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Terms to Describe a Company’s Assortment of Products Product line Product line Product item Product item Product mix Product mix
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Chapter 10Chapter 10New Product ProcessNew Product Process
What is a Product?What is a Product? A good, service, or idea consisting of A good, service, or idea consisting of
a bundle of tangible and intangible a bundle of tangible and intangible attributes that satisfies consumers attributes that satisfies consumers which they receive in exchange for which they receive in exchange for money or some other unit of value.money or some other unit of value.
Difference between a good and a Difference between a good and a service?service?
Terms to Describe a Terms to Describe a Company’s Assortment of Company’s Assortment of
ProductsProducts Product lineProduct line Product itemProduct item Product mix Product mix
Classifying ProductsClassifying Products Consumer ProductsConsumer Products
Convenience Convenience Shopping Shopping Specialty Specialty UnsoughtUnsought
Business Products Business Products Production Production Support Support
Slide 10-10
Classification of Consumer ProductsClassification of Consumer Products
How Do You Define “New How Do You Define “New Product”Product”
Term “new” is hard to defineTerm “new” is hard to define If a product is functionally different If a product is functionally different
from existing products, it can be from existing products, it can be defined as new.defined as new.
Sometimes newness is revolutionarySometimes newness is revolutionary Sometimes it merely means adding Sometimes it merely means adding
features to an existing productfeatures to an existing product
What do these products have What do these products have in common?in common?
Bic PerfumeBic Perfume Fab 1 ShotFab 1 Shot Wheaties Dunk-A-BallsWheaties Dunk-A-Balls Dr. Care ToothpasteDr. Care Toothpaste Avert Virucidal TissuesAvert Virucidal Tissues FingoesFingoes La Choy’s Fresh and Lite Frozen EntreesLa Choy’s Fresh and Lite Frozen Entrees
Slide 10-29
FIGURE 10-3 FIGURE 10-3 Why did these new products Why did these new products fail?fail?
Why Did this Product Fail?Why Did this Product Fail?La Choy launched a line of frozen egg rolls. La Choy launched a line of frozen egg rolls.
Not measly little appetizer egg rolls, but Not measly little appetizer egg rolls, but big meaty egg rolls that a consumer big meaty egg rolls that a consumer would eat as a main course. These egg would eat as a main course. These egg rolls were a part of the Fresh and Lite rolls were a part of the Fresh and Lite line of low fat frozen Chinese entrees. La line of low fat frozen Chinese entrees. La Choy had a well known brand name; Choy had a well known brand name; ethnic cuisine was soaring in popularity; ethnic cuisine was soaring in popularity; so were frozen meals. Why did this so were frozen meals. Why did this product fail?product fail?
Many new products fail each Many new products fail each year.year.
Failures range from 33 percent to 90 Failures range from 33 percent to 90 percent depending on the industry.percent depending on the industry.
What is the New Product Process?What is the New Product Process? The stages a firm goes through to identify The stages a firm goes through to identify
business opportunities and convert them to a business opportunities and convert them to a salable good or service.salable good or service.
Stage 1: New-Product Strategy Stage 1: New-Product Strategy Development Development
Purpose:Purpose: Scan the environment to identify trends Scan the environment to identify trends
that present marketing opportunities or that present marketing opportunities or threats.threats.
Evaluate existing strengths and Evaluate existing strengths and weaknessesweaknesses
This stage serves as valuable input to This stage serves as valuable input to later stageslater stages
Stage 2: Idea GenerationStage 2: Idea Generation Purpose – to identify as many new Purpose – to identify as many new
product ideas as possibleproduct ideas as possible SourcesSources 1. Customers1. Customers 2. Company Research and 2. Company Research and
DevelopmentDevelopment 3. Sales representatives / employees3. Sales representatives / employees 4. Competitors 4. Competitors
Stage 3: ScreeningStage 3: Screening Internal Approach – The firm establishes a Internal Approach – The firm establishes a
set of criteria that the idea must pass in set of criteria that the idea must pass in order to be considered further.order to be considered further.
External Approach – Calls for testing the External Approach – Calls for testing the product conceptproduct concept with an appropriate with an appropriate group of target consumers. group of target consumers.
Relies on written descriptions of the Relies on written descriptions of the product and/or sketches. No physical product and/or sketches. No physical product yet. product yet.
Stage 4: Business AnalysisStage 4: Business Analysis Assesses the potential profitability of Assesses the potential profitability of
the product concept the product concept Estimate salesEstimate sales Estimate costsEstimate costs
Stage 5: Product Stage 5: Product DevelopmentDevelopment
The product concept described on The product concept described on paper is turned into a physical paper is turned into a physical product called a product called a prototypeprototype..
The prototype is tested with sample The prototype is tested with sample groups from the target market. groups from the target market.
Stage 6: Market TestingStage 6: Market Testing Product is tested under realistic Product is tested under realistic
purchase conditions.purchase conditions. Purpose – to see how targeted Purpose – to see how targeted
consumers respond to product and consumers respond to product and other marketing mix elementsother marketing mix elements
Product is introduced in one or more Product is introduced in one or more test citiestest cities
Slide 10-48
FIGURE 10-5FIGURE 10-5 Six important U.S. test Six important U.S. test markets and the “demographics winner”:markets and the “demographics winner”:Wichita Falls, Texas, metropolitan statistical Wichita Falls, Texas, metropolitan statistical areaarea
Stage 7: CommercializationStage 7: Commercialization Product is sold in the marketplace.Product is sold in the marketplace. Involves setting up:Involves setting up:
manufacturing facilitiesmanufacturing facilities Channels of distributionChannels of distribution Promotion for the productPromotion for the product
Will often use a regional roll outWill often use a regional roll out
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