Gilbert A. Churchill, Jr. J. Paul Peter

1. Marketing Chapter 10 Developing New Products Gilbert A. Churchill, Jr. J. Paul Peter

2. Types of New Products Slide 10-1 Figure 10.1 DVD & HD-TV New-to-the-WorldProducts NewCategoryEntries Kodak Royal Gold Lysol drain opener Repositionings New! ProductImprovement Additions to the Product Line Windows 98, Autofocus camera Barbie on wheelchair, playing soccer, etc. A product that is new to the marketing organization in any way

3. The New Product Development Process Slide 10-2 Figure 10.2 Idea Generation Idea Screening Business Analysis Product Development Test Marketing Commercialization

4. Step 1: Techniques for Generating Ideas Slide 10-3a Table 10.1 Technique Description Delphi Method A panel of experts fills out a questionnaire; a researcher tabulates the results and sends them to panel members. Repeat the process until the panel reaches a consensus or an impasse. Benefit Analysis List all the benefits customers receive from the product under study. Think of benefits that are currently missing from the list. Use Analysis Ask customers how they use the product under study. List the various uses. Ask target markets whether the brand name makes sense for other product categories under consideration. A stretch of the brand name that makes sense to potential buyers can be the basis for a new product. Relative Brand Profile Unique properties List all the properties held in common by a product or material currently on the market. Look for unique properties of the organization’s product.

5. Techniques for Generating Ideas Slide 10-3b Table 10.1 Technique Description Achilles heel List the weaknesses of a product or product line (for the organization and its competitors). Prune the list to the one or two weaknesses most likely to inspire a response from competitors. Identify product concepts that could result from correcting these weaknesses. FreeAssociation Write down one aspect of the product situation–a product attribute, use or user. Let the mind roam and jot down every idea that surfaces. Repeat the process for other aspects of the product situation. Stereotypeactivity Ask, “How would ________do it?” –referring to how a member of some group or a particular person would use the product. Example: What type of bicycle would a senator ride? Can also ask what the stereotype would not do. Study products that have failed. Look for ways to solve the problems that led to failure. Study of other people’s failures

6. Slide 10-4 Step 2: Idea Screening Idea Screening Done to avoid Drop Error and Go Error

7. Slide 10-5 Step 3: Business Analysis Business Analysis Concept Testing Having potential customers evaluate pictures or written descriptions of the product

8. Slide 10-6 Step 4: Product Development Product Development Simultaneous/concurrent Engineering simultaneous product development

9. Step 5: Types of Test Markets Slide 10-7 • A standard test market is the practice of offering a new product through normal distribution channels in a limited area. • A controlled test market is the practice of offering a new product through a set of retailers who have been paid to set aside shelf space for the product in a desirable area of the store. • A simulated test market is an experiment in which a sample of consumers has an opportunity to select products.

10. Slide 10-8 Step 6: Commercialization Commercialization

11. Slide 10-9 New Product Introductions in 1997 Food 4,883 Beverages 1107 Health and Beauty 3,655 Household Products 578 261 Pet Products Miscellaneous 117 Source: Statistical Abstract of the United States (1998), p. 548.

12. Selecting New Product Characteristics Slide 10-10 Decisions Description Quality level Need to consider what criteria(s) potential customers use to determine their perceptions of quality Product Features Select specifications by determining what it is that customers want from the product and what they are likely to need Product Design Design products for both ease of use and aesthetic appeal Customers must not be harmed by using the product as intended. Product Safety

13. The Eight Dimensions of Quality Slide 10-11 Walt Disney World Performance PerceivedQuality Singapore Airlines OverallEvaluation Features Ralph Lauren Sears Die Hard Reliability Aesthetics Serviceability Durability Midas DuraCell Conformance Chrysler

14. Auxiliary Dimension of New Product Slide 10-12 Decisions Description Warranty A producer’s statement of what it will do to compensate the buyer if the product is defective. Magnuson-Moss Warranty FTC Act (1975) Guarantee An assurance that the product is as represented and will perform properly. Packaging Used for functional, promotional, and facilitating exchange. The plastic or paper sticker attached to a product. Nutritional Labeling & Educational Act (1990) Labeling

15. Universal Product Codes Slide 10-13 A code imprinted on the product or its package 0 12345 67890 5 Check Digit Identify ManufacturerAssigned by the Uniform Code Council Identify ProductAssigned by the Manufacturer

16. Slide 10-14 Three Types Of Product Failures RELATIVE Profits are less than company target PARTIAL Sales cover all the variable costs but no fixed costs ABSOLUTE Sales do not cover variable costs DEGREE OF FAILURE

17. Slide 10-15 Why Some New Products Succeed SUCCESS FACTORS Good match between product and market needs Adequate target market size Offers a clear, meaningful benefit Distinguishable from substitute products Offers unique, superior value Organizational commitment to new product development FAILURE FACTORS Poor match between product and market needs Overestimation of market size Incorrect positioning Inappropriate price Inadequate distribution Poor promotion

18. Organizational Forms for New Product Development Slide 10-16 Figure 10.5 Options Functional BalancedMatrix ProjectMatrix Venture FunctionalMatrix With orWithoutCommittee Inside/Outside Percentage of Employee Time Devoted to the New Product Almost None Almost All Source: Adapted from C. Merle Crawford, New Products Management, 4th ed. (Burr Ridge, Ill.:Irwin, 1994), p. 411

19. Shortening Development Time Slide 10-17 • Use cross-functional teams • Applying technology • Delegate authority • Build on specialized knowledge