DEVELOPING NEW PRODUCTS AND SERVICES

1. CHAPTER DEVELOPING NEW PRODUCTS AND SERVICES

2. Product Item A specific version of an organization’s products. Product Line A group of closely-related product items. Product Mix All products that an organization sells. Product Items, Lines, and Mixes (SKU) Each has a unique number and bar code

4. Classifying Products • Type of User • Consumer Goods • Business Goods • Degree of Tangibility • Nondurable Good-used up in a few uses • Durable Good-lasts over many uses Examples?? • Services

5. The Characteristics of Services Services that cannot be touched, seen, tasted, heard, or felt in the same manner as goods. Intangibility A characteristic of services that allows them to be produced and consumed simultaneously. Inseparability A characteristic of services that makes them less standardized and uniform than goods. Heterogeneity A characteristics of services that prevents them from being stored, warehoused, or inventoried. Perishability

6. The Four I’s of Services • Intangibility • Inseparability • Inconsistency • Inventory • Idle Production Capacity- like stock out costs and holding costs for goods THE VARIATIONS OF PRODUCTS Can be reduced by using commission and part time workers

7. A relatively inexpensive item that merits little shopping effort. Convenience Product Shopping Product A product that requires comparison shopping, because it is usually more expensive and found in fewer stores. Specialty Product A particular item that consumers search 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. Unsought Product CLASSIFYING GOODS AND SERVICES

8. Classification of consumer goods

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

10. What Is A New Product • Functionally Different from Existing Products • FTC: Newness = 6 Months or less After Regular Distribution • Company: Simply Anything Different

11. FIGURE 10-DWhat it takes to launch one commercially successful new product

12. Reasons for New Product Failures • Bad Timing • Too Little Market Attractiveness • Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution • No Access to Buyers • Insignificant Point of Difference • Poor Product Quality • Insensitivity to Customer Needs on Critical Factors

13. Why Did These Products Fail?

14. Why did this new product fail?

15. Stages in the New Development Process

16. Strategic roles of most successful new products

17. THE NEW-PRODUCT PROCESS- Idea Generation • Customer and Supplier Suggestions • Employee and Co-Worker Suggestions • Research and Development Breakthroughs • Competitive Products

18. 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.

19. Demand Considerations in Business Analysis Stage Cost Sales Profitability THE NEW-PRODUCT PROCESS- Business Analysis • if positive, build a prototype

20. THE NEW-PRODUCT PROCESS-Development • Safety Tests • “Failure Analysis” • Marketing strategy • Packaging, branding, labeling • Manufacturing feasibility • Final government approvals if needed

21. 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.

22. When Test Markets Don’t Work • Limited time to market • Service nature of the item • Time to see product benefit is long • Number of units produced is small

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

24. Ramp Up and Regional Rollouts • Product Positioning is marketing’s job here • Speed as a Factor in New-Product Success • Time to Market- important high tech items • Fast Prototyping – do it, try it, fix it • Parallel Development – Gantt chart usage THE NEW-PRODUCT PROCESS- Commercialization Most expensive stage

25. To Review: The New Product Process

26. 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.

27. 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.

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

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

30. 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.

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

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

33. 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.