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the service components on goods. Media clutter is increasing, making educational advertising less effective. Shopping time is growing scarce, in- creasing the need for signals. Technology diffu- sion continues to grow.

But the question still remains: Who should use signals? To answer this, the authors suggest a marketer classify a product into one of three groups. A search product is one that customers can evaluate prior to purchase-paper towels and small appliances are mentioned. An experience product is one on which the customer needs some use experience-restaurant meals and books are examples. A credence product is one that con- sumers can never evaluate effectively. Examples include the services of lawyers and accountants.

Marketers of credence products must use sig- nals (customers are using them, so the seller should provide ones that signal the best mes- sage). Marketers of experience may use signals to help, especially on first purchases. Marketers of search products will probably find signals of little use.

The toughest question perhaps is how should a marketer go about selecting signals to use. The authors propose a system, consisting of a “com- bination of sophisticated consumer research, ex- acting competitive analysis, and honest self-as- sessment.” The consumer research is very difficult because customers often cannot or will not reveal the signals they are now using or could respond to.

Then one must study competitors to see what signals they are using, what ones are “open” to us, and what ones we might affect in some way. The authors point out the well-known example of Red Roof Inns telling the customer that the ex- pensive motel’s mint is good, but not worth $27. Such action can destroy a competitor’s signal.

The final ingredient is the self-assessment. It is important to see what signals are now being com- municated (deliberately or otherwise), what sig- nals might be communicated, and what actual product benefits and advantages a product will be able to deliver. Oftentimes the situation requires product innovation just to permit use of a particu- larly good signal.

Marketing New Products With Industrial Dis- tributors, Nicholas Nickolaus, Industrial Market- ing Management (1990), pp. 289-299

ABSTRACTS

The author is Senior Vice President of the Pall Corporation, a $500 million maker of filters de- signed to remove solid, liquid, or gaseous con- taminants from liquids and gases in a wide variety of applications. The firm leads its market and has offices and factories in six countries. Its markets are primarily health care, aeropower, and fluid processing.

As background, the author notes that new products are vital to Pall, and over 95% of theirs are merchandised successfully. They have clear strategy on new products, requiring concentra- tion on fluid clarification (filtering), extending the state of the art where possible, only developing products where there can be quantitative proof of customer benefit, and no commodity products. Their new product process is well thought out, and consistently followed. For example, they will not undertake R&D until marketing and sales people have written out a Marketing Brief that describes a new product’s target market, market need, product performance criteria, and possible sales. R&D people must agree that the requested product is feasible, technically.

Distributors are critical to Pall, even though the manufacturer has the market knowledge and dollar resources to sell direct. Rather, Pall wants the profit-oriented, locally-dedicated entrepre- neurial management that only a distributor can provide.

The strategies and policies Pall uses to make their distributive network successful are as fol- lows.

1.

2.

3.

Straightforward with distributors. The com- pany is absolutely clear (witness the openness of this article) about what the distributor is to do, what the company will do, and what the distributor will gain from the arrangement. Terms of starting and stopping are totally un- derstood. The solid presumption is that the distributor will be one for decades, at least. Selecting distributors for new markets. Often- times a distributor will be invited to attack new markets (new industrial applications) but Pall generally prefers to select new ones. They want to deal with distributors whose major in- come is from the markets Pall serves. Exclusive distribution. There are no excep- tions to this, and the evidence of distributor acceptance is that they send Pall unpriced cop-

ABSTRACTS

4.

5.

6.

7.

8.

9.

ies of every customer invoice, so the manufac- turer can track sales to their ultimate use. Training. The essence of distributor training is formal and continuing. Three-week opening sessions on the usual business and technical matters are followed up by detailed sales man- uals, sales action plans, advanced training ses- sions, and other techniques. They believe that “the knowledgeable salesperson exudes confi- dence which begets customers’ trust and loy- alty.” Technical workshops for end users. Pall has developed a cadre of people, usually with technical backgrounds, who are not in sales and not in laboratory research, for presenting technical seminars and workshops for cus- tomers. These people, often in addition to their regular jobs, become recognized experts in their chosen fields. Every marketing man- ager, for example, must present at least one such seminar. Complementary lines. This is approved, and welcomed. Other products help reduce distrib- utors’ costs and add to their profits, as well as increase customer service. Competing products. These are not allowed. Period. Evaluating distributors. This type of evalua- tion is comprehensive, and involves the usual sales and profits, but it is meant to be con- structive and useful for the distributor, and of- ten turns on non-quantitative factors such as the goodness of feeling one has towards Pall and its products. Avoiding pitfalls on new products. Most of the policies just discussed contribute directly to new product success, but there are special matters. First, the firm makes sure that the new item does indeed meet the requirements in the marketing brief that began the process. This includes product characteristics and per- formance; if the product is not ready it will not be marketed. Not only is product failure very expensive to Pall, but distributors have long memories.

Second, the manufacturing department must have a 3-month inventory on hand, and clear ca- pability of making the first 12-month sales fore- cast.

Third, provision is made for customers to test

J PROD INNOV MANAG 147 1991;8:138-152

the new item. Pall is assured that a new item works (above), but they realize that distributors’ customers will want to prove it themselves. So the marketing manager provides prototype prod- uct for exhaustive testing at point of use.

Fourth, the management recognizes that dis- tributors also want to be convinced. They want to know how the filter behaves “when Pall people are not around.”

Fifth, distributors are backed by a heavy and sustained program of communications during launch. They need to know how the product works, why it was developed, how much profit they can make on it, what its selling requires, and so on. They must have adequate inventories, and they must be backed by every support possible. It is team selling at its best.

The Employee Empowerment Era, Jeffrey Gandz, Business Quarterly (Autumn 1990), pp. 74-79

For some time now we have been hearing about a new culture developing for the product innova- tion function. New organizations, networking, etc. One dimension of this new culture is empow- erment of people working at the action points, and this article tells us about the concept and how it can be implemented.

The forces driving us to empowerment are many. Some are not new, since some firms preached empowerment in the 1950s and 1960s. But today the emphasis is not so much on making employees’ lives more pleasant, but making them more productive. The globalization of business is a factor, since the complexity of today’s opera- tions makes local action more critical.

But we find we also need speed, speed of deci- sion and action. If a new product is needed, the authority must increasingly be vested in people closest to the customer’s problem. And firms are finding that profitable innovation is often a stream of micro-innovation rather than sporadic leaps. Continuous improvements are almost always best left in the hands of people well down the line.

Increased competition is putting new stress on productivity, which calls for better educated em- ployees, dedicated to productivity, and not hin- dered by bureaucratic layers and controls. Lastly, the 1990s will have severe demographi- cally-related shortages of people with certain