New product development

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-5
LECTURE QUESTIONS:
Identify the consumer and business goods and services are classified and marketed.
Explain the effects of different ways of viewing “newness” in new products and services.

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-6
LECTURE QUESTIONS:
Analyze the factors that contribute to the success or failure of a product or service.
Describe the purposes of each step of the new-product process.

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE VARIATIONS OF PRODUCTS
Slide 10-10
Product Line and Product Mix Product Line
Product Mix
Product
Product Item
Stock Keeping Unit (SKU)

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-92
A 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.
Product

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-93
A product line is a group of products—goods or services—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 w/in a given price range.
Product Line

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-94
The product mix is the number of product lines offered by a company.
Product Mix

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE VARIATIONS OF PRODUCTS
Slide 10-12
Classifying Products
Type of User Degree of Tangibility
Consumer Goods
Business Goods
Nondurable Good
Durable Good
Services

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-95
Consumer goods are products purchased by the ultimate consumer.
Consumer Goods

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-96
Business goods are products that assist directly or indirectly in providing products for resale.
Business Goods

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE VARIATIONS OF PRODUCTS
Slide 10-14
The Uniqueness of Services
Intangibility Inconsistency
Idle Production Capacity
Inseparability
Inventory

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-97
Idle production capacity is when the service provider is available but there is no demand.
Idle Production Capacity

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-15
The 4 I’s of service

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
CLASSIFYING GOODS
AND SERVICES
Slide 10-16
Classification of Consumer Goods
Convenience Goods Shopping Goods
Specialty Goods
Unsought Goods

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-17
Classification of consumer goods

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
CLASSIFYING GOODS
AND SERVICES
Slide 10-19
Classification of Business Goods
Derived Demand Production Goods
Support Goods
Installations
Accessory Equipment
Supplies
Services

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
CLASSIFYING GOODS
AND SERVICES
Slide 10-20
Classification of Services
Delivery by People or Equipment
Profit or Not-for-Profit Organizations
Government Sponsored or Not

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-23
1. Explain the difference between product mix and product line.
A: The product mix is the number of product lines offered by a company. A product line is a group of products or services that: 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.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-24
2. What are the four main types of consumer goods?
A: Convenience goods, shopping goods, specialty goods, and unsought goods.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-25
3. What are the three ways to classify services?
A: Delivery by people or equipment, profit or not-for-profit organizations, and government sponsored or not.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL
Slide 10-26
What is a New Product?
The Term “New”
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-29
Product “newness,” as defined by the degree of consumer learning needed to use the product

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL
Slide 10-30
Why Products Succeed or Fail
Marketing Reasons for New-Product Failures
Incomplete Market and Product Definition
Before Product Development Starts
Insignificant Point of Difference

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL
Slide 10-34
Why Products Succeed or Fail
Marketing Reasons for New-Product Failures
Too Little Market Attractiveness
Poor Execution of the Marketing Mix
Poor Product Quality or Insensitivity to
Customer Needs on Critical Factors

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL
Slide 10-35
Why Products Succeed or Fail
Marketing Reasons for New-Product Failures
Bad Timing
No Economic Access to Buyers
A Look at Some Failures

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-39
1. Describe the three kinds of innovations that marketers use to categorize new products.
A: Continuous innovation,
dynamically continuous innovation, and discontinuous innovation.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-40
2. What does “insignificant point of difference” mean as a reason for new-product failure?
A: The product’s characteristics did not deliver benefits to the user that were uniquely superior to those of competitors or were not deemed important to users.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE NEW-PRODUCT DEVELOPMENT PROCESS
Slide 10-41
New-Product Development Process
Identifying Markets and Strategic Roles
Cross-Functional Teams
New-Product Strategy Development
Cross-Functional Teams and
New-Product Development

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-98
The new-product development process consists of seven stages a firm goes through to identify business opportunities and convert them to a salable good or service.
New-Product Development Process

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-42
Stages in the new-product development process

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-44
The cross-functional new-product team

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE NEW-PRODUCT PROCESS
Slide 10-52
Internal Approach
Screening and Evaluation
External Approach
Concept Tests

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-54
1. What step in the new-product process has been added in recent years?
A: New-product strategy development has been added recently by many companies to provide focus for ideas and concepts developed in later stages.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-55
2. What are four sources of new-product ideas?
A: Customer and supplier suggestions, employee suggestions, R&D breakthroughs, and competitive products.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE NEW-PRODUCT PROCESS
Slide 10-56
Prototype
Business Analysis
Assessing the “Business Fit”
of the New Product
Big G Plus Pillsbury: Increasing Emphasis
on Synergies and Segments

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE NEW-PRODUCT PROCESS
Slide 10-58
Test Marketing
Development
Market Testing
When Test Markets Don’t Work

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
THE NEW-PRODUCT PROCESS
Slide 10-61
Commercialization
Speed as a Factor in
New-Product Success
Burger King’s French Fries:
The Complexities of Commercialization
The Risks and Uncertainties of the
Commercialization Stage
Time to Market (TtM)
Parallel Development

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-62
Marketing information and methods used in the new-product process

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-65
1. Describe the business analysis stage of the new-product process.
A: Business analysis involves specifying the features of the product and the marketing strategy needed to commercialize it—bring it to market—and making financial projections.
Concept Check

Marketing, lecture 7
ass.prof.I.I.Skorobogatykh (Ph.D)
Slide 10-66
2. What is a test market?
A: A test market is a city that is viewed as being representative of U.S. consumers in terms of demographics and brand purchase patterns, is far enough from big markets to allow low-cost advertising, and has tracking systems to measure sales.
Concept Check