Marketing

9th Canadian Edition

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

10

Developing New
Products and Services

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

Learning Objectives
After reading this chapter, you should be able to:

Recognize the various terms that pertain to products and

services.
Identify the ways in which consumer and business goods and
services can be classified.
Explain the implications of alternative ways of viewing
newness in new products and services.
Describe the factors contributing to a products or services
failure.
Explain the purposes of each step of the new-product process.

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

 2014 McGraw-Hill Ryerson Ltd. All rights reserved.

Apples New-Product Innovation Machine

Steve Jobs, co-founder and former chairman of the
board of Apple, Inc.
Advertising Age anointed Steve Jobs as Marketer of
the Decade.
In 2011, Fortune rated Apple as the worlds mostadmired company
Bloomberg Businessweek has perennially identified
Apple as the worlds most innovative company.

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

THE VARIATIONS OF PRODUCTS

Product Line and Product Mix
Classifying Products
Type of User
Consumer goods
Business goods

Degree of Tangibility

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO1

Raymond Weil
Specialty goods, such as
Raymond Weil watches,
require distinct marketing
programs to reach narrow
target markets

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO1

CLASSIFYING CONSUMER
AND BUSINESS GOODS
Classification of Consumer Goods
Convenience goods
Shopping goods
Specialty goods
Unsought goods

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO2

FIGURE 10-1
Classification of consumer goods

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO2

CLASSIFYING CONSUMER
AND BUSINESS GOODS
Classification of Business Goods
Production Goods
Support Goods
Installations
Accessory Equipment
Supplies
Services

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO2

WHAT IS A NEW PRODUCT?

Newness Compared with Existing Products
Newness in Legal Terms
Newness from the Companys Perspective
Newness from the Consumers Perspective

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO3

Is Sonys
PlayStation Move
really new?

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO3

FIGURE 10-2
Consumption effects define newness

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO3

For how the kind of

innovation present in this
ketchup bottle and the
innovation present in the
Amazon Kindle affects
marketing strategy, see
the text.

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO3

WHAT ARE NEW SERVICES?

Major service innovations
Major process innovations
Service-line extensions
Process-line extensions
Supplementary-service innovations
Basic service improvements
Style changes

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO3

WHY NEW PRODUCTS OR SERVICES

SUCCEED OR FAIL
Marketing Reasons for New-Product Failures
Insignificant point of difference
Incomplete market and product definition (Protocol)
Too little market attractiveness
Poor execution of the marketing mix
Poor product quality on critical factors
Bad timing
No economical access to buyers

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO4

WHY NEW PRODUCTS OR SERVICES

SUCCEED OR FAIL
A Look at Some Failures
What were they thinking? Organizational problems newproduct failure.

Not really listening to the voice of the consumer.

Skipping steps in the new-product process.
Pushing a poorly conceived product into the market to generate
quick revenue.
Groupthink in task force and committee meetings.
Not learning critical takeaway lessons from past failures.

How Marketing Dashboards Can Reduce New-Product

Failures

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO4

iRobot
The text describes
some new-product
lessons this iRobot
co-founder learned
the hard way.

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO4

FIGURE 10-3
Stages in the new-product process

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

Using Marketing
Dashboards
Monitoring Your NewProduct Launch

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

THE NEW-PRODUCT PROCESS

Stage 1: New-Product Strategy Development
Objectives of the Stage: Identify Markets and Strategic Roles
Cross-Functional Teams
Six Sigma
Lead Users

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

Toronto-based
Bravado! Designs
solicits new-product
ideas from its
employees.

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

THE NEW-PRODUCT PROCESS

Stage 2: Idea Generation
Customer and Supplier Suggestions
Employee and Co-Worker Suggestions
Research and Development Breakthroughs
Competitive Products
Universities, Inventors, and Small Technology Firms

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

THE NEW-PRODUCT PROCESS

Stage 3: Screening and Evaluation
Internal Approach
External Approach
Concept Tests

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

The use of online concept tests: an external evaluation

method for new product ideas

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

THE NEW-PRODUCT PROCESS

Stage 4: Business Analysis
Stage 5: Development
Stage 6: Market Testing
Standard Test Markets
Controlled Test Markets
Simulated Test Markets
When Test Markets Do Not Work

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

Mattels Barbie
During development, laboratory tests like this one result in safer
dolls for toys for children

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5

THE NEW-PRODUCT PROCESS

Stage 7: Commercialization
Slotting fee
Failure fee

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

FIGURE 10-4
Marketing information and methods used in the new-product process

2014 McGraw-Hill Ryerson Ltd. All rights reserved.

LO5