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CHAPTER 2

Developing New Products and Services

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After studying this chapter you
should be able to:
Recognize the different types of new products.

Discuss the different sources of new products.

Understand the stages in the new-product


development process.

Describe the way marketing research is used


in the new-product development process.

Appreciate the keys to new-product success.


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New-Product Overview

New products
drive sales and
profit growth.
New Product
Failure Rate
May Be 80%
New products
may gain market share
from competitors.

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Types of New Products
New to the World Products

New Category Entries

Additions to Product Lines

Product Improvements

Repositionings

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Sources of New Products

External Internal
Sourcing Development

Collaborative
Venture

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New-Product Development Process

Idea Generation
Prototype
Development

Idea Screening

Test Marketing
Concept
Development
& Testing
Commercialization
Business
Analysis
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New-Product Development Approaches

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Idea Generation
Idea Generation:
The initial stage for the new-product
development process.

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Idea Screening

Idea Screening:
Evaluate the idea pool and reduce it to a
smaller and more attractive set of potential
new products.

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Concept Development and Testing

Concept Development:
The process of shaping and refining the idea into a
more complete product concept.

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Business Analysis

Business Analysis:
Stage of the new-development process that
calls for preparing initial marketing plans for the
product.

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Prototype Development

Prototype Development:
Converting the concept into an actual product.

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Test Marketing
Test Marketing:
Testing the product
prototype and marketing
strategy in simulated or
actual market situations.

Simulated Test
Marketing:
Evaluating a new product
in situations contrived to
be similar to how
consumers would
purchase and use it.

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Test Marketing

Standard Test Marketing:


Testing a new product and its marketing strategy
in actual market situations.

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Commercialization
Commercialization:
The firm introduces the product on a full-scale basis,
involving:
Understanding Consumer Adoption

Timing

Coordination

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The Consumer Adoption Process
Consumer Marketing Strategy
Adoption Stage Objective

Awareness Communicate Availability

Interest Communicate Product Benefits

Evaluation Emphasize Advantages

Trial Motivate Customers to Try

Adoption Ensure Customer Satisfaction

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Keys to New-Product Success

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Organizational Approaches to New
Product Development

Balanced Matrix
Organization
Project Team
Organization

Project Matrix
Organization

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Marketing-Research Support
Prelaunch

Focus Groups Name & Package


Market Definition Evaluation
Studies Product Tests

Target Segment Copy Tests


Identification Simulated Test
Concept Tests Markets
Test Markets

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Market-Research Support
Rollout

Awareness & Attitude Studies


Usage Studies
Tracking Studies
Product Refinement Tests
New Advertising Strategy Tests

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The Best Products for 2001

Harmony low-fat cereal from General


Mills
The Samsung 1300 from Sprint PCS
Microsofts Xbox
Credit Watch
Hitachis DZ-MV100A Camcorder
Apples I Pod
Listerines PocketPaks

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