CHAPTER ELEVEN
I. The Importance of New Products
a. New products are important to sustain growth, increase revenues and
profits, and replace obsolete items
b. New product: a product new to the world, the market, the producer,
the seller, or some combination of these
i. New-to-the-world (discontinuous innovations): products create
an entirely new market; smallest category
ii. new product lines: allow firms to enter an established market
iii. additions to existing product lines: new products that
supplement a firm’s established line
iv. improvements or revisions of existing products: new and
improved products with minor or major changes
v. repositioned products: existing products targeted at new
markets
vi. lower-priced products: products that provide performance
similar to competing brands at a lower price
II. The New-Product Development Process
a. To succeed firms must:
i. Make the long-term commitment needed to support innovation
and new-product development
ii. Use a company-specific approach, driven by corporate
objectives and strategies, with a well-defined new-product
strategy at its core
iii. Capitalize on experience to achieve and maintain competitive
advantage
iv. Establish an environment-a management style, organizational
structure, and degree of top-management support- conducive
to achieving company-specific new-product and corporate
objectives
b. New-product strategy: a plan that links the new-product
development process with the objectives of the marketing
department, the business unit, and the corporation
i. Sharpens the focus and provides general guidelines for
generating, screening, and evaluating new-product ideas;
specifies roles that new products must play in the
organization’s overall plan and describes characteristics of
products the organization wants to offer and the markets it
wants to serve
c. New ideas come from:
i. Customers: customers’ wants and needs should be springboard
for developing new products
ii. Employees: analyze and are involved in marketplace
iii. Distributors: provide responses about needs that are not being
met
iv. Vendors: forged partnership to create proprietary products
v. Competitors: monitoring the performance of competitors’
products can lead to new products
vi. Research and development (R&D): basic research, applied
research, product development, product modification
1. Product development: a marketing strategy that
entails the creation of marketable new products; the
process of converting applications for new technologies
into marketable products
2. Product modification: makes cosmetic or functional
changes in existing products
vii. Consultants: examine a business and recommend product
ideas
d. Brainstorming: the process of getting a group to think of unlimited
ways to vary a product or solve a problem
i. Avoid criticism of ideas; postpone objective evaluation
e. Screening: the first filter in the product development process, which
eliminates ideas that are inconsistent with the organization’s new–
product strategy or are obviously inappropriate for some other
reason
i. Most new-product ideas are rejected at this stage
