Chapter 11: Developing and Managing Products
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Chapter 11
Developing and Managing Products
This chapter begins with the learning outcome summaries followed by a set of lesson plans for
instructors to use to deliver the content.
• Lecture (for large sections) on page 3
• Company Clips (video) on page 5
• Group Work (for smaller sections) on page 7
Review and Assignments begin on page 8
Review questions
Application questions
Application exercise
Ethics exercise
Video assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 18
Chapter 11: Developing and Managing Products
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Learning Outcomes
11-1 Explain the importance of developing new products and describe the six categories
of new products
New products are important to sustain growth, increase revenues and profits and replace obsolete
11-2 Explain the steps in the new-product development process
First, a firm forms a new-product strategy by outlining the characteristics and roles of future
products. Then new-product ideas are generated by customers, employees, distributors,
competitors, vendors, and internal research and development (R&D) personnel. Once a product
11-3 Understand why some products succeed and others fail
Despite the amount of time and money spent on developing and testing new products, a large
11–4 Discuss global issues in new-product development
A firm that starts with a global strategy is better able to develop products that are marketable
Chapter 11: Developing and Managing Products
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whenever possible. Some global marketers design their products to meet regulations in their
major markets and then, if necessary, meet smaller markets’ requirements country by country.
11-5 Explain the diffusion process through which new products are adopted
The diffusion process is the spread of a new product from its producer to ultimate adopters.
11-6 Explain the concept of product life cycles
All brands and product categories undergo a life cycle with four stages: introduction, growth,
Key Terms
Brainstorming
Growth stage
Product development
Business analysis
Innovation
Product life cycle (PLC)
Commercialization
Introductory stage
Screening
Concept test
Maturity stage
Simulated (laboratory) market
testing
Decline stage
New product
Simultaneous product
development
Development
New-product strategy
Test marketing
Diffusion
Product category
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Outcomes and Topics
PowerPoint Slides
LO1 Explain the importance of developing
new products and describe the six
1. Developing and Managing Products
2. Learning Outcomes
Chapter 11: Developing and Managing Products
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Learning Outcomes and Topics
PowerPoint Slides
categories of new products
11-1 The Importance of New Products
3. Learning Outcomes (continued)
4. The Importance of New Products
5. New Products
LO2 Explain the steps in the new-product
development process
11-2 The New-Product Development
Process
6. New-Product Development Process
7. New-Product Strategy
8. Idea Generation
9. Idea Screening and Concept Test
10. Consideration in Business Analysis Stage
11. Development
12. Simultaneous Product Development
13. Costs of Test Marketing
14. Alternatives to Test Marketing
15. Commercialization
LO3 Understand why Some Products
Succeed and Others Fail
11-3 Why Some Products Succeed and
Others Fail
16. Why Some Products Succeed and Others
Fail
17. Reasons for Product Failure
LO4 Discuss global issues in new-product
development
11-4 Global Issues in New-Product
Development
18. Global Issues in New-Product Development
19. Global Issues in New-Product Development
LO5 Explain the diffusion process through
which new products are adopted
11-5 The Spread of New Products
20. Spread of New Products
21. Diffusion
22. Product Characteristics and the Rate of
Adoption
23. Marketing Implications of the Adoption
Process
LO6 Explain the concept of product life
cycles
11-6 Product Life Cycles
24. Product Life Cycles
25. Exhibit 11.2: Four Stages of the Product
Life Cycle
26. Introductory Stage
27. Introductory Stage (continued)
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Learning Outcomes and Topics
PowerPoint Slides
28. Growth Stage
29. Maturity Stage
30. Decline Stage
31. Key Terms
32. Summary
33. Summary
Suggested Homework
• The end of this chapter contains assignments on the GaGa’s Inc. video or the America
Online case.
• This chapter’s online study tools include flashcards, visual summaries, practice quizzes,
and other resources that can be assigned or used as the basis for longer investigations into
marketing.
Lesson Plan for Video
Company Clips
Segment Summary: GaGa’s Inc.
Jim King and his wife discuss how they decided to create the company GaGa’s Inc. using the
product Sherbetter. The line expanded from only one flavor, lemon, to several other flavors as
well as Sherbetter bars, the struggles of branding, line extension, and other aspects of the frozen
dessert market.
These teaching notes combine activities that you can assign students to prepare before class, in–
class activities to be done before watching and during the video, and activities that can be
assigned for students to complete after watching the video.
During the viewing portion of the teaching notes, stop the video at appropriate points to ask
students the questions or perform the activities listed on the grid. You may even want to give the
students the questions before starting the video and have them think about the answer while
viewing the segment. That way, students will be engaged in active viewing rather than passive
viewing.
Pre-Class Prep For You
Pre-Class Prep For Your Students
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• Preview the Company Clips video segment
for Chapter 11. This exercise reviews
concepts for LO1, LO2, LO5, and LO6.
• Review your lesson plan.
• Make sure you have all of the equipment
needed to show the video to the class,
including the DVD and a way to project the
video.
• You can also stream the video HERE.
• Have students review and familiarize
themselves with the following terms and
concepts: types of new products, new-
product development process, spread of
new product, and product life cycles.
• Ask students to review the section on test
marketing and think about which U.S.
cities might fit the qualifications of a good
test market.
Video Review Exercise
Activity
Warm Up
Begin by asking students the following question: “What is a product, and why are
products important?”
While students respond, write the following statement on the board: New
products are important to sustain growth, increase revenues and profits, and
replace obsolete items.
In-Class
Preview
• Review the six categories of new products: new-to-the-world; new product
lines; additions to existing product lines; improvements to existing products;
repositioned products; and lower-priced products.
• Discuss Exhibit 11.1, New-Product Development Process with the class.
• Review Exhibit 11.2, Four Stages of the Product Life Cycle. Discuss the
product life cycle with students, soliciting from them examples of products
for each life cycle stage.
• Review the Company Clips questions below with students, and encourage
them to keep the questions in mind while viewing the video.
Viewing
(Solutions
below)
1. What type of new product is GaGa’s Sherbetter? Why?
2. What stage in the Product Life Cycle does it seem that GaGa’s is in? Explain.
Chapter 11: Developing and Managing Products
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Follow-up
• Divide students into groups of three to five, and have them propose a new
product or service for Kodak. Have them discuss and write a brief report on
1) the product category in which the new product/service belongs; 2) how,
specifically, they would develop the product; and 3) how they would
encourage adoption of that product.
• Discuss with the class why Kodak has recently struggled.
• Ask students for suggestions on what Kodak can do regain its success. Ask
students to defend their answers with terms relating to the material of the
chapter. This can also be done in small groups.
• If you had students write answers to the viewing questions, give them a few
minutes after viewing to finish their work. You can collect their responses as
an in-class quiz.
Solutions for Viewing Activities
1. What type of new product is GaGa’s Sherbetter? Why?
2. What stage in the product life cycle does it seem that GaGa’s is in? Explain.
Lesson Plan for Group Work
In most cases, group activities should be completed after some chapter content has been covered,
probably in the second or third session of the chapter coverage. (See “Lesson Plan for Lecture”
above.)
• For “Class Activity: Generating and Screening New Product Ideas,” provide the
information and the questions asked by the activity.
• Application questions 1, 2, 3, and 5 lend themselves well to group work. For those
activities, divide the class into small groups of four or five people. Each group should read
the question and then use their textbooks, or any work completed previously, to perform
the exercise. Each group should discuss or present their work to the class.
Class Activity: Generating and Screening New Product Ideas
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In the class activity in Chapter 1, students were asked to consider the range of marketing
activities that a small manufacturer of tennis racquets would undertake. Now the class should
assume that the tennis racquet manufacturer has been very successful in manufacturing and
marketing a single line of inexpensive tennis racquets, aimed at beginners and casual players.
The manufacturer’s current distribution channel is through large discount retailers, such as
Kmart and Walmart. Recently, three major sporting goods chains also began to carry the
racquets. The company puts most of its promotion budget into sales promotion to the retailers
and into in-store displays. The competitive advantage for this company is its low price for good,
sturdy tennis racquets.
The company wishes to expand its operations, either with new products or in new customer
markets.
1. What are some possible new products for this company?
2. Do these products fit the company’s image? Does the firm have the technological or
production expertise needed for these products?
3. If a product is introduced and fails, what effect will the failure have on the company and its
other products?
Review and Assignments for Chapter 11
Review Questions
1. List the advantages of simultaneous product development.
Advantages of simultaneous product development include shortening the development
2. What are the major disadvantages to test marketing, and how might they be avoided?
Test marketing is very expensive, as the product has to go into production, complete with
3. Describe some products whose adoption rates have been affected by complexity,
compatibility, relative advantage, observability, and/or trialability.
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Although students’ answers will vary, they should address some of the following points.
4. What type of adopter behavior do you typically follow? Explain.
Application Questions
1. How many new products can you identify? Visit the supermarket, and make a list of
at least 15 items with the word “new” on the label. Include on your list anything that
looks like a new product. Next to each item on your list, write the category of new
product that best describes the item. Share your results with the class.
2. New entertainment products aren’t necessarily media products. Form a team of three
to four students, and brainstorm new non-media entertainment products. Try to
identify one item for each of the categories of new products discussed in the chapter.
Students’ answers will vary.
3. You are a marketing manager for Nike. Your department has come up with the idea
of manufacturing a baseball bat for use in colleges around the nation. Assuming you
are in the business analysis stage, write a brief analysis based on the questions in the
“Business Analysis” section of the chapter.
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A simple statistical analysis will help you better understand the types of new products. As in the
application exercise in Chapter 6, you will be using print advertisements, but you will also be
adding information from other sources (TV ads, trips to the store, and the like).
Activities
1. Compile a list of 100 new products. If you are building a portfolio of ads (see the
Application Exercise in Chapter 6), you can generate part of this list as you collect print
advertisements for the topics in this chapter. Consider tabulating television ads for new
products that are aired during programs you normally watch. A trip to the grocery store
could probably yield your entire list, but then your list would be limited to consumer
products.
2. Make a table with six columns labeled as follows: new-to-the-world products, new product
line, addition to existing product line, improvement/revision of existing product line,
repositioned product, and lower-priced product.
3. Place each of your 100 new products into one of the six categories. Tabulate your results at
the bottom of each column. What conclusions can you draw from the distribution of your
products? Consider adding your results together with the rest of the class to get a larger and
more random sample.
Purpose: This exercise is designed to show a distribution curve of new products on the market
and to confirm that most new products are modifications of existing products.
Setting It Up: In the book, the students are assigned to compile a list of 100 new products, a feat
easily accomplished by a trip to the supermarket and the mall. They are to create their own
distribution curve. You can use this exercise as an individual assignment (as just described) or as
a group assignment with an entire class as the introduction to the chapter (as described below).
This exercise was inspired by the following Great Idea in Teaching Marketing.
Karen Stewart
Richard Stockton, College of New Jersey
New Product Development
To help introduce the concept of new product development, I ask students to bring either a new
product to class or an ad for a new product. Students are then asked to share with the class this
new product idea. In addition to describing this new item, students must also indicate whether
the product represents:
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(a) a new-to-the-world product (10% of all new products introduced each year)
(b) a new product line (20% of all new products)
(c) an addition to existing product lines (26% of all new products)
(d) an improvement or revision of existing products (26% of all new products)
(e) a repositioned product (7% of all new products)
(f) a lower cost product (account for about 11% of all new products)
From this, it is evident that the textbook authors are correct when they state that most new
products are either additions to existing product lines or improvements or revisions of existing
products. We then talk about the reasons for this pattern. I also ask the students to indicate
whether they believe their new product will be among the few new product ideas that are truly
successful. This provides a good opportunity to address why companies spend a considerable
amount of time and effort developing new products even though the chances of success are
small. We can then discuss the new-product development process and the factors which
contribute to new product success and product failure.
Ethics Exercise
One source of new-product ideas is competitors. Steven Fischer recently joined Frankie and Alex
Specialty Products as a brand manager. His new boss told him, “We don’t have a budget for
new-product development. We just monitor our competitors’ new-product introductions and
offer knockoffs of any that look like they will be successful.”
1. Is this practice ethical?
One way that companies can define themselves is by the business strategy they follow. For
example, a company can be an innovator or a quick follower of innovations. Being a quick
follower or offering your own version of a popular product developed by another company
is not necessarily unethical. When a company seeks to improve upon an idea or takes an