1. Gilbert A. Churchill, Jr. J. Paul Peter Chapter 10 Developing New Products Marketing

2. Types of New Products Slide 10-1 Figure 10.1 New-to-the-World Products New Category Entries Additions to the Product Line Product Improvement Repositionings New! DVD & HD-TV Kodak Royal Gold Barbie on wheelchair, playing soccer, etc. Windows 98, Autofocus camera Lysol drain opener A product that is new to the marketing organization in any way

3. The New Product Development Process Slide 10-2 Figure 10.2 Idea Generation Idea Screening Business Analysis Product Development Test Marketing Commercialization

4. Technique Delphi Method Benefit Analysis Description A panel of experts fills out a questionnaire; a researcher tabulates the results and sends them to panel members. Repeat the process until the panel reaches a consensus or an impasse. Use Analysis Relative Brand Profile Unique properties Step 1: Techniques for Generating Ideas Slide 10-3a Table 10.1 List all the benefits customers receive from the product under study. Think of benefits that are currently missing from the list. Ask customers how they use the product under study. List the various uses. Ask target markets whether the brand name makes sense for other product categories under consideration. A stretch of the brand name that makes sense to potential buyers can be the basis for a new product. List all the properties held in common by a product or material currently on the market. Look for unique properties of the organization’s product.

5. Technique Achilles heel Free Association Description List the weaknesses of a product or product line (for the organization and its competitors). Prune the list to the one or two weaknesses most likely to inspire a response from competitors. Identify product concepts that could result from correcting these weaknesses. Study of other people’s failures Slide 10-3b Table 10.1 Study products that have failed. Look for ways to solve the problems that led to failure. Stereotype activity Write down one aspect of the product situation–a product attribute, use or user. Let the mind roam and jot down every idea that surfaces. Repeat the process for other aspects of the product situation. Ask, “How would ________do it?” –referring to how a member of some group or a particular person would use the product. Example: What type of bicycle would a senator ride? Can also ask what the stereotype would not do. Techniques for Generating Ideas

6. Step 2: Idea Screening Idea Screening Slide 10-4 Done to avoid Drop Error and Go Error

7. Step 3: Business Analysis Business Analysis Slide 10-5 Concept Testing Having potential customers evaluate pictures or written descriptions of the product

8. Step 4: Product Development Product Development Slide 10-6 Simultaneous/concurrent Engineering simultaneous product development

9. A standard test market is the practice of offering a new product through normal distribution channels in a limited area.A standard test market is the practice of offering a new product through normal distribution channels in a limited area. A controlled test market is the practice of offering a new product through a set of retailers who have been paid to set aside shelf space for the product in a desirable area of the store.A controlled test market is the practice of offering a new product through a set of retailers who have been paid to set aside shelf space for the product in a desirable area of the store. A simulated test market is an experiment in which a sample of consumers has an opportunity to select products.A simulated test market is an experiment in which a sample of consumers has an opportunity to select products. Slide 10-7 Step 5: Types of Test Markets

10. Step 6: Commercialization Commercialization Slide 10-8

11. New Product Introductions in 1997 Source: Statistical Abstract of the United States (1998), p. 548. Miscellaneous Food Beverages Health and Beauty Household Products Pet Products 4,883 1107 3,655 578 261 117 Slide 10-9

12. Decisions Quality level Product Features Description Need to consider what criteria(s) potential customers use to determine their perceptions of quality Product Safety Slide 10-10 Customers must not be harmed by using the product as intended. Product Design Select specifications by determining what it is that customers want from the product and what they are likely to need Design products for both ease of use and aesthetic appeal Selecting New Product Characteristics

13. The Eight Dimensions of Quality Slide 10-11 Performance Features Overall Evaluation Conformance Durability Reliability Serviceability Aesthetics Chrysler DuraCell Sears Die Hard Singapore Airlines Walt Disney World Perceived Quality Ralph Lauren Midas

14. Decisions Warranty Guarantee Description A producer’s statement of what it will do to compensate the buyer if the product is defective. Magnuson-Moss Warranty FTC Act (1975) Labeling Slide 10-12 The plastic or paper sticker attached to a product. Nutritional Labeling & Educational Act (1990) Packaging An assurance that the product is as represented and will perform properly. Used for functional, promotional, and facilitating exchange. Auxiliary Dimension of New Product

15. Universal Product Codes Slide 10-13 0 12345 67890 5 Identify Manufacturer Assigned by the Uniform Code Council Identify Product Assigned by the Manufacturer Check Digit A code imprinted on the product or its package

16. Three Types Of Product Failures DEGREE OF FAILURE PARTIAL Sales cover all the variable costs but no fixed costs PARTIAL Sales cover all the variable costs but no fixed costs RELATIVE Profits are less than company target RELATIVE Profits are less than company target ABSOLUTE Sales do not cover variable costs ABSOLUTE Sales do not cover variable costs Slide 10-14

17. Why Some New Products Succeed SUCCESS FACTORS Good match between product and market needs Adequate target market size Offers a clear, meaningful benefit Distinguishable from substitute products Offers unique, superior value Organizational commitment to new product development FAILURE FACTORS Poor match between product and market needs Overestimation of market size Incorrect positioning Inappropriate price Inadequate distribution Poor promotion Slide 10-15

18. Organizational Forms for New Product Development Slide 10-16 Figure 10.5 Functional With or Without Committee Functional Matrix Balanced Matrix Project Matrix Venture Inside/ Outside Options Almost NoneAlmost All Source: Adapted from C. Merle Crawford, New Products Management, 4th ed. (Burr Ridge, Ill.:Irwin, 1994), p. 411 Percentage of Employee Time Devoted to the New Product

19. Use cross-functional teams Applying technology Delegate authority Build on specialized knowledge Shortening Development Time Slide 10-17