Developing New Products and Services

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Developing New Products and Services

• Chapter 10

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Variations of Products

• Product anything tangible or intangible that,
  through the exchange process, satisfies consumer
  or business customer needs.
• Product Line a group of products that are
  closely related because they
• satisfy a class of needs.
• are used together.
• are sold to the same consumer group.
• are distributed through the same type of outlets.
  
• fall within a given price range.
• Product Mix the number of product lines offered
  by a company.

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Layers of Products

• Core Product all of the benefits received from
  the product.
• Actual Product the physical good or delivered
  service.
• Augmented Product the actual product plus other
  supporting features.

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Classifying Products
Product Classifications
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Consumer Goods

• Convenience Goods goods that are frequently
  purchased with little effort (milk, candy bars,
  drain opener).
• Shopping Goods goods that are selected with
  considerable time and effort (shoes, water
  heater).
• Specialty Goods goods that have unique
  characteristics to the buyer (favorite
  restaurant, Rolex watch).
• Unsought Goods goods that consumers have little
  interest in until the need arises (funeral
  service).

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Business Goods

• Production Goods items in the manufacturing
  process that become part of the final product.
• Support Goods items used to assist in producing
  other goods and services.
• Installations
• Accessory Equipment
• Supplies
• Services

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Is a Product New

• Is a product considered new in relation to
• Existing Products (functionally different?)
• The Law (less than 6 months after distribution?)
• The Company
• Line Extension
• New Innovation or Technology
• True Innovation
• The Consumer
• Continuous Innovation
• Dynamically Continuous Innovation
• Discontinuous Innovation

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Product Success and Failure

• Insignificant point of difference
• Incomplete market and product definition before
  product development starts
• Too little market attractiveness
• Poor execution of the marketing mix

• Poor product quality or sensitivity to customer
  needs on critical factors
• Bad timing
• No economical access to buyers

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22 Immutable Laws of Marketing

• Law 1 The Law of Leadership
• Its better to be first than it is to be better.
  
• Law 2 The Law of the Category
• If you cant be first in a category, set up a new
  category you can be first in.
• Law 3 The Law of the Mind
• Its better to be first in the mind than to be
  first in the marketplace.
• Law 6 The Law of Exclusivity
• Two companies cannot own the same word in the
  prospects mind.

Ries, A, Trout, J (1993). The 22 Immutable
Laws of Marketing Violate Them at Your Own
Risk!. New York HarperCollins Publishers, Inc.
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22 Immutable Laws of Marketing

• Law 7 The Law of the Ladder
• The strategy to use depends on which rung you
  occupy on the ladder.
• Law 8 The Law of Duality
• In the long run, every market becomes a two-horse
  race.
• Law 9 The Law of the Opposite
• If youre shooting for second place, your
  strategy is determined by the leader.
• Law 12 The Law of Line Extension
• Theres an irresistible pressure to extend the
  equity of the brand.

Ries, A, Trout, J (1993). The 22 Immutable
Laws of Marketing Violate Them at Your Own
Risk!. New York HarperCollins Publishers, Inc.
11
The New-Product Process
New-Product Strategy Development
Idea Generation
Screening and Evaluation
Business Analysis
Development
Market Testing
Commercialization
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New-Product Strategy Development

• Involves defining the role for a new product in
  terms of the firms overall corporate objectives.
  
• Through environmental scanning, opportunities,
  threats, strengths, and weaknesses are
  identified.
• New product ideas
• Market identification

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Idea Generation

• New ideas are generated by
• customers.
• employees.
• basic research and development.
• competitors.

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Screening and Evaluation

• Involves internal and external evaluations of the
  new-product ideas to eliminate those that warrant
  further effort.
• Internal Approach
• External Approach

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Business Analysis

• Involves specifying the features of the product
  and the marketing strategy needed to
  commercialize it and making necessary financial
  projections.
• Is there demand?
• Does the firm have the resources?
• How will it fit into the product mix?
• Profit projections.

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Development

• A firms engineers work with marketers in
  refining the design and production process.
• Prototype test versions of a proposed product.
  

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Market Testing

• Test Marketing The firms tries out the complete
  marketing plan, but in a small geographic area
  that is similar to the larger market.
• Advantages
• Marketers can improve the marketing plan
• Negatives
• Expensive
• Free look for competitors
• Simulated Test Marketing Imitates the
  introduction of a product using a smaller number
  of participants and computer software.

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Commercialization

• Positioning and launching the product in
  full-scale production and sales
• Risks
• Slotting Fee a payment to place a new item on a
  retailers shelf.
• Failure Fee a penalty payment to compensate the
  retailer for sales its shelf space never made.