Developing and Managing New Products 11 05 2014 New Products New to the world product discontinuous products create an entirely new market smallest category of new products New product lines Products a firm has not previously offered Additions to existing product lines New products that supplement a firm s established line Improvements or revisions of existing products New and improved product Repositioned products Existing products targeted at new markets or market segments Ones repositioned to change current market s perception of product or company boost declining sales Lower priced products lower price Products that provide performance similar to competing brands at a New Product Development Process Make the long term commitment Use a company specific approach driven by corporate objectives and strategies Capitalize on experience to achieve Establish an environment New product strategy links the new product development process with the objectives of the marketing department the business unit and the corporation Idea Generation Customers o Their wants and needs should be the springboard for developing new products o Some know the company s products and processes better Employees than anyone else Distributors o They are closer to end users so more aware of customer needs than manufacturers Competitors copied Research and development o Monitoring competitors determines which products should be o Basic research applied research product development product modification o Examines business and recommend product idea Consultants Focus groups Brainstorming the process of getting a group to think of unlimited ways to vary a product or solve a problem Screening the first filterin the product development process which eliminates ideas that are inconsistent with the organization s new product strategy or are obviously inappropriate for some other reason Concept test a test to evaluate a new product idea before any prototype ahs been created Business analysis the second stage of the screening process where preliminary figures for demand cost sales and profitability are calculated Development the stage in the product development process in which a prototype is developed and a marketing strategy is outlined Develop prototype Sketch marketing strategy Decide products packaging branding labeling Map out promotion price and distribution Examine feasibility of manufacturing Test marketing the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation Takes one year or longer and costs can exceed 1 million Exposes new product Competitors can sabotage or jam testing program by introducing their own sales promotion Alternative scanner based research lab testing Simultaneous product development a team oriented approach to new product development Simulated laboratory market testing the presentation of advertising and other promotional materials for several products including a test product to members of the products target market Commercialization decision to market a product Ordering materials Production Building inventories Shipping Distribution Training the sales forces Announcing new product Advertising Innovation product perceived as new by a potential adopter Diffusion the process by which the adoption of an innovation spreads Product characteristics and rate of adoption Complexity product Compatibility o Degree of difficult involved in understanding and using a new o Degree to which new product is consistent with existing values and product knowledge past experience and current needs o degree to which a product is perceived as superior to existing relative advantage substitutes Observability o degree to which the benefits or other results of using the product can be observed by others and communicated to target customers o degree to which a product can be tried on a limited basis trialability product life cycle concept that provides the way to trace the stage of a products acceptance from intro to decline introductory growth maturity decline Services and Nonprofit Organization Marketing 11 05 2014 Service the result of applying human or mechanical efforts to people or objects Intangibility the inability of services to be touched seen tasted heard or felt in the same manner that goods can be sense Search quality a characteristic that can be easily assessed before purchase Experience quality a characteristic that can be asses only after use Credence quality a characteristic that consumer may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience Inseparability the inability of the production and consumption of a service to be separated consumers must be present during the production haircuts Heterogeneity the variability of the inputs and outputs of services which causes services to tend to be less standardized and uniform than goods Perishability the inability of service to be stored warehoused or inventoried Service Quality Reliability the ability to perform a service dependably accurately and consistently Responsiveness the ability to provide prompt service Assurance the knowledge and courtesy of employees and their ability to convey trust Tangibles the physical evidence of a service including the physical facilities tools and equipment used to provide the service Gap model a model identifying five gaps that can cause problems in service delivery and influence customer evaluating of service quality Gap 1 Gap 2 o between what customers want and what management thinks customers want o results from lack of understanding or misinterpretation of customers needs wants or desires o Between what management thinks customers want and quality specifications that management develops to provide service o Result of managements inability to translate customers needs into delivery systems Gap 3 o Between service quality specifications and service that is actually provided o If 1 and 2 are closed 3 is due to inability of management and employees to do what should be done o Between what company provides and what customer is told it Gap 4 Gap 5 provides o Between service that customers receive and service they want positive or negative Marketing Mixes for Services Product Service Strategy Process Core and supplementary services Standardization or customization Service mix Service as a process People processing service directed at customer healthcare Possession processing service is