1. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-2 DEVELOPING NEW PRODUCTS AND SERVICES C HAPTER

2. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-5 3M’S NEW GREPTILE GRIP GOLF GLOVE: HOW TO GET TO THE TOP OF THE LEADER BOARD The Product? The Target Market? The Special Marketing Task?

3. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE VARIATIONS OF PRODUCTS Slide 10-6 Product  Product Line Product Line  Product Mix Product Mix Product Line and Product Mix Product Item Stock Keeping Unit (SKU)

4. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-7 Little Remedies How does an extensive product line benefit both consumers and retailers?

5. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE VARIATIONS OF PRODUCTS Slide 10-8  Type of User  Degree of Tangibility Classifying Products Consumer Goods Consumer Goods Business Goods Nondurable Good Durable Good Services  Services and New-Product Development

6. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CLASSIFYING CONSUMER AND BUSINESS GOODS Slide 10-9  Convenience Goods Convenience Goods Classification of Consumer Goods  Shopping Goods Shopping Goods  Specialty Goods Specialty Goods  Unsought Goods Unsought Goods

7. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-10 FIGURE 10-1 FIGURE 10-1 Classification of consumer goods

8. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-11 Raymond Weil Watch What type of consumer good?

9. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CLASSIFYING CONSUMER AND BUSINESS GOODS Slide 10-12  Production Goods Production Goods Classification of Business Goods  Support Goods Support Goods Installations Accessory Equipment Supplies Industrial Services

10. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL Slide 10-16  Newness Compared with Existing Products What is a New Product?  Newness in Legal Terms (Regular Distribution?)  Newness from the Company’s Perspective Regular Distribution

11. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-17 Sony’s PlayStation 2 and Microsoft’s Xbox How does the term “new” apply? XboxPS2

12. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-18 MARKETING NEWSNET Blindsided in the Twenty-First Century— The Convergence of Digital Devices

13. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL Slide 10-19 What is a New Product? Continuous Innovation  Newness from the Consumer’s Perspective Dynamically Continuous Innovation Discontinuous Innovation

14. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-20 FIGURE 10-2 FIGURE 10-2 Consumption effects define newness

15. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL Slide 10-21 Why Products Succeed or Fail Insignificant Point of Difference  Marketing Reasons for New-Product Failures

16. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-22 FIGURE 10-B FIGURE 10-B What it takes to launch one commercially successful new product

17. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-23 MARKETING NEWSNET What Separates New-Product Winners and Losers

18. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL Slide 10-25 Why Products Succeed or Fail  Marketing Reasons for New-Product Failures Too Little Market Attractiveness Incomplete Market and Product Definition Before Product Development Starts  Protocol Protocol Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution

19. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL Slide 10-26 Why Products Succeed or Fail  Marketing Reasons for New-Product Failures Bad Timing Poor Product Quality or Insensitivity to Customer Needs on Critical Factors No Economic Access to Buyers  A Look at Some Failures

20. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-28 MARKETING NEWSNET When Less is More— How Reducing the Number of Features Can Open Up Huge Markets

21. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-30 Concept Check 1. From a consumer’s viewpoint, what kind of innovation would an improved electric toothbrush be? A: continuous innovation

22. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-33 FIGURE 10-4 FIGURE 10-4 Stages in the new-product process

23. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-34 FIGURE 10-C FIGURE 10-C Strategic roles of most successful new products

24. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NEW-PRODUCT PROCESS Slide 10-35  Customer and Supplier Suggestions Idea Generation  Employee and Co-Worker Suggestions  Research and Development Breakthroughs  Competitive Products

25. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-36 Volvo’s YCC How are new-product ideas generated?

26. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NEW-PRODUCT PROCESS Slide 10-38  Internal Approach Screening and Evaluation Concept Tests  External Approach

27. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-39 3M Post-it Flag Highlighter How are new-product ideas screened & evaluated? += 3M Post-it Flag Highlighters 3M Post-it NotesFelt Tip Highlighters

28. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-40 Frito-Lay Natural Snacks How are new-product ideas screened & evaluated?

29. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NEW-PRODUCT PROCESS Slide 10-44  Prototype Business Analysis Development

30. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-45 Mattel’s Barbie Why should laboratory and safety tests be done?

31. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-46 ETHICS AND SOCIAL RESPONSIBILITY ALERT SUVs and Pickups versus Cars— Godzilla Meets a Chimp?

32. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NEW-PRODUCT PROCESS Slide 10-47  Test Marketing Market Testing  Simulated (or Laboratory) Test Markets (STM)  When Test Markets Don’t Work

33. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-48 FIGURE 10-5 FIGURE 10-5 Six important U.S. test markets and the “demographics winner”: Wichita Falls, Texas, metropolitan statistical area

34. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE NEW-PRODUCT PROCESS Slide 10-49  Burger King’s French Fries: The Complexities of Commercialization Commercialization  Speed as a Factor in New-Product Success  The Risks and Uncertainties of the Commercialization Stage Slotting Fee Failure Fee Time to Market (TtM) Parallel Development Fast Prototyping

35. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-50 FIGURE 10-6 FIGURE 10-6 Marketing information and methods used in the new-product process

36. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-51 Burger King French Fries Why is commercialization risky?

37. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-52 Hewlett-Packard Cross-Functional Team Why is time to market (TtM) important?

38. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-64 FIGURE 10-D FIGURE 10-D Five alternative structures for product development projects

39. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-65 FIGURE 10-E FIGURE 10-E Overall performance of five structures for product development projects

40. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-82 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.

41. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-83 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.

42. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-84 Product Mix The product mix is the number of product lines offered by a company.

43. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-85 Consumer Goods Consumer goods are products purchased by the ultimate consumer.

44. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-86 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.

45. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-87 Convenience Goods Convenience goods are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.

46. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-88 Shopping Goods Shopping goods are items for which the consumer compares several alternatives on criteria, such as price, quality, or style.

47. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-89 Specialty Goods Specialty goods are items that a consumer makes a special effort to search out and buy.

48. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-90 Unsought Goods Unsought goods are items that the consumer either does not know about or knows about but does not initially want.

49. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-91 Production Goods Production goods are items used in the manufacturing process that become part of the final product.

50. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-92 Support Goods Support goods are items used to assist in producing other goods and services.

51. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-93 Protocol A protocol is a statement that, before product development begins, identifies: (1) a well-defined target market; (2) specific customers’ needs, wants, and preferences; and (3) what the product will be and do.

52. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-94 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.

53. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-95 New-Product Strategy Development New-product strategy development is the stage of the new-product process that defines the role for a new product in terms of the firm’s overall corporate objectives.

54. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-96 Six Sigma Six Sigma is a means to “delight the customer” by achieving quality through a highly disciplined process to focus on developing and delivering near-perfect products and services.

55. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-97 Idea Generation Idea generation is the stage of the new- product process that involves developing a pool of concepts as candidates for new products.

56. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-98 Screening and Evaluation Screening and evaluation is the stage of the new-product process that involves internal and external evaluations of the new-product ideas to eliminate those that warrant no further effort.

57. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-99 Business Analysis Business analysis is the stage of the new-product process that involves specifying the product features and marketing strategy and making necessary financial projections needed to commercialize a product.

58. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-100 Development Development is the stage of the new- product process that involves turning the idea on paper into a prototype.

59. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-101 Market Testing Market testing is the stage of the new-product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.

60. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-102 Commercialization Commercialization is the stage of the new-product process that involves positioning and launching a new product in full-scale production and sales.

61. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-103 Slotting Fee A slotting fee is a payment a manufacturer makes to place a new item on a retailer’s shelf.

62. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 10-104 Failure Fee A failure fee is a penalty payment a manufacturer makes to compensate a retailer for sales its valuable shelf space failed to make.