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DEVELOPING NEW PRODUCTS
AND SERVICES
CHAPTER
Product ItemProduct Item
Product LineProduct Line
Product MixProduct Mix
A specific version of an organization’s products.A specific version of an organization’s products.
A group of closely-related product items.
A group of closely-related product items.
All products that an organization sells.
All products that an organization sells.
Product Items, Lines, and MixesProduct Items, Lines, and Mixes
Each has a unique number and bar code(SKU)
Gillette’s Product Lines and MixGillette’s Product Lines and Mix
Blades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus
Width of the product mixWidth of the product mix
Dep
th o
f th
e p
rod
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lin
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epth
of
the
pro
du
ct li
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55
Classifying Products
Type of User
Degree of Tangibility
• Consumer Goods • Business Goods
• Nondurable Good-used up in a few uses
• Durable Good-lasts over many uses
• Services
Examples??
IntangibilityIntangibility
InseparabilityInseparability
HeterogeneityHeterogeneity
PerishabilityPerishability
Services 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.
The Characteristics of Services
THE VARIATIONS OF PRODUCTS
Intangibility
Inseparability
Inconsistency
Inventory
• Idle Production Capacity- like stock out costs and holding costs for goods
The Four I’s of Services
Can be reduced by using commission and part time workers
CLASSIFYING GOODS AND SERVICES
ConvenienceProduct
ConvenienceProduct
ShoppingProduct
ShoppingProduct
SpecialtyProduct
SpecialtyProduct
UnsoughtProduct
UnsoughtProduct
A relatively inexpensive item that merits little shopping effort.A 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 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 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.
A product unknown to the potential buyer or a known product that the buyer does not actively seek.
Classification of consumer goods
Why new-product development can be a dice roll: some forecasts
What Is A New Product
Functionally Different from Existing Products
FTC: Newness = 6 Months or less After Regular Distribution
Company: Simply Anything Different
FIGURE 10-DFIGURE 10-D What it takes to launch one commercially successful new product
Reasons for New Product Failures
• Too Little Market Attractiveness
• Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution
• Insignificant Point of Difference
• No Access to Buyers
• Bad Timing
• Poor Product Quality
• Insensitivity to Customer Needs on Critical Factors
Why Did These Products Fail?
Why did this new product fail?
Stages in the New Development Process
Strategic roles of most successful new products
THE NEW-PRODUCT PROCESS-Idea Generation
Customer and Supplier Suggestions
Employee and Co-Worker Suggestions
Research and Development Breakthroughs
Competitive Products
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.
THE NEW-PRODUCT PROCESS-Business Analysis
• if positive, build a prototype
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Considerations Considerations in in
Business Business Analysis StageAnalysis Stage
Demand
Cost
Sales
Profitability
THE NEW-PRODUCT PROCESS-Development
“Failure Analysis” Safety Tests
Marketing strategy
Packaging, branding, labeling
Manufacturing feasibility
Final government approvals if needed
THE NEW-PRODUCT PROCESS- Test Marketing
The limited introduction of a product
and a marketing program to determine
the reactions of potential customers
in a market situation.
Limited time to market
Service nature of the item
Time to see product benefit is long
Number of units produced is small
When Test Markets Don’t Work
Six important U.S. test markets “demographics winner”: Wichita Falls, Texas, metropolitan
statistical area
THE NEW-PRODUCT PROCESS-Commercialization
Speed as a Factor in New-Product Success
• Time to Market- important high tech items
• Parallel Development – Gantt chart usage
• Fast Prototyping – do it, try it, fix it
Ramp Up and Regional Rollouts
• Product Positioning is marketing’s job here
Most expensive stage
To Review: The New Product Process
Product
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.
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 Line
A 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.
A 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.
Product Mix
The product mix is the number of product lines offered by a company.The product mix is the number of product lines offered by a company.
Consumer Goods
Consumer goods are products purchased by the ultimate consumer.Consumer goods are products purchased by the ultimate consumer.
Business Goods
Business goods are products that assist directly or indirectly in providing products for resale. Also called as B2B goods, industrial goods, or organizational goods.
Business goods are products that assist directly or indirectly in providing products for resale. Also called as B2B goods, industrial goods, or organizational goods.
Services
Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.
Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.
Idle Production Capacity
Idle production capacity occurs when the service provider is available but there is no demand.
Idle production capacity occurs when the service provider is available but there is no demand.
New-Product Process
The new-product process consists of seven stages a firm goes through to identify business opportunities and convert them to a salable good or service.
The new-product process consists of seven stages a firm goes through to identify business opportunities and convert them to a salable good or service.