Water Joe
What caused David to come up with a
new product idea?
 What did he have to do to turn his idea
into a real product?
 What problems did he run into?
 Have you ever heard of Water Joe?

Developing New Products
Principles of Marketing
What is a “New” Product?
Simple variation on an existing product is
often considered a new product
 Repackaging is a very common way of
developing a “new” product
 Examples:

◦ The Milk Chug
◦ New design of the taillights
◦ New flavor of potato chip
“Really” New Products
Ruffles potato chips (ridges)
 PT Cruiser and Hummer
 The first Apple home computers
 Sony Walkman—first personal portable
music device
 First cell phones—wireless telephone
 First hybrid gas/electric cars
 New products are risky, companies prefer to
develop variations on current successful
products

Risks of New Products
Over 25,000 new consumer products hit
the market yearly
 Over 75 percent of these fail
 Large companies spend $20 million or
more to develop, product, advertise, and
introduce a new product
 Well-known failures: Ford Edsel, New
Coke, and McDonald’s Arch Deluxe

Research
Choose a new product on the market or
make up a new product.
 What are the risks that the manufacturer
has taken on with this product?

Eight Steps to New-Product Ideas
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Idea Generation
Idea Screening
Business Analysis
Product Design
Production
Test Marketing
Introduction
Evaluation
Larger companies
have product
development
departments
 This department
works closely with
the marketing
department

Idea Generation

Observation
◦ Marketers look for unfulfilled customer needs
◦ Customers often present ideas for new products
to the company
◦ Salespeople often have new-product ideas
because they interact with customers
◦ Marketers watch the competition, sometimes buy
their new product, and then decide to make a
similar but better product
◦ Observations of companies in other industries
Activity
Group Task: Develop a new pen or other
office product, as you learn about newproduct development in this chapter
 Form groups of three or less
 Make a list of what you might need to
know to develop a new product
 Share your ideas

Idea Generation, con’t.

Research
◦ Analyze products that are returned often;
could lead to a new product idea
◦ Survey your customers about their needs and
possible new products
◦ Trend research: discover new-product ideas
by the trends of society
Idea Generation, con’t.

Creative Thinking
◦ Creativity: the ability to produce something new;
often considered a talent
◦ Examples: Auntie Anne's sells pretzels only
◦ Can be developed
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Brainstorming
Learning
Questioning
Journaling
Participating in New Activities
Taking a Different Point of View
New-Pen Activity
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Do some research by visiting the Web sites
of office suppliers such as Office Depot,
Office Max, Bic Stationery Products, and
Papermate
Compile lists of new pens and office
products
What are the new features?
Generate ideas for your new product using
the techniques for creativity that you just
learned
Write your ideas under each technique
heading
Next Two Steps

Idea Screening:
◦ Will customers want and buy the product?

Business Analysis:
◦ Can our company produce and sell the
product profitably?
◦ Products must be appropriate to the
company’s image, goals, strengths, and
resources.
◦ New products should provide a competitive
advantage
Business Analysis

New product should:
◦ Be appropriate to the company’s image, goals,
strengths, and resources
 Jaguar’s image: luxury sports sedans
◦ Fit into the goals of the company
◦ Have a feature that is more satisfying than the
competitors’ feature
◦ Fit with the strengths of the company
 Jaguar wanted a less expensive vehicle; developed
the X-Type
◦ Affordable to produce and market
Product Design
The details of how to produce the
product are planned
 Goods, services, and ideas should go
through a design phase
 New product is tried out on a few
potential customers
 Brand is developed

◦ Name and identity, logo, slogan, packaging
New-Office Product Activity
Decide which product idea to pursue
 Write a new-product description

◦ Include target market
◦ Explain their interest
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Conduct a business analysis
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Determine the materials (make a list)
Include the costs of the materials
Make a prototype??
Use the information to determine the cost of
producing just one pen/office supply
New-Product Activity

Gather information on pricing of similar
products
◦ Record information about your competition
 Brand names
 Descriptions
 Prices
What should you price your product?
Compare price to cost—can you make a
profit?
 Revise your product, if necessary to come
up with something that will be profitable
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New Product Activity
Review all the information on your
product
 Answer these questions:

◦ Does my group have the resources needed to
make the new product?
◦ Does my group have a competitive advantage
over the other groups?
◦ Does the new product fit the goals and
personality of my group?
◦ Share your business analysis.
Goods—Product Design

Prototype-working model of the actual
product
◦ Experiment with the prototype will determine
performance success
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Marketers use the prototype to get
customers’ responses
New-Pen Activity
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Design your new product
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Make a drawing or computer creation
Brand name
Logo
Packaging
Plan how to produce your products in large
enough quantities to sell
Make a prototype of your product
Create a questionnaire to gather feedback
from customers who test the product
Services and Ideas—Product Design
Service providers go through a period of
training to learn to perform the service
 Plan to provide the service
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◦ Physical location, equipment, organizing the
system for delivering, and decorations
◦ Trial run: consists of trying out the service
on a few selected customers to make sure
that everything runs smoothly
Production
Manufacture the product in large
quantities
 The number to produce is a complex
decision with a major impact on the
profitability
 For services and ideas, production is
inseparable from the product itself
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Test Marketing
Involves introducing a new product to a
small portion of the target market
 Can test the entire marketing mix—
product, place, price, and promotion
 Can test only one element of the
marketing mix
 Risky because competitors can see your
product and copy it
 Small companies may not be able to
afford test marketing
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Introduction
Product actually enters the market
 Often called Commercialization
 Promotion is critical at this point

◦ Often starts before the product is ready
◦ Release date is the date the product is first
available to the market

New products are often released at trade
shows (large gathering to display products
for sale)
Evaluation
Should we continue to produce the
product?
 Should we make any changes to the
product?
 Should we expand the market?
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