Chapter 10 New Product Process

1. Chapter 10New Product Process

2. What is a Product? • A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers which they receive in exchange for money or some other unit of value. • Difference between a good and a service?

3. Terms to Describe a Company’s Assortment of Products • Product line • Product item • Product mix

4. Classifying Products • Consumer Products • Convenience • Shopping • Specialty • Unsought • Business Products • Production • Support

5. Classification of Consumer Products Slide 10-10

6. How Do You Define “New Product” • Term “new” is hard to define • If a product is functionally different from existing products, it can be defined as new. • Sometimes newness is revolutionary • Sometimes it merely means adding features to an existing product

7. What do these products have in common? • Bic Perfume • Fab 1 Shot • Wheaties Dunk-A-Balls • Dr. Care Toothpaste • Avert Virucidal Tissues • Fingoes • La Choy’s Fresh and Lite Frozen Entrees

8. FIGURE 10-3 Why did these new products fail? Slide 10-29

11. Why Did this Product Fail? La Choy launched a line of frozen egg rolls. Not measly little appetizer egg rolls, but big meaty egg rolls that a consumer would eat as a main course. These egg rolls were a part of the Fresh and Lite line of low fat frozen Chinese entrees. La Choy had a well known brand name; ethnic cuisine was soaring in popularity; so were frozen meals. Why did this product fail?

12. Many new products fail each year. Failures range from 33 percent to 90 percent depending on the industry.

13. What is the New Product Process? The stages a firm goes through to identify business opportunities and convert them to a salable good or service.

14. Stage 1: New-Product Strategy Development • Purpose: • Scan the environment to identify trends that present marketing opportunities or threats. • Evaluate existing strengths and weaknesses • This stage serves as valuable input to later stages

15. Stage 2: Idea Generation • Purpose – to identify as many new product ideas as possible • Sources 1. Customers 2. Company Research and Development 3. Sales representatives / employees 4. Competitors

16. Stage 3: Screening • Internal Approach – The firm establishes a set of criteria that the idea must pass in order to be considered further. • External Approach – Calls for testing the product concept with an appropriate group of target consumers. Relies on written descriptions of the product and/or sketches. No physical product yet.

17. Stage 4: Business Analysis • Assesses the potential profitability of the product concept • Estimate sales • Estimate costs

18. Stage 5: Product Development • The product concept described on paper is turned into a physical product called a prototype. • The prototype is tested with sample groups from the target market.

19. Stage 6: Market Testing • Product is tested under realistic purchase conditions. • Purpose – to see how targeted consumers respond to product and other marketing mix elements • Product is introduced in one or more test cities

20. FIGURE 10-5Six important U.S. test markets and the “demographics winner”:Wichita Falls, Texas, metropolitan statistical area Slide 10-48

21. Stage 7: Commercialization • Product is sold in the marketplace. • Involves setting up: • manufacturing facilities • Channels of distribution • Promotion for the product • Will often use a regional roll out