Ch. 8 - Developing New Products and Managing the Product Life Cycle

A firm can obtain new products in two ways 

1. Acquisition

2. New product development

Acquisition

buying a whole company, a patent, or a license to produce someone else’s product

ex. google buying Nest

 New product development

The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts.

Why would you develop your own product?

-Its inherently more risky but could help the company grow a lot more 

-there isn't always a product already available for what you want so you could develop one

Do companies rely on new products to grow?

New products account for the majority of companies' growth and companies rely on new products for this 

Ex. Apple's iPhone and iPad bring in 60% of apples total global revenue 

Why do so many new products fail?

-companies can overestimate market size 

-poor design for the product 

-poorly positioned, launched at wrong time, priced too high, or poorly advertised 

Within the new product development process, what are the 8 steps?

I. Idea Generation 

II. Idea Screening 

III. Concept development and testing 

IV. Marketing strategy development 

V. Business Analysis 

VI. Product Development 

VII. Test Marketing 

VIII. Commercialization 

New product development starts with I. idea generation

The systematic search for new product ideas.

Sources of ideas? (Within Step I. - Idea Generation)

Internal Idea Sources (Traditional R&D like Ford’s design labs)

External Idea Sorcues (distributors, suppliers, competitors, & Crowdsourcing) 

Crowdsourcing?

Inviting broad communities of people (anyone)—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.

ex. Ben and Jerry’s where they invited anyone to help with idea generation with the “Do the World a Flavor” campaign

II. Idea screening

 Screening new product ideas to spot good ones and drop poor ones as soon as possible

—> goal is to reduce number of ideas asap

-Product Screening Framework R-W-W (Real? Win? Worth Doing?)

III. Concept Development and Testing

Developing product ideas into product concepts

-Concept Development

-Concept Testing

Concept Development 

evaluate potential target markets, develop alternative product concepts, and assess the attractiveness of each concept to targeted consumers

-look at the people who would be the possible customers, expand on the concept of the product, would the possible customers like our ideas?

-Honda Jet found a few diff. segments to target and developed tweaked ideas to specifically target segments with what they would want

Concept Testing

Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.

-do the customers like the concept ideas we came up with?

IV. Marketing strategy development