Transcript Chapter 9

C H A P T E R
9
Developing New
Products and
Services
McGraw-Hill/Irwin
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After studying this chapter, you should be able to:
 Recognize the different types of new products.
 Discuss the different sources of new products.
 Understand the stages in the new-product


development process.
Describe the way marketing research is used in the
new-product development process.
Appreciate the keys to new-product success.
Bearden Marketing 5th Ed
9-2
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
3M
3M is a $20 billion company
with more than 67,000
employees who create,
manufacture, and sell
products in 200 countries
around the world.
The real distinguishing
characteristic of 3M is its
continuous emphasis on
innovation. One of the
company’s major objectives
is to generate 30 percent of
each year’s sales from
products that are less than
four years old.
Bearden Marketing 5th Ed
9-3
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
New Product Overview
Developing successful new products drives sales
and profit growth for many companies.
Research indicates that companies leading their
industries in profitability and sales growth gain 49
percent of their revenues from products
developed in the most recent five years.
Companies at the bottom in sales and profit
growth achieve only 11 percent of sales from new
products.
Bearden Marketing 5th Ed
9-4
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of New Products
New-to-theworld
Product inventions, such as Polaroid
instant camera, the first car,
rayon, the laser printer, in-line skates.
New Category Products new to the firm but not to
the world, such as P&G’s first
Entries
shampoo, Hallmark gift items, AT&T’s
Universal Card.
more
Bearden Marketing 5th Ed
9-5
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of New Products (con’t)
Additions to Line extensions or flankers on the
Product Lines firm’s current markets, such as Tide
Liquid detergent, Chrysler K cars.
Current products made better;
Product
Improvements virtually every product on the market
today has been improved, often many
times.
more
Bearden Marketing 5th Ed
9-6
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Types of New Products (con’t)
Products retargeted for a new use or
Repositionings
application, such as Kellogg’s Frosted
Flakes cereal (now targeted to adults),
and pork repositioned by National
Pork Producers in recent years from
being similar to beef to being the
“other white meat.”
Bearden Marketing 5th Ed
9-7
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Sources of New Products
External
Sources
New
Products
Collaborative
Venture
Internal
Development
Bearden Marketing 5th Ed
9-8
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
New Product Development Process
A new product development process can be conceived
as consisting of the seven stages presented below. The
process is presented as a logical series of steps. In
reality, the lines between each step are often blurred as
companies are involved in different stages at the same
time; sometimes they even eliminate specific stages.
Exhibit 9-2
Bearden Marketing 5th Ed
9-9
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
New product Development Approaches
Exhibit 9-3
Bearden Marketing 5th Ed
9-10
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Ideas
Idea generation is the initial stage of the new
Idea
Generation product development process. A new product
begins as someone’s idea. Firms typically
generate a large number of ideas relative to the
number of successful products introduced.
Idea
Screening
Bearden Marketing 5th Ed
The purpose of idea screening is to evaluate
the idea pool and reduce it to a smaller, more
attractive set of potential new products. The
ideas should be screened for consistency with
company vision and strategic objectives,
potential market acceptance, fit with the firm’s
capabilities, and possible long-term contribution
to profit.
9-11
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
3M’s Idea Screening Checklist
Bearden Marketing 5th Ed
9-12
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Concept Development and Testing
Concept
Development
Concept
Tests
Bearden Marketing 5th Ed
Concept development is the process of
shaping and refining the idea into a more
complete product concept.
Concept tests are then used to get
potential customers to evaluate the
product concept.
9-13
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Concept Testing
Exhibit 9-5
Bearden Marketing 5th Ed
9-14
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Analysis and Development
Business
Analysis
Product
Development
Bearden Marketing 5th Ed
The business analysis stage of the new
product development process calls for
preparing initial marketing plans for the
product.
Prototype development means
converting the concept into an actual
product. The objective is to use the
information obtained from the concept
tests to design an actual product
that can be further tested.
9-15
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Product Function Development
Exhibit 9-6
Bearden Marketing 5th Ed
9-16
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Test Marketing
Test
Marketing
Test marketing involves testing
the product prototype and marketing
strategy in simulated or actual market
situations.
Simulated test marketing refers to
Simulated Test evaluating a new product in situations
contrived to be similar to how
Marketing
consumers would purchase and use it.
Standard
Test
Marketing
Bearden Marketing 5th Ed
In standard test marketing, a firm
tests a new product and its marketing
strategy in actual market situations.
9-17
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Commercialization
During the commercialization stage, the firm introduces
the product on a full-scale basis.
Consumer
Adoption
The adoption process describes the steps
consumers follow in deciding whether to
use a new product.
Timing
One strategic consideration for new
products in new product categories or
industries is whether to be an early entry.
Coordination
A firm needs to coordinate all functions to
implement this strategy effectively.
Bearden Marketing 5th Ed
9-18
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Keys to New Product Success
Many executives are not satisfied with the speed of new
product development in their companies and have
difficulty in planning and budgeting for new projects.
Front-end planning is critical to improving the new
product development process.
Bearden Marketing 5th Ed
9-19
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Marketing Research Support
Marketing research can make important contributions to
the new product development process. Below are some
of the types of marketing research that might be used
throughout the new product development process.
Exhibit 9-9
Bearden Marketing 5th Ed
9-20
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Best Products of 2004






The Aliph Jawbone Handset includes two microphones
that make it possible to use a cell phone in noisy places.
Hewlett-Packard’s Photosmart R707 Digital Camera is a
pocket-sized, 5.1 megapixel camera that lets the user fix
red eye on the camera.
The Ryobi AIRgrip Laser Level uses a tiny vacuum to
stick to walls and can be turned for horizontal and vertical
leveling.
Maytag’s Neptune Drying Center has a drying cabinet on
top of a tumble dryer.
The Oral B Brush-Ups Finger Toothbrush is a disposable
toothbrush that fits on a finger with toothpaste built in and
no need for rinsing.
Honda’s CRF 250K Motorcycle is a race-ready, off-road
bike that meets emission standards in all states.
Bearden Marketing 5th Ed
9-21
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Summary
After studying this chapter, you should be able to:
 Recognize the different types of new products.
 Discuss the different sources of new products.
 Understand the stages in the new-product


development process.
Describe the way marketing research is used in the
new-product development process.
Appreciate the keys to new-product success.
Bearden Marketing 5th Ed
9-22
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.