Chapter 10 Summary

It is incumbent upon firms to develop and introduce new products if they are to survive and prosper. The competition is so intense that without new products being introduced into the marketplace, firms will lose their competitive edge. There are a number of new product classifications. The first is new - to - the - world products meaning these products did not previously exist. A second classification is called new category entries. These are products that are entries for the firm, but not new inventions. Third is additions to the existing product line. For instance, Coca - Cola just recently expanded its beverage offerings with the introduction of Surge. A fourth classifications is referred to as product improvements that are simply modifications of existing products. A final classification is called repositioning. In this instance, existing products are introduced into new markets or sold for new uses.

Firms normally follow a set of steps in the development of new products. The first step is idea generation where firms seek out new ideas based on the wants and needs of consumers. Idea screening is the second step. Not all ideas are feasible and the firm must decide which new product ideas help achieve its objectives. The third step is called business analysis. Here the marketing manager in conjunction with others analyze the potential sales and costs associated with the new product idea. The next step is product development. If the business analysis step is positive, then the firm begins to establish the specifications for the product. Once developed, the firm then test markets the product by offering it in limited geographic areas for a set time period to see if demand is there and to evaluate the forecasted sales and costs. The final step is commercialization. The test market results are favorable and the firm launches the new product on a full - scale basis.

When developing new products, marketing managers must decide about the characteristics of the product. Four of the primary characteristics are quality, design, features, and safety. Quality has become an overriding issue for most consumers today. To this end, firms are offering products with varying degrees of quality levels and different price levels so consumers have a choice about how much to pay for the quality they are willing to accept. Consumers are also interested in product design. Products should be user - friendly and perform as expected. The features (technical specifications) of the product need to conform to the needs and wants of the consumer. Safety is also a very important product characteristic. Consumers should not be worried about injury if the product is used as designed.

Product packaging and labeling are important factors in offering new products. Packaging has the ability to add value to the product. The package should be made functional, used as an aid in promotion, and used as a method to differentiate one firm' s product from another. The firm should also decide on the package's recycleability. Less packaging reduces garbage and if biodegradable, is less harmful to the environment. Labeling is communication from the firm to the consumer. A label assists the firm in telling the consumer about the product' s benefits such as " fat - free" or "low - fat" . Perishable products have expiration dates (think of the Budweiser commercial with a born-on date). Labels normally carry bar codes on them (universal product code) which are scanned at the checkout counter for prices. Much of the information contained on labels is now required by law for the protection of the consumer.

No matter how much care is given to developing a product that should be appealing to the consumer, new products sometime fail. There are reasons for product failure. The primary reason is the firm is unable to match the product to customer needs and wants. Another reason for failure is the firm does not get the product to the marketplace quickly enough. Shortening development time is a strategy to increase the possibility of product success. There is no doubt that getting the product to the market more quickly than the competition offers a strategic advantage. Methods to introduce the product more quickly include using cross-functional teams, applying modern technology to speed up communication and product analysis, delegating authority to others in the firm, and building and taking advantage of specialized knowledge in - house.