New Product Process

What is a Product?

A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers which they receive in exchange for money or some other unit of value.

Product Assortment

Product line Product item Product mix (assortment)

Classifying Products

Consumer Goods

Convenience Shopping Specialty Unsought Production Support

Business Goods

FIGURE 10-1 Classification of consumer goods

Slide 10-10

What do these products have in common?

Bic Perfume Fab 1 Shot Wheaties Dunk-A-Balls Dr. Care Toothpaste Avert Virucidal Tissues Fingoes La Choys Fresh and Lite Frozen Entrees

Why Did this Product Fail?

La Choy launched a line of frozen egg rolls. Not measly little appetizer egg rolls, but big meaty egg rolls that a consumer would eat as a main course. These egg rolls were a part of the Fresh and Lite line of low fat frozen Chinese entrees. La Choy had a well known brand name; ethnic cuisine was soaring in popularity; so were frozen meals. Why did this product fail?

Many new products fail each year.

Failures range from 33 percent to 90 percent depending on the industry.

What is the New Product Process?

The stages a firm goes through to identify business opportunities and convert them to a salable good or service.

Stage 1: New-Product Strategy Development

Purpose:

Scan the environment to identify opportunities and threats Examine relevant company strengths and weaknesses Serves as valuable input to later stages

Stage 2: Idea Generation

Purpose to identify as many new product ideas as possible Sources 1. Customers 2. Company Research and Development 3. Sales representatives / employees 4. Competitors

Stage 3: Screening

Internal Approach The firm establishes a set of criteria that the idea must pass in order to be considered further. External Approach Calls for testing the product concept with appropriate group of target consumers. Relies on written descriptions of the product and/or sketches.

Stage 4: Business Analysis

Assesses the potential profitability of the product concept Estimate sales Estimate costs

Stage 5: Product Development

The product concept described on paper is turned into a physical product called a prototype. Prototype is tested with sample groups from the target market.

Stage 6: Market Testing

Product is tested under realistic purchase conditions. Purpose see how targeted consumers respond to product and other marketing mix elements Product is introduced in one or more test cities

Stage 7: Commercialization

Product is placed on the market. Involves setting up:

manufacturing facilities Channels of distribution Promotion for the product Will often use a regional roll out