Gilbert A. Churchill, Jr. J. Paul PeterGilbert A. Churchill, Jr. J. Paul Peter

Chapter 10

Developing New Products

Marketing

Types of New ProductsTypes of New ProductsSlide10-1

Figure10.1

New-to-the-WorldProducts

New

Categ

ory

En

tries

Additions to

the

Product L

ineProduct

Improvement

Rep

osi

tio

nin

gs

New!

DVD & HD-TV

Kodak Royal Gold

Barbie on wheelchair, playing soccer, etc.Windows 98, Autofocus camera

Lysol drain opener

A product that is new to the marketing organization in any way

The New Product Development ProcessThe New Product Development ProcessSlide10-2

Figure10.2

Idea Generation

Idea Screening

Business Analysis

Product Development

Test Marketing

Commercialization

TechniqueTechnique

Delphi Method

Benefit Analysis

DescriptionDescription

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.

Use Analysis

Relative Brand Profile

Unique properties

Step 1: Techniques for Generating IdeasStep 1: Techniques for Generating IdeasSlide10-3a

Table10.1

List all the benefits customers receive from the product under study. Think of benefits that are currently missing from the list.

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.

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.

TechniqueTechnique

Achilles heel

FreeAssociation

DescriptionDescription

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.

Study of other people’s failures

Slide10-3b

Table10.1

Study products that have failed. Look for ways to solve the problems that led to failure.

Stereotypeactivity

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.

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.

Techniques for Generating IdeasTechniques for Generating Ideas

Step 2: Idea Step 2: Idea ScreeningScreening

Idea Screening

Slide10-4

Done to avoid Drop Error and Go Error

Step 3: Business Step 3: Business AnalysisAnalysis

Business Analysis

Slide10-5

Concept Testing

Having potential customers evaluate pictures or written descriptions of the product

Step 4: Product Step 4: Product DevelopmentDevelopment

Product Development

Slide10-6

Simultaneous/concurrent Engineering

simultaneous product development

•• A standard test market is the practice of offering a new A standard test market is the practice of offering a new product through normal distribution channels in a product through normal distribution channels in a limited area.limited area.

•• A controlled test market is the practice of offering a new A controlled test market is the practice of offering a new product through a set of retailers who have been paid to product through a set of retailers who have been paid to set aside shelf space for the product in a desirable area set aside shelf space for the product in a desirable area of the store.of the store.

•• A simulated test market is an experiment in which a A simulated test market is an experiment in which a sample of consumers has an opportunity to select sample of consumers has an opportunity to select products.products.

Slide10-7

Step 5: Types of Test MarketsStep 5: Types of Test Markets

Step 6: Step 6: CommercializationCommercialization

Commercialization

Slide10-8

New Product Introductions in New Product Introductions in 19971997

Source: Statistical Abstract of the United States (1998), p. 548.

Miscellaneous

Food

Beverages

Health andBeauty

HouseholdProducts

Pet Products

4,883

1107

3,655

578

261

117

Slide10-9

DecisionsDecisions

Quality level

Product Features

DescriptionDescription

Need to consider what criteria(s) potential customers use to determine their perceptions of quality

Product Safety

Slide10-10

Customers must not be harmed by using the product as intended.

Product Design

Select specifications by determining what it is that customers want from the product and what they are likely to need

Design products for both ease of use and aesthetic appeal

Selecting New Product CharacteristicsSelecting New Product Characteristics

The Eight Dimensions of QualityThe Eight Dimensions of QualitySlide10-11

Performance

FeaturesOverallEvaluation

Conformance

Durability

Reliability

Serviceability

Aesthetics

Chrysler

DuraCell

Sears Die Hard

Singapore Airlines

Walt Disney World

PerceivedQuality

Ralph Lauren

Midas

DecisionsDecisions

Warranty

Guarantee

DescriptionDescription

A producer’s statement of what it will do to compensate the buyer if the product is defective.

Magnuson-Moss Warranty FTC Act (1975)

Labeling

Slide10-12

The plastic or paper sticker attached to a product.

Nutritional Labeling & Educational Act (1990)

Packaging

An assurance that the product is as represented and will perform properly.

Used for functional, promotional, and facilitating exchange.

Auxiliary Dimension of New Product Auxiliary Dimension of New Product

Universal Product CodesUniversal Product CodesSlide10-13

0 12345 67890 5

Identify ManufacturerAssigned by the Uniform Code Council

Identify ProductAssigned by the Manufacturer

Check Digit

A code imprinted on the product or its package

Three Types Of Product FailuresThree Types Of Product Failures

DEGREE OF FAILURE

PARTIAL

Sales cover all thevariable costs but

no fixed costs

PARTIAL

Sales cover all thevariable costs but

no fixed costs

RELATIVE

Profits are lessthan company

target

RELATIVE

Profits are lessthan company

target

ABSOLUTE

Sales do notcover variable

costs

ABSOLUTE

Sales do notcover variable

costs

Slide10-14

Why Some New Products SucceedWhy Some New Products Succeed

SUCCESS FACTORSGood 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 FACTORSPoor match between product and market needs

Overestimation of market size

Incorrect positioning

Inappropriate price

Inadequate distribution

Poor promotion

Slide10-15

Organizational Forms for Organizational Forms for New Product DevelopmentNew Product Development

Slide10-16

Figure10.5

Functional

With orWithoutCommittee

FunctionalMatrix

BalancedMatrix

ProjectMatrix

Venture

Inside/Outside

Options

Almost None Almost All

Source: Adapted from C. Merle Crawford, New Products Management, 4th ed. (Burr Ridge, Ill.:Irwin, 1994), p. 411

Percentage of Employee Time Devoted to the New Product

• Use cross-functional teams

• Applying technology

• Delegate authority

• Build on specialized knowledge

Shortening Development TimeShortening Development TimeSlide10-17