ch. 9 Developing New Products and Services

Organizational Inertia in New Product Features

1.) Encountering "groupthink" in task force and committee meetings 2.) Avoiding the "NIH problem": a great idea is a great idea regardless of its source. But in large organizations ideas get rejected because they were "NOT invented here"

4 Types of consumer products

1.) convenience product-- toothpaste, hand soap etc 2.) shopping product- cameras, tv, airline tickets 3.) specialtly product- rolex watch, heart surgery 4.) unsought product- burial insurance, thesaurus

The Uniqueness of Services- 4 things

1.) intangibility 2.) inconsistency 3.) inseparability- means that the customer cant distinguish the service provider from the service itself. ex: large lecture might be great, but not great if you cant get your question answered 4.) inventory

Marketing Reasons for New Product Failures

IINNBPPT 1,) *insignificant point of difference*: this is the single most important factor for a new product to defeat competing ones- having superior characteristics that deliver unique benefits to the user 2.) *incomplete market and product protocol before product development starts*: a vague product wont last. 3.) *Not satisfying customer needs on critical factors*: overlaps with 1. this stresses that problems on one or 2 critical factors can kill the product 4.) *Bad timing*: ex: Microsoft introduced Zune after the ipod and it didnt do well 5.) *No economical access to buyers*: ex: grocery products. the cost to gain access to retailer shelf space is huge. 6.) *Poor product qaulity*: happens when the product isnt well tested. ex: windows vista 7.) *Poor execution of the marketing mix* 8.) *Too little market attractiveness*: the ideal is a large target market with high growth and real buyer need. however, the target market is often too small or competitive

dynamically continuous innovation

minor changes in behavior are required. ex: Heinz EZ squirt cap

durable goods

a good that lasts over many uses. ex: appliances, cars. they emphasize personal selling

product

a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers needs and is received in exchange for money or something else of value

newness from the consumer's perspective

a second way to define new products is in terms of their effects on consumption. classifies new products by the degree of learning required by the customer. -continuous innovation -dynamically continuous innovation -discontinuous innovation

Stage 6: Market Testing

exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy. 3 main test markets: 1.) standard: company develops a product and then attempts to sell it through normal distrib channels 2.) controlled: involves contracting the entire test program to an outside service. the service pays retailers for shelf space and can guarentee a % of the test products potential. 3.) simulated: to save time and money, companies turn to this type. It somewhat replicates a full scale test market. ex: can be used in Shopping Malls to find consumers who use the product class being tested.

product line

group of products that are closely related because they are similar in terms of consumer needs and uses, market segments, sales outlets, or prices

continuous innovation

consumers dont need to learn new behaviors. ex: when toothpastes add a "protects gums"...customers dont need to learn how to brush their teeth in a new way now.

Newness (of a product) compared with existing products

if a product is functionally different from existing products, it can be defined as new.

3 ways to classify services

if they are delivered by 1.) people or equipment 2.) business firms or nonprofit organizations 3.) govt agencies

product

includes the physical good and services AS WELL AS the idea

services

intangible activities or benefits that an organization provides to satisfy consumers needs in exchange for money or something else of value. ex: dental exam -services contribute $7.6 trillion to the US GDP, while goods provide only half that

Stage 3: Screening and Evaluation

internally and externally evaluates NP ideas to eliminate those that warrant no further effort *internal approach*: *CEM Customer Experience Management*: process of managing the entire customer experience within the company *external approach*: they use concept tests. which are external evals with consumers that consists of preliminary testing of a NP idea`

idle production capacity

inventory handling costs are more subjective and related to idle production capacity...which is when the service provider is available but there is no demand for the service.

discontinuous innovation

making the consumer learn entirely new consumption patterns to use the product. ex: buying a wireless router was confusing so customers needed help from the Geek Squad.

business products AKA B2B products

products organizations buy that assist in providing other products for resale. -their sales are often the result of derived demand -- which means sales of business products are from the sale of consumer products...ex: if consumer demand for Ford cars (consumer product) increases, the company may increase its demand for paint spraying equipment (business product)

consumer product

products purchased by the ultimate consumer

Stage 4: Business Analysis

specifies the features of the product and the marketing strategy needed to bring it to market. -this is the last checkpoint before a PROTOTYPE is created

New Product Process

the 7 stages an organization passes through to identify business opportunities and convert them into salable products or services.

Newness in Legal Terms

the US federal trade commission (FTC) advises that the term "NEW" be limited to use with a product up to 6 months after it enters regular distribution.

Stage 1: New Product Strategy Development

the stage of NP process that defines the role for a new product in terms of the firms overall objectives. -uses a SWOT analysis and environmental scanning - the outcome defines the vital PROTOCOL for each NP idea

Stage 7: Commercialization

the stage of the NP process that positions and launches a new product in full-scale production and sales. -most expensive stage

idea

the thought that leads to a product or action, such as a concept for a new invention or getting people to vote.

all products need a protocol:

this identifies: 1.) a well defined target market 2.) specific customers needs/wants and preferences 3.) what the product will be and do to satisfy -less than 3% of new consumer packaged goods exceed first year sales of $50 million - the benchmark for a successful product

gap analysis

used to compare differences between consumers expectations and his/her actual experiences.

non durable goods

used up quickly. ex: Wrigley's gum, relies heavily on consumer advertising

Newness from the Organizations Perspective`

view newness and innovation in their products at three levels. lowest level: least risk, is a PRODUCT LINE EXTENSION next level: involves a jump in innovation or technology OR a BRAND EXTENSION ex: putting an established brand name on a completely new product third level: radical invention ex: apples first personal computer

product mix

all the product lines offered by a company. ex: Cray inc. has 3 product lines: supercomputers, storage systems, and "Data appliance"... they are sold to govt agencies

Stage 5: Development

NP idea gets turned into a prototype. ex: googles driverless car

product item

a specific product that has a unique brand, size or price. ex: Ultra Downey softener comes in many different forms and each has a unique SKU

Stage 2: Idea Generation

developing a pool of concepts to serve as candidates for new products. -the goal is to move from "what is" questions to "what if" questions that focus on solutions and marketing actions. -open innovation: businesses seek NP ideas from employees through suggestion boxes. -firms also ask their salespeople to talk to customers and ask their suppliers to discover new product ideas - R&D - competitive products: analyzing competitive products can lead to better NP ideas - Smaller Firms, Universities, and Inventors: General Mills partnered with WeightWatchers to make healthier soups *Crowdfunding*: way to gather an online community of supporters to financially rally around a specific project