Transcript New-Product Process - Cal State LA

McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 10, YOU SHOULD BE ABLE TO:
LO1
Recognize the various terms that
pertain to products and services.
LO2
Identify the ways in which consumer
and business goods can be classified.
LO3
Explain the significance of “newness”
in new products and services as it
relates to the degree of consumer
learning involved.
10-2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 10, YOU SHOULD BE ABLE TO:
LO4
Describe the factors contributing to a
new product’s or service’s success or
failure.
LO5
Explain the purposes of each step of
the new-product process.
10-3
NEW PRODUCT REVOLUTIONS:
APPLE AND ITS INNOVATION MACHINE
10-4
NEW PRODUCT REVOLUTIONS:
APPLE AND ITS INNOVATION MACHINE

Apple’s Innovation
Machine

How the iPhone
Came About

What the iPhone
Can Do
10-5
LO1
THE VARIATION OF PRODUCTS
PRODUCT, PRODUCT LINE, AND PRODUCT MIX

Product

Product Line
• Product Item
• Stock Keeping Unit (SKU)

Product Mix
10-6
Little Remedies
LO1
How does an extensive product line benefit
both consumers and retailers?
10-7
LO1
THE VARIATION OF PRODUCTS
CLASSIFYING PRODUCTS

Type of User
• Consumer Goods
• Business Goods
10-8
LO1
THE VARIATION OF PRODUCTS
CLASSIFYING PRODUCTS

Degree of Tangibility
• Nondurable Goods
• Durable Goods
• Services
10-9
LO2
CLASSIFYING CONSUMER AND
BUSINESS GOODS
CLASSIFYING CONSUMER GOODS

Convenience Goods

Shopping Goods

Specialty Goods

Unsought Goods
10-10
LO2
Rolex Watch
What type of consumer good?
10-11
FIGURE 10-1 How a consumer good is
classified affects what products consumers
buy and the marketing strategies used
10-12
LO2
CLASSIFYING CONSUMER AND
BUSINESS GOODS
CLASSIFYING BUSINESS GOODS

Derived Demand

Production Goods

Support Goods
• Installations
• Supplies
• Accessory
Equipment
• Industrial
Services
10-13
LO3
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHAT IS A NEW PRODUCT?

Newness Compared with
Existing Products

Newness in Legal Terms
10-14
LO3
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHAT IS A NEW PRODUCT?

Newness From the
Organization’s Perspective
• Product Line Extension
• Significant Jump in Innovation
• True Innovation
10-15
LO3
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHAT IS A NEW PRODUCT?

Newness From the Consumer’s
Perspective
• Continuous Innovation
• Dynamically Continuous Innovation
• Discontinuous Innovation
10-16
FIGURE 10-2 The degree of “newness” in a
new product affects the amount of learning
effort consumers exert to use the product
10-17
MARKETING MATTERS
Bought a Computer, Lawn Mower, and
Dishwasher? Call the Geek Squad!
10-18
FIGURE 10-A What it takes to launch one
commercially successful new product
10-19
LO4
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHY PRODUCTS SUCCEED OR FAIL

Marketing Reasons for New-Product
Failures
• Insignificant Points of Difference
• Incomplete Market and Product Definition
Before Product Development Starts
 Protocol
• Too Little Market Attractiveness
10-20
LO4
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHY PRODUCTS SUCCEED OR FAIL

Marketing Reasons for New-Product
Failures
• Poor Execution of the Marketing Mix
• Poor Product Quality or Sensitivity to
Customer Needs on Critical Factors
• Bad Timing
• No Access to Buyers
10-21
LO4
General Mills Fingos
Why did this product fail?
10-22
LO4
Thirsty Dog! and Thirsty Cat!
Why did these products fail?
10-23
MARKETING MATTERS
What Separates New-Product
Winners and Losers?
10-24
FIGURE 10-3 Why did these two new
products fail?
10-25
LO4
NEW PRODUCTS AND WHY
THEY SUCCEED OR FAIL
WHY PRODUCTS SUCCEED OR FAIL

What Were They Thinking? Organizational
Problems in New-Product Failure
• Not Listening to the “Voice” of the Consumer
• Skipping Steps in the New-Product Process
• Marketing a Poorly Conceived Product Too Quickly
• “Groupthink” in Task Force & Committee Meetings
• Not Learning Lessons From Past Failures
10-26
USING MARKETING DASHBOARDS
Monitoring Your New-Product Launch
Household (HH) Trial and Repeat Percents
10-27
FIGURE 10-4 Stages in the new-product
process
10-28
FIGURE 10-B Strategic roles of most
successful new products
10-29
LO5
THE NEW-PRODUCT PROCESS
NEW-PRODUCT STRATEGY DEVELOPMENT

New-Product Process

New-Product Strategy Development

Objectives: Identify Markets and
Strategic Roles
• SWOT Analysis • Environmental Scanning

Improve Innovation: Use
Cross-Functional Teams
10-30
THE NEW-PRODUCT PROCESS
LO5
IDEA GENERATION

Idea Generation

Customer and Supplier Suggestions

Employee and Co-Worker Suggestions

R&D Breakthroughs

Competitive Products

Universities, Inventors, and
Small Tech Firms
10-31
LO5
Volvo’s YCC
How are new-product ideas generated?
10-32
LO5
THE NEW-PRODUCT PROCESS
SCREENING AND EVALUATION

Screening and Evaluation

Internal Approach

External Approach
10-33
LO5
THE NEW-PRODUCT PROCESS
BUSINESS ANALYSIS AND DEVELOPMENT

Business Analysis

Development
10-34
LO5
THE NEW-PRODUCT PROCESS
MARKET TESTING

Market Testing

Test Marketing

Simulated Test Markets (STMs)

When Test Markets Don’t Work
10-35
FIGURE 10-5 Six important U.S. test
markets
10-36
LO5
THE NEW-PRODUCT PROCESS
COMMERCIALIZATION

Commercialization

Regional Rollouts

Burger King’s French Fries
10-37
FIGURE 10-6 Marketing information and
methods used in each stage of the newproduct process
10-38
LO5
THE NEW-PRODUCT PROCESS
COMMERCIALIZATION

The Risks and Uncertainties
• Slotting Fee
• Failure Fee

Speed as a Factor in New-Product Success
• Time to Market (TtM)
• Parallel Development
• Fast Prototyping
10-39
VIDEO CASE 10
3M GREPTILE™ GRIP GOLF GLOVE:
GREAT GRIPPING!
10-40
VIDEO CASE 10
3M
1. What are the characteristics of
the target market for the 3M
Greptile Grip golf glove?
10-41
VIDEO CASE 10
3M
2. What are the key points of
difference of the 3M Greptile Grip
golf glove when compared to
competitors’ products, such as
FootJoy and Nike? Substitute
products, such as golf grips?
10-42
VIDEO CASE 10
3M
3. How does the Greptile Grip golf
glove meet 3M’s three criteria for
new products?
10-43
VIDEO CASE 10
3M
4. Since 3M has no prior products
for the golf market, what special
promotion and distribution
problems might 3M have?
10-44
VIDEO CASE 10
3M
5.
How would you rate the 3M Greptile Grip
golf glove on the following reasons for
success and failure: (a) significant points
of difference; (b) size and growth of the
golf market; (c) product quality; (d) market
timing; (e) execution of the marketing mix;
(f ) synergy or fit with 3M’s R&D,
manufacturing, or marketing capabilities;
and (g) access to consumers.
10-45
SUPPLEMENTAL
LECTURE NOTE 10-1
WHY NEW-PRODUCT
DEVELOPMENT CAN BE
A DICE ROLL:
SOME FORECASTS
10-46
FIGURE 10-C Why new-product
development can be a dice roll: some
forecasts
10-47
SUPPLEMENTAL
LECTURE NOTE 10-2
THE NEW-PRODUCT
PROCESS AT 3M
10-48
3M’s Successful New-Product Idea
Ultrathon™ Insect Repellent
10-49
FIGURE 10-D 3M’s stages in the newproduct process compared with Figure 10-4
10-50
IN-CLASS ACTIVITY 10-1
WHAT WERE
THEY THINKING? ANALYZING
NEW-PRODUCT DISASTERS
10-51
10-52
Problem Product A: Adam’s Body Smarts
10-53
Problem Product B: Coca Cola’s Surge
10-54
Problem Product C: Wheaties Dunk-A-Balls
10-55
Problem Product D: Garlic Cake
10-56
Problem Product E: Kellogg’s Special K Plus
10-57
Problem Product F: Dr. Care Toothpaste
10-58
10-59
10-60
IN-CLASS ACTIVITY 10-2
FOCUS GROUP FOR
CONVERGENT DIGITAL
DEVICES
10-61
Apple iPhone
10-62
IN-CLASS ACTIVITY 10-3
USING METHOD 6-3-5 TO FIND
NEW-PRODUCT IDEAS
FOR 3M’S ULTRATHON™
INSECT REPELLENT
10-63
3M Ultrathon™ Insect Repellent Packet
10-64
10-65
10-66
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.
10-67
Product Line
A product line consists of 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.
10-68
Product Mix
A product mix consists of the
number of product lines offered
by a company.
10-69
Consumer Goods
Consumer goods are products
purchased by the ultimate
consumer.
10-70
Business Goods
Business goods are products
that assist directly or indirectly in
providing products for resale. Also
called B2B goods, industrial
goods, or organizational goods.
10-71
Convenience Goods
Convenience goods are items
that the consumer purchases
frequently, conveniently, and with
a minimum of shopping effort.
10-72
Shopping Goods
Shopping goods are items for
which the consumer compares
several alternatives on criteria,
such as price, quality, or style.
10-73
Specialty Goods
Specialty goods are items that a
consumer makes a special effort
to search out and buy.
10-74
Unsought Goods
Unsought goods are items that
the consumer either does not
know about or knows about but
does not initially want.
10-75
Production Goods
Production goods are items
used in the manufacturing
process that become part of the
final product.
10-76
Support Goods
Support goods are items used
to assist in producing other goods
and services.
10-77
Protocol
A protocol is a statement that,
before product development
begins, identifies: (1) a welldefined target market; (2) specific
customers’ needs, wants, and
preferences; and (3) what the
product will be and do.
10-78
New-Product Process
The new-product process
consists of the stages a firm
goes through to identify business
opportunities and convert them
to a salable good or service.
10-79
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.
10-80
Idea Generation
Idea generation is the stage
of the new-product process that
involves developing a pool of
concepts as candidates for new
products.
10-81
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.
10-82
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.
10-83
Development
Development is the stage of the
new-product process that involves
turning the idea on paper into a
prototype.
10-84
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.
10-85
Commercialization
Commercialization is the stage
of the new-product process that
involves positioning and launching
a new product in full-scale
production and sales.
10-86
Slotting Fee
A slotting fee is a payment a
manufacturer makes to place a
new item on a retailer’s shelf.
10-87
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.
10-88