Presentation on theme: "DEVELOPING NEW PRODUCTS AND SERVICES"— Presentation transcript:
1 DEVELOPING NEW PRODUCTS AND SERVICES CHAPTERDEVELOPING NEW PRODUCTS AND SERVICES
2 Product Item Product Line Product Mix Product Items, Lines, and MixesProduct ItemProduct LineProduct MixA specific version of an organization’s products.A group of closely-related product items.All products that an organization sells.(SKU)Each has a unique number and bar code
4 Classifying Products Type of User Degree of Tangibility Consumer Goods Business GoodsDegree of TangibilityNondurable Good-used up in a few usesDurable Good-lasts over many usesExamples??Services
5 The Characteristics of Services IntangibilityInseparabilityHeterogeneityPerishabilityServices that cannot be touched, seen, tasted, heard, or felt in the same manner as goods.A characteristic of services that allows them to be produced and consumed simultaneously.A characteristic of services that makes them less standardized and uniform than goods.A characteristics of services that prevents them from being stored, warehoused, or inventoried.
6 THE VARIATIONS OF PRODUCTS IntangibilityInseparabilityInconsistencyInventoryIdle Production Capacity-like stock out costs and holding costs for goodsThe Four I’s of ServicesCan be reduced by using commission and part time workers
7 CLASSIFYING GOODS AND SERVICES ConvenienceProductShoppingSpecialtyUnsoughtA relatively inexpensive item that merits little shopping effort.A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.A particular item that consumerssearch extensively for and are reluctant to accept substitutes.A product unknown to the potential buyer or a known product that the buyer does not actively seek.
9 Why new-product development can be a dice roll: some forecasts These quotations—from very knowledgeable people—were made at the time these four new inventions appeared in the marketplace. The quotations show the difficulty of forecasting future technological revolutions—those usually involving discontinuous innovations.
10 What Is A New Product Functionally Different from Existing Products FTC: Newness = 6 Months or less After Regular DistributionCompany: Simply Anything Different
11 FIGURE 10-D What it takes to launch one commercially successful new product The thousands of product failures that occur every year cost American business billions of dollars. Research research summarized in this figure suggests that it takes about 3,000 raw unwritten ideas to produce a single commercially successful new product.
12 Reasons for New Product Failures Bad TimingToo Little Market AttractivenessPoor Execution of the Marketing Mix: Name, Price, Promotion, and DistributionNo Access to BuyersInsignificant Point of DifferencePoor Product QualityInsensitivity to Customer Needs on Critical Factors
16 Strategic roles of most successful new products Booz, Allen, and Hamilton, a global consulting firm, asked firms what strategic role was served by their most successful recent product. These roles, shown in the figure, help define the direction of new-product development in terms of externally- and internally-driven factors.
17 THE NEW-PRODUCT PROCESS- Idea GenerationCustomer and Supplier SuggestionsEmployee and Co-Worker SuggestionsResearch and Development BreakthroughsCompetitive Products
18 THE NEW-PRODUCT PROCESS- Screening and Evaluation The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason.
19 THE NEW-PRODUCT PROCESS- Business Analysisif positive, build a prototypeConsiderations in Business Analysis StageDemandCostSalesProfitability
20 THE NEW-PRODUCT PROCESS-Development Safety Tests“Failure Analysis”Marketing strategyPackaging, branding, labelingManufacturing feasibilityFinal government approvals if needed
21 THE NEW-PRODUCT PROCESS- Test Marketing The limited introduction of a productand a marketing program to determinethe reactions of potential customersin a market situation.
22 When Test Markets Don’t Work Limited time to marketService nature of the itemTime to see product benefit is longNumber of units produced is small
23 Six important U.S. test markets “demographics winner”: Wichita Falls, Texas, metropolitan statistical area
24 THE NEW-PRODUCT PROCESS- CommercializationMost expensive stageRamp Up and Regional RolloutsProduct Positioning is marketing’s job hereSpeed as a Factor in New-Product SuccessTime to Market- important high tech itemsParallel Development – Gantt chart usageFast Prototyping – do it, try it, fix it
26 ProductA product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.
27 Product LineA product line is 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 type of outlets, or fall within a given price range.
28 Product MixThe product mix is the number of product lines offered by a company.
29 Consumer GoodsConsumer goods are products purchased by the ultimate consumer.
30 Business GoodsBusiness goods are products that assist directly or indirectly in providing products for resale. Also called as B2B goods, industrial goods, or organizational goods.
31 ServicesServices are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.
32 Idle Production Capacity Idle production capacity occurs when the service provider is available but there is no demand.
33 New-Product ProcessThe new-product process consists of seven stages a firm goes through to identify business opportunities and convert them to a salable good or service.