1. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin DEVELOPING NEW PRODUCTS AND SERVICES

2. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Line and Product Mix Classifying Products Type of User  Consumer goods Consumer goods  Business goods Business goods Degree of Tangibility Services and New-Product Development THE VARIATIONS OF PRODUCTS

3. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Classification of Consumer Goods  Convenience goods Convenience goods  Shopping goods Shopping goods  Specialty goods Specialty goods  Unsought goods Unsought goods CLASSIFYING CONSUMER AND BUSINESS GOODS

4. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Classification of consumer goods

5. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Classification of Business Goods  Production Goods Production Goods  Support Goods Support Goods  Installations  Accessory Equipment  Supplies  Services CLASSIFYING CONSUMER AND BUSINESS GOODS

6. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What is a New Product? Newness Compared with Existing Products Newness in Legal Terms Newness from the Company’s Perspective Newness from the Consumer’s Perspective NEW PRODUCTS AND WHY THEY SUCCEED AND FAIL

7. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumption effects define newness

8. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Reasons for Failures  Insignificant “point of difference”  Incomplete market and product definition (Protocol) (Protocol)  Too little market attractiveness  Poor execution of the marketing mix  Poor product quality or sensitivity  Bad timing  No economical access to buyers NEW PRODUCTS AND WHY THEY SUCCEED AND FAIL

9. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin NEW-PRODUCT PROCESS

10. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin New-Product Strategy Development Objectives of the Stage: Identify Markets and Strategic Roles 3M: Cross-Functional Teams, Six Sigma, and Lead UsersSix Sigma THE NEW-PRODUCT PROCESS

11. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Idea Generation Customer and Supplier Suggestions Employee and Co-Worker Suggestions Research and Development Breakthroughs Competitive Products THE NEW-PRODUCT PROCESS

12. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Screening and Evaluation Internal Approach External Approach THE NEW-PRODUCT PROCESS

13. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Business Analysis Development Market Testing Test Marketing THE NEW-PRODUCT PROCESS

14. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Six important U.S. test markets

15. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Testing Simulated Test Markets When Test Markets Don’t Work THE NEW-PRODUCT PROCESS

16. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Commercialization Burger King’s French Fries: The Complexities of Commercialization The Risks and Uncertainties of the Commercialization Stage  Slotting fee Slotting fee  Failure fee Failure fee Speed as a Factor in New-Product Process THE NEW-PRODUCT PROCESS

17. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing information and methods used in the new- product process

18. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchanges for money or some other unit of value. Product

19. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A group of products 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. Product Line

20. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Products purchased by the ultimate consumer. Consumer Goods

21. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Products that assist directly or indirectly in providing products for resale. Business Goods

22. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items that the consumer purchases frequently and with a minimum of shopping effort. Convenience Goods

23. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items for which the consumer compares several alternatives on criteria such as price, quality, or style. Shopping Goods

24. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items that a consumer makes a special effort to search out and buy. Specialty Goods

25. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items that the consumer either does not know about or knows about but does not initially want. Unsought Goods

26. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items used in the manufacturing process that become part of the final product. Production Goods

27. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Items used to assist in producing other goods and services. Support Goods

28. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A statement that, before product development begins, identifies (1) a well- defined target market; (2) specific customer’ needs, wants, and preferences; an (3) what the product will do. Protocol

29. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The sequence of activities a firm uses to identify business opportunities and convert them to a salable good or service. New-Product Process

30. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Defining the role for a new product in terms of the firm’s overall corporate objectives. New-Product Strategy Development

31. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A means to “delight the customer” by achieving quality through a highly disciplined process to focus on developing and delivering near-perfect products and services. Six Sigma

32. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Developing a pool of concepts as candidates for new products. Idea Generation

33. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The third stage of the new product process which involves internal and external evaluations of the new-product ideas to eliminate those that warrant no further effort. Screening and Evaluation

34. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Involves specifying the features of the product and the marketing strategy needed to commercialize it and making necessary financial projections. Business Analysis

35. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Turning the idea on paper into a prototype. Development

36. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy. Market Testing

37. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Positioning and launching a new product in full-scale production and sales. Commercialization

38. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Payment manufacturer makes to place a new item on a retailer’s shelf. Slotting Fee

39. © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A penalty payment made by a manufacturer to compensate the retailer for sales its valuable shelf space never made. Failure Fee