Ch10rev[1]

DEVELOPING NEW PRODUCTS

AND SERVICES

CHAPTER

Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of an organization’s products.A specific version of an organization’s products.

A group of closely-related product items.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.

Product Items, Lines, and MixesProduct Items, Lines, and Mixes

Each has a unique number and bar code(SKU)

Gillette’s Product Lines and MixGillette’s Product Lines and Mix

Blades and Writingrazors Toiletries instruments Lighters

Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus

Width of the product mixWidth of the product mix

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Classifying Products

Type of User

Degree of Tangibility

• Consumer Goods • Business Goods

• Nondurable Good-used up in a few uses

• Durable Good-lasts over many uses

• Services

Examples??

IntangibilityIntangibility

InseparabilityInseparability

HeterogeneityHeterogeneity

PerishabilityPerishability

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.

The Characteristics of Services

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

CLASSIFYING GOODS AND SERVICES

ConvenienceProduct

ConvenienceProduct

ShoppingProduct

ShoppingProduct

SpecialtyProduct

SpecialtyProduct

UnsoughtProduct

UnsoughtProduct

A relatively inexpensive item that merits little shopping effort.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 product that requires comparison shopping, because it is usually more expensive and found in fewer stores.

A particular item that consumerssearch extensively for and are reluctant to accept substitutes.

A particular item that consumerssearch 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.

A product unknown to the potential buyer or a known product that the buyer does not actively seek.

Classification of consumer goods

Why new-product development can be a dice roll: some forecasts

What Is A New Product

Functionally Different from Existing Products

FTC: Newness = 6 Months or less After Regular Distribution

Company: Simply Anything Different

FIGURE 10-DFIGURE 10-D What it takes to launch one commercially successful new product

Reasons for New Product Failures

• Too Little Market Attractiveness

• Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution

• Insignificant Point of Difference

• No Access to Buyers

• Bad Timing

• Poor Product Quality

• Insensitivity to Customer Needs on Critical Factors

Why Did These Products Fail?

Why did this new product fail?

Stages in the New Development Process

Strategic roles of most successful new products

THE NEW-PRODUCT PROCESS-Idea Generation

Customer and Supplier Suggestions

Employee and Co-Worker Suggestions

Research and Development Breakthroughs

Competitive Products

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.

THE NEW-PRODUCT PROCESS-Business Analysis

• if positive, build a prototype

Considerations Considerations in in

Business Business Analysis StageAnalysis Stage

Considerations Considerations in in

Business Business Analysis StageAnalysis Stage

Demand

Cost

Sales

Profitability

THE NEW-PRODUCT PROCESS-Development

“Failure Analysis” Safety Tests

Marketing strategy

Packaging, branding, labeling

Manufacturing feasibility

Final government approvals if needed

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.

Limited time to market

Service nature of the item

Time to see product benefit is long

Number of units produced is small

When Test Markets Don’t Work

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

statistical area

THE NEW-PRODUCT PROCESS-Commercialization

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

Ramp Up and Regional Rollouts

• Product Positioning is marketing’s job here

Most expensive stage

To Review: The New Product Process

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.

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.

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.

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.

Product Mix

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

Consumer Goods

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

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.

Business goods are products that assist directly or indirectly in providing products for resale. Also called as B2B goods, industrial goods, or organizational goods.

Services

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

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

Idle Production Capacity

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

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

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.

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.