8-1
Chapter 8
Product Planning
and Development
8-2
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Goals
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Meaning of product
New product
Classification of consumer and business products
Importance of product innovation
Stages in new-product development process
Criteria for adding a product to a company’s lines
Adoption and diffusion processes for new products
Organization structures for product planning and
development
8-3
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Product
Set of tangible
and intangible
attributes
Want-satisfaction
in the form
of benefits
8-4
May be a good,
service, place,
person, or idea
Product
More Than a Set of Attributes
8-5
Classification of Products
8-6
Consumer
Business
Intended for
personal
consumption or
household use
Intended for
resale,
producing
other products,
providing
services
in organization
Categories of Consumer Goods
8-7
Categories of Business Goods
8-8
Importance of Product Innovation
Requirement
for growth
“Innovate or Die”
High failure rates
No differentiation,
Does not deliver on promise,
Poor value
8-9
What is a “New” Product?
Really
innovative
Significantly
different
Imitative
8-10
Stages in the Development Process
8-11
Producer’s Criteria
for New Products
Adequate
market
demand
Compatible
with
environmental
standards
8-12
Satisfy key
financial
criteria
Fit
company’s
marketing
structure
Middleman’s Criteria
for New Products
Good
relationship
with
producer
Compatible
distribution
policies,
practices
Satisfy key
financial
criteria
8-13
Stages in the Adoption Process
AWARENESS
INTEREST
EVALUATION
TRIAL
ADOPTION
CONFIRMATION
8-14
Early and Late Adopters
8-15
Adoption Rate
NEW PRODUCT CHARACTERISTICS
RELATIVE
Superior to available products
ADVANTAGE
8-16
COMPATIBILITY
Coincides with values and
lifestyles
COMPLEXITY
Difficulty in understanding or
using
TRIALABILITY
Able to Sample
OBSERVABILITY
Demonstrate effectiveness
Organizing for Product Innovation
TYPES OF ORGANIZATIONS
Product-planning Committee
New-product department or team
Brand manager
SHIFTING ARRANGEMENTS
8-17
Key Terms and Concepts
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Product
Consumer products
Business products
Convenience good
Shopping good
Specialty good
Unsought good
Raw materials
Fabricating materials
Fabricating parts
Installations
Accessory equipment
8-18
McGraw-Hill/Irwin
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Accessory equipment
Operating supplies
New products
New-product strategy
New-product development
process
Business analysis
Market tests
Adoption process
Diffusion
Stages in the adoption process
Innovation adopter categories
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms and Concepts
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Innovators
Early adopters
Change agent
Early majority
Late majority
Laggards
Nonadopters
Adoption rate
Product-planning committee
New-product department or
team
• Brand manager
8-19
McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.