1. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Recognize the terms that pertain to products and services.
LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:
LO1
Recognize the terms that pertain to products and services.
LO2
Identify the ways to classify consumer and business products.
LO3
Describe four unique elements of services.
Explain the significance of “newness” and “consumer learning” to new products and services.
LO4
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3. Explain the purposes of each step of the new-product process.
LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:
Describe the factors affecting the success or failure of a new product or service.
LO5
LO6
Explain the purposes of each step of the new-product process.
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4. APPLE’S NEW-PRODUCT INNOVATION MACHINE
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5. APPLE’S NEW PRODUCTS Apple’s Innovation Machine
Apple Macintosh image courtesy of Wikipedia.
iCloud: Where the Digital Lifestyle is Heading
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6. WHAT ARE PRODUCTS AND SERVICES? A LOOK AT GOODS, SERVICES, AND IDEAS
Nondurable Goods
Ideas
Durable Goods
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7. FIGURE 9-A The service continuum shows how offerings can vary in their balance of products and services
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8. WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS
LO2
Consumer Products
Business Products
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9. WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS
LO2
Consumer Products
Convenience Products
Shopping Products
Specialty Products
Unsought Products
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10. FIGURE 9-1 How a consumer product is classified affects which products consumers buy and the marketing strategies used
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11. WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING PRODUCTS
LO2
Business Products
Derived Demand
Components
Support Products
Installations
Supplies
Accessory Equipment
Industrial Services
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12. WHAT ARE PRODUCTS AND SERVICES? CLASSIFYING SERVICES
LO2
Delivery by People or Equipment
Delivery by Business Firms or Nonprofit Organizations
Delivery by Government Agencies
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13. FIGURE 9-2 Services can be classified as equipment-based or people-based
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14. WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES
LO3
Four I’s of Services
Intangibility
Inseparability
Inconsistency
Inventory
Idle Production Capacity
Product/Service Offering
Core
Supplementary
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15. WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES
LO3
Assessing Service Quality
Gap Analysis
Monitoring Service Failure
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16. FIGURE 9-3 The five dimensions of service quality
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17. WHAT ARE PRODUCTS AND SERVICES? THE UNIQUENESS OF SERVICES
LO3
Customer Contact Audits
Service Encounters
Customer Contact Audit
A Customer’s Car Rental Activities
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18. FIGURE 9-B Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity)
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19. Product Item Product Line Product Mix
WHAT ARE PRODUCTS AND SERVICES? PRODUCT ITEMS, LINES, MIXES, CLASSES AND FORMS
LO3
Product Item
Stock Keeping Unit (SKU)
Product Line
Product Mix
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20. Product Class Product Form
WHAT ARE PRODUCTS AND SERVICES? PRODUCT ITEMS, LINES, MIXES, CLASSES AND FORMS
LO3
Product Class
Product Form
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21. Little Remedies How does a broad product line benefit both consumers and retailers?
LO3
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22. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT?
LO4
Newness: Compared to Existing Products
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23. MARKETING MATTERS Feature Bloat: Geek Squad to the Rescue!
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24. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT?
LO4
Newness: The Consumer’s Perspective
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
Newness in Legal Terms
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25. FIGURE 9-4 The degree of “newness” in a new product affects the amount of learning effort consumers exert to use the product
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26. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT?
LO4
Newness: The Organization’s Perspective
Product Line Extension
Jump in Innovation
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27. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHAT IS A NEW PRODUCT?
LO4
Newness: The Organization’s Perspective
Brand Extension
True Innovation
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28. Purina Elegant Medleys What are the potential benefits and dangers of product line extensions?
LO4
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29. FIGURE 9-C What it takes to launch one commercially successful new product
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30. FIGURE 9-D What separates new-product winners and losers
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31. Marketing Reasons for New-Product Failures
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL
LO5
Marketing Reasons for New-Product Failures
Insignificant Points of Difference
No Economical Access to Buyers
Incomplete Market and Product Protocol Before Product Development Starts
Not Satisfying Customer Needs on Critical Factors
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32. Marketing Reasons for New-Product Failures
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL
LO5
Marketing Reasons for New-Product Failures
Bad Timing
Poor Product Quality
Too Little Market Attractiveness
Poor Execution of the Marketing Mix
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33. NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL WHY PRODUCTS & SERVICES SUCCEED OR FAIL
LO5
What Were They Thinking? Organizational Problems in New-Product Failure
Not Listening to the “Voice” of the Consumer
Skipping Stages in the New-Product Process
Marketing a Poorly Conceived Product Too Quickly
Encountering “Groupthink” in Meetings
Not Learning Lessons From Past Failures
Avoiding the “NIH Problem”
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34. Fingos & Thirsty Dog/Thirsty Cat Why did these products fail?
LO5
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35. Avert, Monster in My Room, and Life Saver Why did these products fail?
LO5
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36. USING MARKETING DASHBOARDS Which States are Underperforming?
LO5
Annual Percent Change in Unit Volume by State
Change in Growth
< 0%
0 to 10%
> 10%
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37. FIGURE 9-5 Seven stages in the new-product process leading to success
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38. THE NEW-PRODUCT PROCESS STAGE 1: NEW-PRODUCT STRATEGY DEVELOPMENT
Stage Gate Process
New-Product Strategy Development
Strategic Role Defined
SWOT Analysis/Scanning Conducted
Protocol Defined
Service Development Difficult
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39. FIGURE 9-E Strategic roles of most successful new products
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40. THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION
LO6
Idea Generation
Open Innovation
Employee and Co-Worker Suggestions
Customer and Supplier Suggestions
Tide Pods Ad
Crowdsourcing
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41. THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION
LO6
Research & Development Laboratories
Industrial Design
Outside Labs
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42. THE NEW-PRODUCT PROCESS STAGE 2: IDEA GENERATION
LO6
Competitive Products
Smaller Firms
Universities
Inventors
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43. THE NEW-PRODUCT PROCESS STAGE 3: SCREENING AND EVALUATION
LO6
Screening and Evaluation
Internal Approach
Customer Experience Management (CEM)
External Approach
Concept Tests
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44. THE NEW-PRODUCT PROCESS STAGE 4: BUSINESS ANALYSIS
LO6
Business Analysis
Prototype
Business Fit
Capacity Management
Off-Peak Pricing
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45. THE NEW-PRODUCT PROCESS STAGE 5: DEVELOPMENT
Example: Chobani Yogurt
Service Encounters
Safety Tests
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46. MARKETING MATTERS Marissa Mayer: The Talent Behind Google’s Familiar White Home Page
LO6
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47. THE NEW-PRODUCT PROCESS STAGE 6: MARKET TESTING
LO6
Market Testing
Test Marketing
Standard Test Markets
Controlled Test Markets
Simulated Test Markets (STMs)
When Test Markets Don’t Work
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48. THE NEW-PRODUCT PROCESS STAGE 7: COMMERCIALIZATION
LO6
Commercialization
Regional Rollouts
Burger King’s French Fries
Risks with Grocery Products
Slotting Fee
Failure Fee
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49. THE NEW-PRODUCT PROCESS STAGE 7: COMMERCIALIZATION
LO6
Speed as a Factor in New-Product Success
Time to Market (TtM)
Parallel Development
Fast Prototyping
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50. GENERAL MILLS WARM DELIGHTS™: INDULGENT, DELICIOUS, AND GOOEY!
VIDEO CASE 9
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51. VIDEO CASE 9
WARM DELIGHTS
1. What is the competitive set of desserts in which Warm Delights is located?
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52. VIDEO CASE 9
WARM DELIGHTS
2. (a) Who is the target market? (b) What is the point of difference on the positioning for Warm Delights? (c) What are the potential opportunities and hindrances of the target market and positioning?
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53. VIDEO CASE 9
WARM DELIGHTS
3. (a) What marketing research did Vivian Callaway execute? (b) What were the critical questions that she sought research and expert advice to get answers to? (c) How did this affect the product’s marketing mix price, promotion, packaging, and distribution decisions?
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54. VIDEO CASE 9
WARM DELIGHTS
4. (a) What initial promotional plan directed to consumers in the target market did Callaway use? (b) Why did this make sense to Callaway and her team when Warm Delights was launched?
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55. VIDEO CASE 9
WARM DELIGHTS
5. If you were a consultant to Vivian Callaway, what product changes would you recommend to increase sales of Warm Delights?
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56. Product
A product is 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.
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57. Services
Services are the intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange money or something else of value.
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58. Consumer products are products purchased by the ultimate consumer.
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59. Business Products
Business products are products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products.
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60. Four I’s of Services
The four I’s of services consists of the four unique elements that distinguish services from goods: intangibility, inconsistency, inseparability, and inventory.
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61. Idle Production Capacity
Idle production capacity occurs when the service provider is available but there is no demand for the service.
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62. Product Item
A product item is a specific product that has a unique brand, size, or price.
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63. Product Line
A product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
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64. Product Mix
A product mix consists of all of the product lines offered by an organization.
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65. New-Product Process
The new-product process consists of the seven stages an organization goes through to identify business opportunities and convert them to salable products or services.
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66. Customer Experience Management (CEM)
Customer experience management (CEM) is the process of managing the entire customer experience within the firm.
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