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Slide 10-1

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  1. Slide 10-1

  2. CHAPTER DEVELOPING NEW PRODUCTS AND SERVICES Slide 10-2

  3. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Recognize the various terms that pertain to products and services. • Identify the ways in which consumer and business goods and services can be classified. • Explain the implications of alternative ways of viewing “newness” in new products and services. Slide 10-3

  4. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Describe the factors contributing a product’s or service’s failure. • Explain the purposes of each step of the new-product process. Slide 10-4

  5. THE VARIATIONS OF PRODUCTS • Product • Product Line and Product Mix • Product Line • Product Item • Stock Keeping Unit (SKU) • Product Mix Slide 10-6

  6. THE VARIATIONS OF PRODUCTS • Classifying Products • Type of User • Consumer Goods • Business Goods • Degree of Tangibility • Nondurable Good • Services • Durable Good • Services and New-Product Development Slide 10-8

  7. CLASSIFYING CONSUMER AND BUSINESS GOODS • Classification of Consumer Goods • Convenience Goods • Shopping Goods • Specialty Goods • Unsought Goods Slide 10-9

  8. FIGURE 10-1 Classification of consumer goods Slide 10-10

  9. CLASSIFYING CONSUMER AND BUSINESS GOODS • Classification of Business Goods • Production Goods • Support Goods • Installations • Accessory Equipment • Supplies • Industrial Services Slide 10-12

  10. Concept Check 1. Explain the difference between product mix and product line. A: The product mix is the number of product lines offered by a company. A product line is a group of products or services that 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. Slide 10-13

  11. Concept Check 2. What are the four main types of consumer goods? A: convenience goods, shopping goods, specialty goods, and unsought goods Slide 10-14

  12. Concept Check 3. To which type of good (business or consumer) does the term derived demand generally apply? A: business Slide 10-15

  13. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL • What is a New Product? • Newness Compared with Existing Products • Newness in Legal Terms (Regular Distribution?) • Regular Distribution • Newness from the Company’s Perspective Slide 10-16

  14. 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 Slide 10-19

  15. FIGURE 10-2 Consumption effects define newness Slide 10-20

  16. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL • Why Products Succeed or Fail • Marketing Reasons for New-Product Failures • Insignificant Point of Difference Slide 10-21

  17. FIGURE 10-BWhat it takes to launch one commercially successful new product Slide 10-22

  18. MARKETING NEWSNET What Separates New-ProductWinners and Losers Slide 10-23

  19. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL • Why Products Succeed or Fail • Marketing Reasons for New-Product Failures • Incomplete Market and Product Definition Before Product Development Starts • Protocol • Too Little Market Attractiveness • Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution Slide 10-25

  20. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL • Why Products Succeed or Fail • Marketing Reasons for New-Product Failures • Poor Product Quality or Insensitivity to Customer Needs on Critical Factors • Bad Timing • No Economic Access to Buyers • A Look at Some Failures Slide 10-26

  21. Concept Check 1. From a consumer’s viewpoint, what kind of innovation would an improved electric toothbrush be? A: continuous innovation Slide 10-30

  22. Concept Check 2. What does “insignificant point of difference” mean as a reason for new-product failure? A: The product must have superior characteristics that deliver unique benefits to the user compared to those of competitors. Slide 10-31

  23. THE NEW-PRODUCT PROCESS • New-Product Process • New-Product Strategy Development • Objectives of the Stage: Identify Markets and Strategic Roles • 3M: Cross-Functional Teams and Six Sigma • Cross-Functional Teams • Six Sigma Slide 10-32

  24. FIGURE 10-4 Stages in the new-product process Slide 10-33

  25. FIGURE 10-CStrategic roles of most successful new products Slide 10-34

  26. THE NEW-PRODUCT PROCESS • Idea Generation • Customer and Supplier Suggestions • Employee and Co-Worker Suggestions • Research and Development Breakthroughs • Competitive Products Slide 10-35

  27. THE NEW-PRODUCT PROCESS • Screening and Evaluation • Internal Approach • External Approach • Concept Tests Slide 10-38

  28. Concept Check 1. What step in the new-product process has been added in recent years? A: New-product strategy development has been added recently by many companies to provide focus for ideas and concepts developed later. Slide 10-41

  29. Concept Check 2. What are main sources of new-product ideas? A: Customer and supplier suggestions, employee suggestions, R&D breakthroughs, and competitive products. Slide 10-42

  30. Concept Check 3. What is the difference between internal and external screening and evaluation approaches used by a firm in the new-product process? A: In internal screening, company employees evaluate the technical feasibility of new product ideas. In external screening, evaluation consists of preliminary testing of the concept (not the actual product) with consumers. Slide 10-43

  31. THE NEW-PRODUCT PROCESS • Business Analysis • Prototype • Development Slide 10-44

  32. ETHICS AND SOCIAL RESPONSIBILITY ALERT SUVs and Pickups versus Cars—Godzilla Meets a Chimp? Slide 10-46

  33. THE NEW-PRODUCT PROCESS • Market Testing • Test Marketing • Simulated (or Laboratory) Test Markets (STM) • When Test Markets Don’t Work Slide 10-47

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

  35. THE NEW-PRODUCT PROCESS • Commercialization • Burger King’s French Fries: The Complexities of Commercialization • The Risks and Uncertainties of the Commercialization Stage • Slotting Fee • Failure Fee • Speed as a Factor in New-Product Success • Time to Market (TtM) • Fast Prototyping • Parallel Development Slide 10-49

  36. FIGURE 10-6 Marketing information and methods used in the new-product process Slide 10-50

  37. Concept Check 1. How does the development stage of the new-product process involve testing the product inside and outside the firm? A: Internally, laboratory tests are done to see if the product achieves the physical, quality, and safety standards; externally, consumer tests are done. Slide 10-53

  38. Concept Check 2. What is a test market? A: A test market is a city that is viewed as being representative of U.S. consumers in terms of demographics and brand purchase behaviors, is far enough from big markets to allow low-cost advertising, and has tracking systems to measure sales. Slide 10-54

  39. Concept Check 3. What is commercialization of a new product? A: Commercialization involves positioning and launching a new product in full-scale production and sales and is the most expensive stage for most new products. Slide 10-55

  40. JALAPEÑO SODA, ANYONE? GOING ONLINE Slide 10-56

  41. Going Online • 1.Access the NewProductWorks website. Study the “Hits and Misses” categories: “We Expect Them to be Successes,” “Jury is Out,” “Failures,” and “Favorite Failures.” Pick two of the failed products and identify the reasons that led to their failure. Slide 10-57

  42. Going Online • 2.Contrast these failed products with those that are deemed successes to learn why they became “sure-fire winners.” Slide 10-58

  43. WHY NEW-PRODUCT DEVELOPMENT CAN BEA DICE ROLL:SOME FORECASTS SUPPLEMENTALLECTURE NOTE 10-1 Slide 10-59

  44. FIGURE 10-AWhy new-product development can be a dice roll: some forecasts Slide 10-60

  45. THE NEW-PRODUCT PROCESS AT 3M SUPPLEMENTALLECTURE NOTE 10-2 Slide 10-61

  46. DOES A PRODUCT DEVELOPMENT TEAM NEED A FORMAL LEADER? SUPPLEMENTALLECTURE NOTE 10-3 Slide 10-63

  47. FIGURE 10-DFive alternative structures for product development projects Slide 10-64

  48. FIGURE 10-EOverall performance of five structures for product development projects Slide 10-65

  49. NEW-PRODUCT SCREENING AND EVALUATION AT MEDTRONIC, INC. SUPPLEMENTALLECTURE NOTE 10-4 Slide 10-66

  50. FIGURE 10-FA weighted point system Medtronic uses to spot a winning new medical product (part 1) Slide 10-67