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NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10 th Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights.

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Presentation on theme: "NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10 th Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights."— Presentation transcript:

1 NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10 th Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Chapter 20 Public Policy Issues 20-2

3 Public Policy Concerns Product developers have to be aware of emerging public policy concerns and consider their impact on product development and launch. How do the following affect product decision making? –Concern about the environment and the results of climate policy, government mandates on fuel emission, etc. –Concern about poor diets leading to heart disease, high cholesterol and diabetes, including among young people. 20-3

4 Life Cycle of a Public Concern Stirring Trial Support Political Arena Regulatory Adjustment 20-4

5 Product Liability: Typology of Injury Sources Inherent Risk in Product Design Defects – Dangerous Condition – No Safety Device – Inadequate Materials Defects in Manufacture Inadequate Instructions or Warnings Dangers After Use 20-5

6 Four Legal Bases for Product Liability Negligence –Manufacturer let the product be injurious Warranty –A promise –Express warranty: a statement of fact about a product –Implied warranty: arises when product is made available for a given use 20-6

7 Four Legal Bases for Product Liability (continued) Strict Liability –Seller is responsible for not putting a defective product on the market –Defenses: assumption of risk; unforeseeable misuse; not defective Misrepresentation – Implied use of product, even if not defective Other Legislation Consumer Product Safety Act/Safety Commission 20-7

8 Which Are the Real Product Warning Labels? 1. On a disposable razor: “Do not use this product during an earthquake.” 2. On a rock garden: “Eating rocks may lead to broken teeth.” 3. On a roll of Life Savers: “Not for use as a flotation device.” 4. On a hair dryer: “Do not use while sleeping.” 5. On a piano: “Harmful or fatal if swallowed.” 6. On a cardboard windshield sun shade: “Warning: Do not drive with sun shield in place.” 7. On shin guards: “Shin guards cannot protect any part of the body they do not cover.” 8. On syrup of ipecac: “Caution: may induce vomiting.” 9. On an iron: “Do not iron clothes while being worn.” 10. On a plastic sled: “Not to be eaten or burned.” 11. On work gloves: “For best results, do not leave at crime scene.” 12. On a cell phone: “Don’t try to dry your phone in a microwave oven.” 13. On a carpenter’s router: “This product not intended for use as a dentist’s drill.” 14. On a blender: “Not for use as an aquarium.” 15. On a stroller: "Always remove child from stroller before folding.“ 16. On a washing machine: “Do not put any person in this washer.” 17. On a fireplace log: “Caution – risk of fire.” 18. On a laser printer cartridge: “Do not eat toner.” 20-8

9 Which Are the Real Product Warning Labels? 1. NO 2. On a rock garden: “Eating rocks may lead to broken teeth.” 3. NO 4. On a hair dryer: “Do not use while sleeping.” 5. NO 6. On a cardboard windshield sun shade: “Warning: Do not drive with sun shield in place.” 7. On shin guards: “Shin guards cannot protect any part of the body they do not cover.” 8. NO 9. On an iron: “Do not iron clothes while being worn.” 10. On a plastic sled: “Not to be eaten or burned.” 11. NO 12. On a cell phone: “Don’t try to dry your phone in a microwave oven.” 13. On a carpenter’s router: “This product not intended for use as a dentist’s drill.” 14. NO 15. On a stroller: "Always remove child from stroller before folding.“ 16. On a washing machine: “Do not put any person in this washer.” 17. On a fireplace log: “Caution – risk of fire.” 18. On a laser printer cartridge: “Do not eat toner.” 20-9

10 Preparing For the Product Recall Prior to the Recall –Designate the recall program coordinator (spokesperson) –Develop channels for communicating with customers directly During the Recall –Assess safety risk and take corrective action –Inform customers as well as intermediaries of the risks After the Recall –Strive to restore company reputation –Monitor recall effectiveness 20-10

11 Public Policy Problems and the New Products Process 20-11

12 Other Areas of Public Policy Debate Environmental Needs Product Piracy Worthy Products Morality Monopoly Personal Ethics (what would you do?) 20-12

13 Environmental Needs A new product is said to hurt the environment if: –Its raw materials are scarce or hard to get to. –Its design or manufacture causes pollution or excess power usage. –Its use causes pollution. –Its disposal cannot be handled by recycling. Some companies test market their products in Germany and Scandinavia, because of the strict greenness tests there. Business objectives should be aligned with environmental initiatives, otherwise product teams will not feel supported in pursuing projects with real environmental benefits. Taking a leadership position in green product development could turn out to be a sustainable competitive advantage

14 Product Piracy Threatens brand equity and intellectual property of firms. Categories of product piracy: –Counterfeiting: unauthorized production of goods –Brand Piracy: unauthorized use of copyrights or patented brands (the “$20 Rolex”) –Near Brand Usage: slightly different brand names (“Tonny Hilfiger” clothes) –Intellectual Property Copying: Unauthorized copying of CDs and DVDs, for example 20-14

15 Protection Against Product Piracy Communication Legal recourse Government Direct contact Labeling Strong proactive marketing Piracy as Promotion Source: Laurence Jacobs, A. Coksun Samli, and Tom Jedlik, “The Nightmare of International Product Piracy,” Industrial Marketing Management 30, 2001, pp

16 Worthy Products Coffee manufacturers agreed to produce some brands containing no beans from El Salvador. Manufacturers have been asked to produce special exercise equipment for the handicapped or modified products for the elderly. Orphan drugs supported by the federal government; otherwise would not be commercially feasible due to few users

17 Personal Ethics – What Would You Do? 1.You introduce a temporary product and are told not to let distributors or your sales force know it is only temporary and will soon be replaced. 2.You are marketing a new seminar service to train bank personnel in investment counseling, but you don’t know they will really learn how to counsel. 3.You are working on an item to be sold to virtually every K-12 school. You calculate gross margin at about 80%. The price could be cut in half and your company margin would still be 60%. 4.Your database service collects patient records from physicians and offers a new service of information for pharmaceutical firms, including patients’ name, age, sex, and so on, as well as illnesses and treatments. 5.Your company’s “educational” game cards are known to be bought by less sophisticated parents: there are several far better games on the market. 6.Your brewing company markets a new beer containing legal (sterilized) hemp seeds, mostly as a gimmick. Nevertheless, your advertising contains obvious drug imagery

18 What Can the New Product Manager Do? Include in Strategy and Policy –Consider public policy implications in PIC Control Systems Product Testing Marketing Prepares Warnings/Labels Adequate Market Testing (to identify miscommunications) Education (to company personnel and customers) External Affairs 20-18


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