Gilbert A. Churchill, Jr. J. Paul Peter

1
Marketing
Chapter 10
Developing New Products
Gilbert A. Churchill, Jr. J. Paul Peter
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Types of New Products
Slide 10-1
Figure 10.1
DVD HD-TV
New-to-the-WorldProducts
NewCategoryEntries
Kodak Royal Gold
Lysol drain opener
Repositionings
New!
ProductImprovement
Additions to the Product Line
Windows 98, Autofocus camera
Barbie on wheelchair, playing soccer, etc.
A product that is new to the marketing
organization in any way
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The New Product Development Process
Slide 10-2
Figure 10.2
Idea Generation
Idea Screening
Business Analysis
Product Development
Test Marketing
Commercialization
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Step 1 Techniques for Generating Ideas
Slide 10-3a
Table 10.1
Technique
Description
Delphi Method
A panel of experts fills out a questionnaire a
researcher tabulates the results and sends them
to panel members. Repeat the process until the
panel reaches a consensus or an impasse.
Benefit Analysis
List all the benefits customers receive from the
product under study. Think of benefits that are
currently missing from the list.
Use Analysis
Ask customers how they use the product under
study. List the various uses.
Ask target markets whether the brand name makes
sense for other product categories under
consideration. A stretch of the brand name that
makes sense to potential buyers can be the basis
for a new product.
Relative Brand Profile
Unique properties
List all the properties held in common by a
product or material currently on the market. Look
for unique properties of the organizations
product.
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Techniques for Generating Ideas
Slide 10-3b
Table 10.1
Technique
Description
Achilles heel
List the weaknesses of a product or product line
(for the organization and its competitors). Prune
the list to the one or two weaknesses most likely
to inspire a response from competitors. Identify
product concepts that could result from
correcting these weaknesses.
FreeAssociation
Write down one aspect of the product situationa
product attribute, use or user. Let the mind roam
and jot down every idea that surfaces. Repeat the
process for other aspects of the product
situation.
Stereotypeactivity
Ask, How would ________do it? referring to how
a member of some group or a particular person
would use the product. Example What type of
bicycle would a senator ride? Can also ask what
the stereotype would not do.
Study products that have failed. Look for ways to
solve the problems that led to failure.
Study of other peoples failures
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Step 2 Idea Screening
Slide 10-4
Idea Screening
Done to avoid Drop Error and Go Error
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Step 3 Business Analysis
Slide 10-5
Business Analysis
Concept Testing Having potential customers
evaluate pictures or written descriptions of the
product
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Step 4 Product Development
Slide 10-6
Product Development
Simultaneous/concurrent Engineering simultaneous
product development
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Step 5 Types of Test Markets
Slide 10-7

• A standard test market is the practice of
  offering a new product through normal
  distribution channels in a limited area.
• A controlled test market is the practice of
  offering a new product through a set of retailers
  who have been paid to set aside shelf space for
  the product in a desirable area of the store.
• A simulated test market is an experiment in
  which a sample of consumers has an opportunity to
  select products.

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Step 6 Commercialization
Slide 10-8
Commercialization
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New Product Introductions in 1997
Slide 10-9
Food
4,883

Beverages
1107
Health and Beauty
3,655
Household Products
578
261
Pet Products
Miscellaneous
117
Source Statistical Abstract of the United States
(1998), p. 548.
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Selecting New Product Characteristics
Slide 10-10
Decisions
Description
Quality level
Need to consider what criteria(s) potential
customers use to determine their perceptions of
quality
Product Features
Select specifications by determining what it is
that customers want from the product and what
they are likely to need
Product Design
Design products for both ease of use and
aesthetic appeal
Customers must not be harmed by using the product
as intended.
Product Safety
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The Eight Dimensions of Quality
Slide 10-11
Walt Disney World
Performance
Singapore Airlines
PerceivedQuality
OverallEvaluation
Features
Reliability
Sears Die Hard
Ralph Lauren
Aesthetics
Durability
Serviceability
DuraCell
Midas
Conformance
Chrysler
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Auxiliary Dimension of New Product
Slide 10-12
Decisions
Description
Warranty
A producers statement of what it will do to
compensate the buyer if the product is
defective. Magnuson-Moss Warranty FTC Act (1975)
Guarantee
An assurance that the product is as represented
and will perform properly.
Packaging
Used for functional, promotional, and
facilitating exchange.
The plastic or paper sticker attached to a
product. Nutritional Labeling Educational Act
(1990)
Labeling
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Universal Product Codes
Slide 10-13
A code imprinted on the product or its package
0 12345 67890 5
Check Digit
Identify ManufacturerAssigned by the Uniform
Code Council
Identify ProductAssigned by the Manufacturer
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Three Types Of Product Failures
Slide 10-14
PARTIAL Sales cover all the variable costs but
no fixed costs
RELATIVE Profits are less than company target
ABSOLUTE Sales do not cover variable costs
DEGREE OF FAILURE
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Why Some New Products Succeed
Slide 10-15
SUCCESS FACTORS Good match between product and
market needs Adequate target market size Offers a
clear, meaningful benefit Distinguishable from
substitute products Offers unique, superior
value Organizational commitment to new product
development
FAILURE FACTORS Poor match between product and
market needs Overestimation of market
size Incorrect positioning Inappropriate
price Inadequate distribution Poor promotion
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Organizational Forms for New Product Development
Slide 10-16
Figure 10.5
Options
Functional
FunctionalMatrix
BalancedMatrix
ProjectMatrix
Venture
With orWithoutCommittee
Inside/Outside
Percentage of Employee Time Devoted to the New
Product
Almost None
Almost All
Source Adapted from C. Merle Crawford, New
Products Management, 4th ed. (Burr Ridge,
Ill.Irwin, 1994), p. 411
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Shortening Development Time
Slide 10-17

• Use cross-functional teams
• Applying technology
• Delegate authority
• Build on specialized knowledge