Developing New Products and ServicesLearning Objectives3MNew Product OverviewTypes of New ProductsTypes of New Products (con’t)Slide 7Sources of New ProductsNew Product Development ProcessNew product Development ApproachesIdeas3M’s Idea Screening ChecklistConcept Development and TestingConcept TestingAnalysis and DevelopmentProduct Function DevelopmentTest MarketingCommercializationKeys to New Product SuccessMarketing Research SupportBest Products of 2004SummaryC H A P T E RC H A P T E R© 2007 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinDeveloping NewProducts and ServicesDeveloping NewProducts and Services99-2© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdLearning ObjectivesLearning ObjectivesLearning ObjectivesLearning ObjectivesAfter 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.9-3© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th Ed3M3M3M3M3M is a $20 billion company with more than 67,000 employees who create, manufacture, and sell products in 200 countries around the world. The real distinguishing characteristic of 3M is its continuous emphasis on innovation. One of the company’s major objectives is to generate 30 percent of each year’s sales from products that are less than four years old.9-4© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNew Product OverviewNew Product OverviewNew Product OverviewNew Product OverviewDeveloping successful new products drives sales and profit growth for many companies. Research indicates that companies leading their industries in profitability and sales growth gain 49 percent of their revenues from products developed in the most recent five years. Companies at the bottom in sales and profit growth achieve only 11 percent of sales from new products.9-5© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNew Category New Category EntriesEntriesProducts new to the firm but not to the world, such as P&G’s firstshampoo, Hallmark gift items, AT&T’s Universal Card.New-to-the-New-to-the-worldworldProduct inventions, such as Polaroid instant camera, the first car,rayon, the laser printer, in-line skates.moreTypes of New ProductsTypes of New ProductsTypes of New ProductsTypes of New Products9-6© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct Product ImprovementsImprovementsCurrent products made better; virtually every product on the markettoday has been improved, often many times.Additions to Additions to Product LinesProduct LinesLine extensions or flankers on the firm’s current markets, such as TideLiquid detergent, Chrysler K cars.moreTypes of New Products Types of New Products (con’t)(con’t)Types of New Products Types of New Products (con’t)(con’t)9-7© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdRepositioningsRepositioningsProducts retargeted for a new use or application, such as Kellogg’s Frosted Flakes cereal (now targeted to adults), and pork repositioned by National Pork Producers in recent years from being similar to beef to being the “other white meat.”Types of New Products Types of New Products (con’t)(con’t)Types of New Products Types of New Products (con’t)(con’t)9-8© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNewNewProductsProductsExternalExternalSourcesSourcesCollaborativeCollaborativeVentureVentureInternalInternalDevelopmentDevelopmentSources of New ProductsSources of New Products9-9© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNew Product Development ProcessNew Product Development ProcessNew Product Development ProcessNew Product Development ProcessA new product development process can be conceived as consisting of the seven stages presented below. The process is presented as a logical series of steps. In reality, the lines between each step are often blurred as companies are involved in different stages at the same time; sometimes they even eliminate specific stages.Exhibit 9-29-10© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNew product Development ApproachesNew product Development ApproachesNew product Development ApproachesNew product Development ApproachesExhibit 9-39-11© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdIdeasIdeasIdeasIdeasIdea Idea ScreeningScreeningThe purpose of idea screening is to evaluate the idea pool and reduce it to a smaller, more attractive set of potential new products. The ideas should be screened for consistency with company vision and strategic objectives, potential market acceptance, fit with the firm’s capabilities, and possible long-term contribution to profit.Idea Idea GenerationGenerationIdea generation is the initial stage of the new product development process. A new product begins as someone’s idea. Firms typically generate a large number of ideas relative to the number of successful products introduced.9-12© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th Ed3M’s Idea Screening Checklist3M’s Idea Screening Checklist3M’s Idea Screening Checklist3M’s Idea Screening Checklist9-13© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdConceptConceptTestsTestsConcept tests are then used to get potential customers to evaluate the product concept.ConceptConceptDevelopmentDevelopmentConcept development is the process of shaping and refining the idea into a more complete product concept.Concept Development and TestingConcept Development and TestingConcept Development and TestingConcept Development and Testing9-14© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdConcept TestingConcept TestingConcept TestingConcept TestingExhibit 9-59-15© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdAnalysis and DevelopmentAnalysis and DevelopmentAnalysis and DevelopmentAnalysis and