(Abbie Griffen, University of

Illinois, Urbana-Champaign)
 Learning Objective: categorize products by type –
types of products
 DEFINITIONS:
 Products: are sets of features, functions, and
benefits that consumers purchase.
 Features: are the ways that benefits are delivered
i.e. provide the solution to customer problems.
 Brands: the name, representative symbol or
design, or any other feature that identifies one
firm’s product as distinct from another firm’s
 Consumer products:

convenience products – inexpensive, bought with little

effort, frequently used,

Shopping products: more expensive, more time spent on

selection,

Specialty products: reflect consumer’s personality or self-

image, spend more time and effort – substitutes are not
an option. Unsought products: not aware, unknown, or
if known not actively sought unless made aware.
B. Business-to-business products:
 Raw Materials
 Supplies: not part of the finished product,
inexpensive (pen, paper etc. standardized)
 Accessories – standardized pieces of equipment that
support the overall running of factories ,
 Component parts and materials – partly assembled or
already processed to be fitted into the finished
products (tires, seats etc.),
 Installations are major capital goods – buildings,
laboratories, major equipment systems.
 Learning Objective: define new product success
and newness, and learn how to set the stage for
creating success.

A. Defining products: Newness, Success, and

Failure
A new product is any product a firm spends
money on to change, improve, or reduce cost.
A combination of the newness to the market &
newness to the firm, new-to-the-world are less
than 10%

The New Product Development Spiral – keep on

bringing out new products through a process of
Needs Understanding plus technological capability
lead to the Stream of New Products – 3M
 Fulfillment of the Objective. NPD Project Success:
Three dimensions
2. Measure of Financial Success
3. Technical Performance Success
4. Success From the customers’ perspective –
A. Market Share & B. Customer Satisfaction.
one type of success is not enough
 Failure to provide an advantage or performance
improvement to customers over products already
available in the market.
 Lack of synergy with the technologies & manufacturing
processes of the firm
 Marketing synergies lack necessary distribution channels,
promotion & selling practices, or pricing policies.
 The product development process was not properly
executed.
Contd. Learning Objective 2: setting the stage for successful
new product development
B. Requirements for developing successful new products

Firms should complete the following activities

successfully.

6. Uncover unmet needs & problems

7. Develop a competitively advantaged product
8. Shepherd products through the firm
Defining customer needs: the problems that a
person or firm would like to have solved.
Detailed needs are essentially difficult to learn
as
they are mostly specific to use in a particular
context.

Customer problems are complex, and frequently,

different needs conflict – my internet needs and
my son’s do differ.
 Methods for Understanding Customer Needs: customers
are capable of providing reliable information about
products they have used and situations they have
experienced – we can find out through qualitative market
research (Ch.4)
 Becoming the customer; observe own firm’s &
competitors products & thus discover the problems.
2. Living with and critically observing those with the
problems of interest .
3. Talking to (interviewing) people in depth about their
problems – voice of the customer (in-depth
interviewing to find out).
 Describestrategies, processes, & organizational
structures by which successful products are consistently
developed.
A. Product Development Strategy: provides the long-term
destination for where the firm is going – be proactive,
reactive, first, or second etc.

B. Project strategy: the specific plan of how this project

will succeed and why– the reason for undertaking this
project (objective, goal, target market.
C. A Framework For Managing Product development:
Stage-Gate Processes
A formal Product Development Process defining the
functions which are responsible for performing what
tasks in what order, and in conjunction with the other
tasks and functions.
Stage-Gate process is a common NPD Process that
decides the repeatable portion of product
development into time-sequenced series of stages,
each of which is separated by a management decision
gate – won’t go beyond this stage if condition is
unmet
 Generate & screen ideas – find alternative
“interesting” ideas which solve customer
problems, fit the firm’s resources and
present a profit-making opportunity at
reasonable risk.
 Preliminary Investigation: market assessment, technical
feasibility assessment and financial assessments by a core
team of marketing and technical experts – quick and dirty
market study
 Detailed Investigation: building a business case for the
project so that top mgmt. can allocate the necessary
resources or not. Justification requires a market analysis
(size, segments etc) ,technical assessment, concept test,
competitive analysis, and detailed financial analysis.
 Development: outputs of this stage are:
2. A prototype that has been tested in-house for
performance and in a limited way with customers for
initial reaction.
3. A mapped-out manufacturing process, with critical
aspects pilot tested.
4. A marketing launch plan
5. A test and validation plan.
 Testing & Validation: this stage provides final project
validation. The product production process, and
marketing strategy plan are all put through verification
tests – confirming to mgmt. the expectations of project in
terms of performance, volume, and profit will be met.
 Commercialization & Launch. Full production and
commercial selling.
 Shepherding is done by putting in place appropriate
organizational processes, which includes developing
project leaders to lead NPD process and navigate the
politics of the organization, providing appropriate
organizational structures within which to manage
projects, and ensuring upper management support.
 For smooth working of the project, Project Leadership
can take several forms:
 Project Leaders: appointed by the upper management
with formal power and authority to complete the project.
They guard the project’s objectives, continuously
communicate with team member, serve as a translator
across different functions, an dare the primary
management contact point.
Mustering Management Support for NPD
 One of the fundamental requirement of the successful
NPD process is tangible & visible top management
commitment to NPD.
 NPD team must constantly strive to gain the attention
of the top management to convince them that the
particular project needs the necessary resources they
must provide – make presentations, seek interviews,
invite them on site (it must be worth top mgmt’s
time & effort).
 Learning Objective 4: making product decisions:
branding, packaging, and labeling
A. Branding decisions
B. Packaging decisions
C. Labeling decisions
Brands - used to
simplify choices and
reduce purchase risk
for consumers
Brand equity -
marketplace value of
a brand based on
reputation and
goodwill
Brand name, logo,
trademark should
Attract attention
Be memorable
Help communicate the
positioning of the
product
Distinguish the product
Branding strategies
Individual brand name strategy
 Proctor and Gamble, General

Mills, etc.
Branding strategies
Familybrand name
strategy like Pringles chips
 Branding strategies
 Hybrids:blanket family name, separate family
names for types of products, family/individual
brand combinations
 Packaging provides:
 Protection
 Identification
 Information
 Usage enhancement
 Disposal enhancement
 Channel acceptance enhancement
 Labeling helps customers by:
 Identifying the manufacturer, country of origin,
ingredients
 Reporting expiration dates, content grading
 Explaining product use
 Warning about potential misuse
 Providing care instructions
 Serving as a communications link between the user,
eventual buyers, and the company
Product mode new
Price policy use skimming or
penetration strategies
Place rapidly building distribution
network
Promotion build general demand
Profits expected loses

Introduction Growth Maturity Decline

Product mode differentiated products
Price policy maintain stable pricing policy

Place solidify distribution channels and

network
Promotion generate secondary demand
Profits start of profits

Introduction Growth Maturity Decline

Product mode modify product or product usage
Price policy price reduction

Place increase distribution efforts

Promotion concentrate on product
positioning
Profits highest profits (peak)

Introduction Growth Maturity Decline

Product mode maintain a basic product
Price policy maintain pricing or rise prices

Place limit distribution efforts

Promotion cut-back on advertising and
sales promotions
Profits reduced profits

Introduction Growth Maturity Decline

Innovators:
■ First purchasers of a new product
■ Venturesome, willing to accept risk, socially
aggressive, communicative, and cosmopolitan

2.5%
Early Early Late
Innovators Adopters Majority Majority Laggards
Early Adopters:
■ Are the next customers to buy new product
■ Enjoy leadership, prestige, and respect that
early purchases bring
■ Tend to be opinion leaders
■ Adapt new ideas but use discretion

13.5%

Early Early Late

Innovators Adopters Majority Majority Laggards
Early Majority:
■ First part of mass market
■ Outgoing, communicative, and attentive to
information cues

34.0%

Early Early Late

Innovators Adopters Majority Majority Laggards
Late Majority:
■ Second part of mass market
■ Less cosmopolitan and responsive to change
■ Include lower economic and social brackets,
those past middle age, and skeptics

34.0%

Early Early Late

Innovators Adopters Majority Majority Laggards
Laggards:

■ Last to purchase
■ Price conscious, suspicious of change, low
income and status, tradition bound, and
conservative
■ Often difficult to market to this small group

16.0%
Early Early Late
Innovators Adopters Majority Majority Laggards