1. New Products and Services
Chapter 10

2. Product
“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.”
Tangible- Color, taste
Intangible- Healthier or wealthier

3. Products Product item Product line Product mix Nike Air Jordan
Nike shoes
Product mix
Nike shoes and clothes
PL- “A group of products that are closely related because they satisfy a class of needs, are used together, are distributed through the same type of outlets, or fall within a given price range.”
Nike: Clothes and shoes
Number of product lines

4. Product Classifications
Type of user
Consumer goods
Business goods
Degree of tangibility
Durable
Nondurable
Service

5. Consumer v. Business Goods
Differences based on
Effort spent in decision
Attributes used in purchase
Frequency of purchase

6. Consumer Goods Convenience goods Shopping goods Specialty goods
Unsought goods

7. Business Goods Production goods Support goods Installations
Accessory equipment
Supplies
Services

8. What is New? Newness compared with Existing Products
Newness in legal terms
Newness from company’s perspective
Newness from consumers’ perspective

9. Why do New Products Fail?
Insignificant “point of difference”
Incomplete market and product definition before development starts
Protocol
Too little market attentiveness
Poor execution of marketing mix
Bad timing
No economical access to buyers
Protocol- Statement before development begins that identifies a well-defined target market, specific customers’ needs, wants, and preferences, and what the product will be and do

10. New Product Process New-product strategy development Idea generation
Screening and evaluation
Business analysis
Development
Market testing
Commercialization
Process to identify business opportunities and convert them to a salable good or service

11. New-product strategy development
Identify markets and strategic roles
Environmental scanning
SWOT analysis
Defining the role for a new product in terms of the firm’s overall corporate objectives

12. Idea Generation Customer and supplier suggestions
Employee and co-worker suggestions
R&D breakthroughs
Competitive products
Developing concepts as candidates for new products
R&D- Costly

13. Screening & Evaluation
Two approaches
Internal approach
External approach
Internal and external evaluations of new-product ideas to eliminate those that warrant no further effort.
Internal- Does it meet corporate objectives? Technically feasible?
External- Customers. Show drawing Who would use this? What for?

14. Business Analysis Last checkpoint before capital is committed
Look at product and marketing strategy needed to commercialize it
What will be effect on current products? Will need new distribution channels?
Financial projections

15. Development “Paper into prototype” Testing against standards
Pharmaceutical testing example at Merck

16. Market Testing Company chooses a specific market, based on criteria
Advantages
Disadvantages
Simulated test markets
Exposing product to prospective consumers under realistic conditions to see if they buy
Adv-Helps to forecast sales on larger stage; receive input from customers,
Disadv- Reveal product/plan to customers; costly

17. Commercialization Positioning and launching a product
Most expensive step
Slotting fee
Failure fee
Sf- Supermarkets require payment to put product on the shelf
FF- If sales target is not met, may have to pay failure fee to compensate for sales that area of the shelf did not make.