Chapter 9: Developing new products and services

Product a good, service, or idea consisting of tangible and intangible features that
satisfies consumers needs and is received in exchange for money or something else
of value

Nondurable consumed in one or a few uses

Durable long lasting car

Services intangible activities or benefits that an organization provides to satisfy

consumers needs in exchange for money or something else of value
Consumer product products purchased by the ultimate consumer
Business products (B2B) products brought and intended for resale
Convenience products consumer purchase frequently, conveniently, minimum
shopping effort
Shopping product items compared criteria on price, quality, style before
purchasing
Specialty product consumer make special effort to search out and buy
Unsought product did not know or did not initially want
Derived demand business product derived from consumer demand
1
2
3

Delivery by people or equipment people agencies equipment vending

machines
Delivery by business firm or nonprofit seek to satisfy clients and be efficient
Delivery by govt agency

Four Ls of service unique elements that distinguish services from goods:

intangibility, inconsistency, inseparability, inventory

Intangible performance rather than an object product

Inconsistency services depend on who provides them varies from person
to person
Inseparability consumer cannot distinguish service provider from service
itself
Inventory idle production capacity when the service provider is available
but there is no demand for the service

Gap analysis consumer expectation and experience on product

Product item a specific product that has a unique brand, size, or price

Product line group of products that are closely related because they are similar in
terms of consumer needs and uses, market segments, sales outlets, or prices
Product mix all the product lines offered by a company
Newness in existing products different function can be new
Newness from consumer perspective effect of their consumption

Continuous innovation customer dont need to learn new behavior

Dynamically continuous innovation only minor changes in product
Discontinuous innovation need to learn new skill

Lowest level with least risk is product line extension

Second level brand extension putting brand on unfamiliar new products ex.
Colgate dinner entrees
Third level radical invention ex. Apple
1 Well defined target market
2 Specific customer needs and wants
3 What product will look like and what will it do
New product failures:
1 Insignificant point of difference
2 No economical access to buyers
3 Incomplete market and product protocol before product development
starts
4 Not satisfying customer needs on critical factors
5 Bad timing
6 Poor product quality
7 Too little market attractiveness
8 Poor execution of market mix: brand name, package, price, promotion,
distribution
Reason why they failed:
1 Didnt listen to voice of the consumer
2 Skipping stages in new product process
3 Pushing a poorly conceived product into the market to generate quick
revenue
4 Encountering groupthink in task force and committee meetings
5 Not learning critical takeaway lessons from past failures
6 Avoiding not invented here problem
New product process 7 stages an organization goes through to identify business
opportunities and convert them into salable products and or services
1 New product strategy development role for new product in terms of firms
overall obj. uses swot analysis
2 Idea generation developing a pool of concepts to serve as candidates for
new products to serve as candidates for new products

Screening and evaluation - process that internally and externally evaluates

new product ideas to eliminate those that warrant no further effort
a Internal approach customer experience management (CEM) process
of managing the entire customer experience within the company
b External approach testing project idea over the actual product
concept test
4 Business analysis features of the product and the marketing strategy
needed to bring it to market and make financial projections
5 Development turns ideas into prototype
6 Market testing exposing product to prospective consumers under realistic
purchase conditions to see what they will buy
Standard test market product and tries to sell through normal distribution
Controlled test market- contracting the entire test program to outside service
Simulated test market
7 Commercialization process positions and launch product in full scale
production/sales. Most expensive stage
Slotting fee payment a manufacturer makes to place a new item on a retailers
shelf.