Chapter 10
New Product Process
What is a Product?
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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.
Difference between a good and a service?
Terms to Describe a Company’s
Assortment of Products
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Product line
Product item
Product mix
Classifying Products
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Consumer Products
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Convenience
Shopping
Specialty
Unsought
Business Products
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Production
Support
Classification of Consumer Products
Slide 10-10
How Do You Define “New
Product”
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Term “new” is hard to define
If a product is functionally different from
existing products, it can be defined as
new.
Sometimes newness is revolutionary
Sometimes it merely means adding
features to an existing product
What do these products have in
common?
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Bic Perfume
Fab 1 Shot
Wheaties Dunk-A-Balls
Dr. Care Toothpaste
Avert Virucidal Tissues
Fingoes
La Choy’s Fresh and Lite Frozen Entrees
FIGURE 10-3 Why did these new products
fail?
Slide 10-29
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
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Purpose:
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Scan the environment to identify trends that
present marketing opportunities or threats.
Evaluate existing strengths and weaknesses
This stage serves as valuable input to later
stages
Stage 2: Idea Generation
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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
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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 an appropriate group of
target consumers.
Relies on written descriptions of the product
and/or sketches. No physical product yet.
Stage 4: Business Analysis
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Assesses the potential profitability of the
product concept
Estimate sales
Estimate costs
Stage 5: Product Development
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The product concept described on paper is
turned into a physical product called a
prototype.
The prototype is tested with sample
groups from the target market.
Stage 6: Market Testing
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Product is tested under realistic purchase
conditions.
Purpose – to see how targeted consumers
respond to product and other marketing
mix elements
Product is introduced in one or more test
cities
FIGURE 10-5 Six important U.S. test
markets and the “demographics winner”:
Wichita Falls, Texas, metropolitan statistical
area
Slide 10-48
Stage 7: Commercialization
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Product is sold in the marketplace.
Involves setting up:
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manufacturing facilities
Channels of distribution
Promotion for the product
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Will often use a regional roll out
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