Chapter 10

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45 terms · Developing New Products and Services

product line

group of product or service items 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 outlets, or fall within a given price range

product mix

consists of all the product lines offered by an organization

protocol

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

newness in legal terms

use with a product up to six months after it enters regular distribution

newness from the organization's perspective (lowest level)

product line extension (least risk) (purina adds Elegant Medleys "restaurant-inspired for cats" to existing line of 50 varieties Fancy Feast gourmet cat food); potential benefit of adding new customers but the twin dangers of increasing expenses and cannibalizing its existing line

newness from the organization's perspective (medium level)

significant jump in the innovation or technology (such as from a regular landline telephone to a cell phone)

newness from the organization's perspective (third level)

true innovation, a truly revolutionary new product (such as the first Apple computer in 1976)

newness from the consumer's perspective

the degree of "newness" in a new product affects the amount of learning effort consumers must exert to use the product and the resulting marketing strategy

3001:1

research suggests that it takes 3,000 raw unwritten ideas to produce 1 commercially successful new product

marketing reasons for new-product failures 1.

insignificant point of difference

marketing reasons for new-product failures 2.

incomplete market and product protocol before product development starts

marketing reasons for new-product failures 3.

not satisfying customer needs on critical factors

marketing reasons for new-product failures 4.

bad timing

marketing reasons for new-product failures 5.

too little market attractiveness

marketing reasons for new-product failures 6.

poor product quality

marketing reasons for new-product failures 7.

poor execution of the marketing mix: brand name, package, price, promotion, distribution

marketing reasons for new-product failures 8.

no economical access to buyers

insignificant point of difference

having superior characteristics that deliver unique benefits to the user; a distinct pod is the single most important factor for a new product to defeat competitive ones

incomplete market and product protocol before product development starts

without this, firms try to design a vague product for a phantom market

not satisfying customer needs on critical factors

problems on 1 or 2 critical factors can kill the product, even though the general quality is high (ex. US sent few right-hand-drive cars to left-hand driven Japan vs German sent several right-hand-drive models)

bad timing

results when product is introduced too soon, too late, or when consumer tastes are shifting dramatically

too little market attractiveness

(ideal: large TM w/high growth & real buyer need) often TM is too small or competitive to warrant the huge expenses necessary to reach it

poor product quality

results when a product is not thoroughly tested; the costs to an organization for this can be staggering and include the labor, materials, & other expenses necessary to fix the problem (not to mention the lost sales, profits, and mkt share that usually result)

poor execution of the marketing mix: brand name, package, price, promotion, distribution

examples include: monster in my room bug spray (kept kids awake in fear of monsters b/c implied monster was still hiding in bedroom), garlic bread (what is it and when on earth some1 would want to eat it), avert virucidal tissues (cidal-suicidal)

no economical access to buyers

supermarkets carry more than 30thou different SKUs, cost to gain access to retailer shelf space is huge (sp is judged in terms of sales pr/square foot; ex:thirsty dog failed 2 gener8 enough sales to meet requirements); must displace an existing product on sprmkt shelves (difficult task with the high sales pr/square foot demands of stores)

organizational problems in new product failure 1.

not really listening to the "voice of the consumer"

organizational problems in new product failure 2.

skipping stages in the new-product process

organizational problems in new product failure 3.

pushing a poorly conceived product into the market to gener8 quick revenue

organizational problems in new product failure 4.

encountering "groupthink" in task force and committee meetings

organizational problems in new product failure 5.

not learning critical takeaway lessons from past failures

not really listening to the "voice of the consumer"

product managers often believe they "know better" than their consumers, or feel they "can't afford" the valuable mkt research that could uncover problems

skipping stages in the new-product process

7-stages, this is why many firms have a "gate" to ensure that 1 step is completed satisfactorily before going on to the next step

pushing a poorly conceived product into the market to gener8 quick revenue

focus on speed often results in overlooking the network of services needed to support the physical product

encountering "groupthink" in task force and committee meetings

a strong public commitment to a new product by its key advocate makes it difficult 2 kill the product even when new negative info comes to light; som1 in new-product planning knows the product concept is a bad idea but is afraid to speak up

not learning critical takeaway lessons from past failures

intelligent failures (ones that happen early in the new-product process); these failures are less expensive & immediately give better understanding of customers' wants and needs (must learn from them)

new-product process

the 7 stages an organization goes through to identify business opportunities and convert them to a salable good or service

new-product process stage 1

new product strategy development: defines the role for a new product in terms of the firm's overall objectives; firm uses both SWOT analysis & environmental scanning to assess its strengths & weaknesses relative to the trends it identifies as opportunities or threats; outcome defines vital protocol for ea.new-product idea & identifies strategic role it might serve in the firm's porfolio

new-product process stage 2

idea generation: develops a pool of concepts as candidates for new products, building upon the previous stage's results; has led to open innovation: an organization finds & executes creative new-product ideas by developing strategic relationships w/outside individuals & organizations

new-product process stage 3

screening & evaluation: internally & externally evaluates new-product ideas to elimin8 those th@ warrant no further effort; internal-firm's employees evalu8 technical feasibility 2 det. if it meets objectives defined in new-product strategy development; external-firms use concept tests (ext.evaluations w/consumers)=preliminary testing of a new-product idea rather than an actual product

new-product process stage 4

business analysis: specifies the features of the product & the mktg strategy needed to bring it 2 a mkt & make financial projections; assesses the total "business fit" of proposed new product w/the company's mission/objectives (from whether the product can be economically developed/manufactured 2 the mkt strategy needed to have it succeed in the mktplace)

new-product process stage 5

development: turns the idea on paper into a prototype; results in a demonstrable, producible product that also involves performing lab/consumer tests 2 ensure it meets standards established 4 it in the protocol; new product must be able 2 b manufactured @ reasonable cost w/the required quality

new-product process stage 6

marketing testing: exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy; test marketing-offering a product for sale on a lmtd basis in a defined area; simulated test markets-technique that stimul8s a full-scale test market in a lmtd fashion

new-product process stage 7

commercialization: positions and launches a new product in full-scale production and sales; most expensive stage; regional rollouts-introducing the product sequentially in2 geographical areas of the US (2 allow production levels/mktg activities 2 build ^ gradually 2 minimize the risk of new-product failure;ex:tel serv providers)

types of consumer products

1. convenience 2. shopping 3. specialty 4. unsought

cross-functional teams

conduct the simultaneous development of both the product & the production process; stay w/product from conception 2 production

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