1. Water Joe What caused David to come up with a new product idea? What did he have to do to turn his idea into a real product? What problems did he run into? Have you ever heard of Water Joe?

2. Developing New Products Principles of Marketing

3. What is a “New” Product? Simple variation on an existing product is often considered a new product Repackaging is a very common way of developing a “new” product Examples: ◦ The Milk Chug ◦ New design of the taillights ◦ New flavor of potato chip

4. “Really” New Products Ruffles potato chips (ridges) PT Cruiser and Hummer The first Apple home computers Sony Walkman—first personal portable music device First cell phones—wireless telephone First hybrid gas/electric cars New products are risky, companies prefer to develop variations on current successful products

5. Risks of New Products Over 25,000 new consumer products hit the market yearly Over 75 percent of these fail Large companies spend $20 million or more to develop, product, advertise, and introduce a new product Well-known failures: Ford Edsel, New Coke, and McDonald’s Arch Deluxe

6. Research Choose a new product on the market or make up a new product. What are the risks that the manufacturer has taken on with this product?

7. Eight Steps to New-Product Ideas Idea Generation Idea Screening Business Analysis Product Design Production Test Marketing Introduction Evaluation Larger companies have product development departments This department works closely with the marketing department

8. Idea Generation Observation ◦ Marketers look for unfulfilled customer needs ◦ Customers often present ideas for new products to the company ◦ Salespeople often have new-product ideas because they interact with customers ◦ Marketers watch the competition, sometimes buy their new product, and then decide to make a similar but better product ◦ Observations of companies in other industries

9. Activity Group Task: Develop a new pen or other office product, as you learn about new- product development in this chapter Form groups of three or less Make a list of what you might need to know to develop a new product Share your ideas

10. Idea Generation, con’t. Research ◦ Analyze products that are returned often; could lead to a new product idea ◦ Survey your customers about their needs and possible new products ◦ Trend research: discover new-product ideas by the trends of society

11. Idea Generation, con’t. Creative Thinking ◦ Creativity: the ability to produce something new; often considered a talent ◦ Examples: Auntie Anne's sells pretzels only ◦ Can be developed  Brainstorming  Learning  Questioning  Journaling  Participating in New Activities  Taking a Different Point of View

12. New-Pen Activity Do some research by visiting the Web sites of office suppliers such as Office Depot, Office Max, Bic Stationery Products, and Papermate Compile lists of new pens and office products What are the new features? Generate ideas for your new product using the techniques for creativity that you just learned Write your ideas under each technique heading

13. Next Two Steps Idea Screening: ◦ Will customers want and buy the product? Business Analysis: ◦ Can our company produce and sell the product profitably? ◦ Products must be appropriate to the company’s image, goals, strengths, and resources. ◦ New products should provide a competitive advantage

14. Business Analysis New product should: ◦ Be appropriate to the company’s image, goals, strengths, and resources  Jaguar’s image: luxury sports sedans ◦ Fit into the goals of the company ◦ Have a feature that is more satisfying than the competitors’ feature ◦ Fit with the strengths of the company  Jaguar wanted a less expensive vehicle; developed the X-Type ◦ Affordable to produce and market

15. Product Design The details of how to produce the product are planned Goods, services, and ideas should go through a design phase New product is tried out on a few potential customers Brand is developed ◦ Name and identity, logo, slogan, packaging

16. New-Office Product Activity Decide which product idea to pursue Write a new-product description ◦ Include target market ◦ Explain their interest Conduct a business analysis ◦ Determine the materials (make a list) ◦ Include the costs of the materials ◦ Make a prototype?? ◦ Use the information to determine the cost of producing just one pen/office supply

17. New-Product Activity Gather information on pricing of similar products ◦ Record information about your competition  Brand names  Descriptions  Prices What should you price your product? Compare price to cost—can you make a profit? Revise your product, if necessary to come up with something that will be profitable

18. New Product Activity Review all the information on your product Answer these questions: ◦ Does my group have the resources needed to make the new product? ◦ Does my group have a competitive advantage over the other groups? ◦ Does the new product fit the goals and personality of my group? ◦ Share your business analysis.

19. Goods—Product Design Prototype-working model of the actual product ◦ Experiment with the prototype will determine performance success Marketers use the prototype to get customers’ responses

20. New-Pen Activity Design your new product ◦ Make a drawing or computer creation ◦ Brand name ◦ Logo ◦ Packaging Plan how to produce your products in large enough quantities to sell Make a prototype of your product Create a questionnaire to gather feedback from customers who test the product

21. Services and Ideas—Product Design Service providers go through a period of training to learn to perform the service Plan to provide the service ◦ Physical location, equipment, organizing the system for delivering, and decorations ◦ Trial run: consists of trying out the service on a few selected customers to make sure that everything runs smoothly

22. Production Manufacture the product in large quantities The number to produce is a complex decision with a major impact on the profitability For services and ideas, production is inseparable from the product itself

23. Test Marketing Involves introducing a new product to a small portion of the target market Can test the entire marketing mix— product, place, price, and promotion Can test only one element of the marketing mix Risky because competitors can see your product and copy it Small companies may not be able to afford test marketing

24. Introduction Product actually enters the market Often called Commercialization Promotion is critical at this point ◦ Often starts before the product is ready ◦ Release date is the date the product is first available to the market New products are often released at trade shows (large gathering to display products for sale)

25. Evaluation Should we continue to produce the product? Should we make any changes to the product? Should we expand the market?