion—is finalized
For services and ideas, production is inseparable from the product itself
so, the production step is part of product introduction

28. Test Marketing Goal: to see if the market will buy the product
What if the market does not like and buy the product?
To try to avoid this risk, companies use test marketing
introducing the new product to a small portion of the target market
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29. Test Marketing Test marketing
tests a single variable or all variables of the marketing mix
is usually too expensive for smaller companies
has risks
your competitors might see your product and copy it

30. Introduction
Goal: to make a big splash and get customers to buy the product
Introduction
when the product is first presented to the market
also called commercialization
Promotion is critical and often starts before the product is actually available
(Continued)

31. New products are often introduced at trade shows
Courtesy of National Restaurant Association
New products are often introduced at trade shows

32. Evaluation Goal: to decide what to do next
After product starts selling, ask
Should we continue to produce this product?
Should we make any changes to it?
Should we change any part of the marketing mix, such as promotion, distribution, or price?
Should we expand the market?

33. Review Describe the eight-step process used to develop new products.
From where do product ideas come?
Describe techniques used to develop creativity.
How can marketers test market a product?

34. Glossary
Back
competitive advantage. Aspect of a product that is better than the competitors’ products.
creativity. Ability to produce something new.
prototype. Working model of the actual product.
(Continued)

35. Glossary
Back
test marketing. Introducing a new product to a small portion of the target market, for example one city.
trial run. Trying out a service on a few selected customers to make sure that everything runs smoothly.