10–41
4. Relate Medtronic’s decision to sell pacemakers in China to its corporate mission
statement. How does the decision relate to these Medtronic stakeholders:
(a) shareholders of Medtronic stock, (b) Medtronic employees, and (c) Chinese
patients?
Answers:
5. Medtronic chose to design and build a new low-priced, highly reliable, reduced-
feature heart pacemaker in its Shanghai plant. What are the strengths and
weaknesses of this decision from (a) a marketing viewpoint and (b) an ethical
viewpoint?
Answers:
Chapter 10 – Developing New Products and Services
10–42
ICA 10-1: IN-CLASS ACTIVITY
Focus Group for a Smartwatch
Learning Objective. To have 6 to 8 students participate in a focus group in front of
class to evaluate new product concepts in front to help the class learn how to run them
effectively.
Definition. The following marketing term is referred to in this ICA:
• Crowdfunding: A way an individual or small company can gather an online
community of supporters to financially rally around a specific project that is unlikely
to get resources from traditional sources.
Nature of the Activity. To (1) have the instructor moderate a focus group of students to
explore their reactions to a new smartwatch device so that (2) the class members will learn ways
to conduct an effective focus group.
Estimated Class Time and Teaching Suggestions. About 20 minutes, moderated by the
instructor in front of the class.
Materials Needed.
• Blank name cards and markers for making nametags for focus group participants.
• A table and enough chairs for the moderator, recorder, and focus group participants.
Steps to Teach this ICA.
2. Set up the classroom for the focus group by arranging the table and chairs.
3. Place name cards on a table in front of class where the faces of the moderator and
student focus group participants can be seen and their voices heard.
4. Give students this background mini-lecture on smartwatches:
Chapter 10 – Developing New Products and Services
10–43
5. Show Slide 10-47 and give the following mini-lecture about the Pebble smartwatch:
“Eric Migicovsky, the inventor of the Pebble Smartwatch, began working on it in
6. Ask the class these two broad questions about focus groups:
• Question 1: (a) Why are focus groups used? (b) How are focus groups
conducted?
Answers:
• Question 2: What are some questions you would want answers to as a result of
conducting a focus group on a company’s new smartwatch?
7. Recruit 6 to 8 students for the focus group on smartwatches. Seat them in the front
of the room and have them write their names on the cards. Recruit another student
as the “recorder” to record the focus group participants’ responses on the board to the
questions asked by the moderator.
8. When all have been seated, welcome the focus group participants by thanking them
for agreeing to engage in this activity. Inform the participants that they will be asked
to give their opinions on smartwatches. You will act as the moderator, the person
who facilitates the focus group discussion.
9. Tell the focus group that the only rules are (1) no opinion or idea is to be thought of
as foolish and (2) everyone in the group must have a chance to share his/her opinions.
10–44
10. As the moderator, have the focus group participants answer the following questions:
• Question 1: Are any of you familiar with the term wearable computing?
Smartwatch? Have you heard of the Pebble Smartwatch or any other brand
before today? Probe the responses.
• Question 2: Are you wearing a watch now? Why or why not? What do you like
or dislike about wearing a watch? Probe the responses.
• Question 3: Would you consider purchasing a smartwatch? Why or why not?
Probe the responses and have the recorder write the answers on the board.
• Question 4: If you wanted to purchase a smartwatch, what features would you
like it to have or do? Probe the responses. Have the recorder write the answers
on the board.
• Question 5: Click on the Internet icon to play the Pebble Smartwatch video.
[TRT = 1:32] Would you buy the Pebble Smartwatch for $150? Why or why not?
Probe the responses.
11. Thank the focus group participants and excuse them from the focus group.
12. Acting as the instructor, have the entire class answer the following questions:
• Question 6: How was the interaction among the focus group participants? Did
you think everyone had a chance to share his/her opinions? How could we have
obtained more and better answers?
Chapter 10 – Developing New Products and Services
10–45
Marketing Lesson. Focus groups are useful in generating new product ideas or
evaluating new product concepts in very early stages of development before a great deal of time,
10–46
ICA 10-2: IN-CLASS ACTIVITY
What Were They Thinking? Analyzing New Product Disasters1
Learning Objectives. To have students study six new product failures and in each case
assess: (1) who the target market was, (2) some likely reasons it failed, and (3) what simple
marketing research might have been done to identify and avert these problems early.
Nature of the Activity. To have students work in teams to identify key reasons for the
failure of six—sometimes outrageous—consumer products and have fun in the process. These
examples and accompanying photos are adapted from Robert M. McMath’s book “What Were
They Thinking?”2
Estimated Class Time and Teaching Suggestions. About 15 minutes, taught in class in
4-person teams.
Materials Needed. Copies for each student of the:
• “Six Consumer Products With Problems” handout.
• “Worksheet to Analyze Why Six Consumer Products Failed”
• OPTIONAL: “Answers to the Worksheet to Analyze Why Six Consumer Products
Failed”
Steps to Teach this ICA.
1. Form students into 4-person teams.
2. Pass out copies of the following to students:
a. Six Consumer Products With Problems Handout.
b. Worksheet to Analyze Why Six Consumer Products Failed.
3. Six Consumer Products With Problems Handout and leave it on the screen for
students to refer to.
4. Assign half of the student teams to analyze products A, B, and C and the other half to
analyze products D, E, and F.
5. Review with students the critical marketing factors that often separate new product
successes and failures discussed in Chapter 10.
1 The authors wish to thank Robert M. McMath of New Product Works who assisted in the development of this ICA.
2 Robert M. McMath and Thom Forbes, “What Were They Thinking?” (New York: Times Business, 1998).
Chapter 10 – Developing New Products and Services
10–47
6. Problem Products A–F. Provide a brief overview of each of the six products,
describing what the product was and what it was intended to do.
7. Worksheet to Analyze Why Six Consumer Products Failed.
8. Have the student teams spend 5 minutes to complete the handout. Give them the
following instructions:
a. Under the “Target Market” column, identify to whom they think each product was
targeted.
b. Under columns 1–7 for each product, have the respective teams (A–C or D–F)
check the one or more reason (s) why the product failed.
c. Suggest some possible marketing research activities that the firm could have done
to avoid the failure.
9. For each product listed on the worksheet, have one team share its analysis of each
product with the class. Get comments from other students.
10. Answers to Worksheet to Analyze Why Six Consumer Products Failed. OPTIONAL:
11. Discuss the following comments made by Robert M. McMath and the subjective
assessments of the co-authors of Marketing:
“According to new-product expert Dr. Robert M. McMath, ‘The product’s name, its
promise and actual benefits, and its market positioning must all touch a consumer’s
nerve to stimulate the purchase.’ Here’s why these six products failed miserably.”
a. Adam’s Body Smarts. Show Slide 10-55 if needed. In early 2002, Adams
pulled the product off retailer shelves despite a $70 million market-introduction
Chapter 10 – Developing New Products and Services
10–48
12. Conclude this ICA by giving these explanations for frequent product failures:
a. Pressure to increase revenues. Product managers face extreme pressures to
generate increased revenues, often turning to new products for the quick answer.
Marketing Lessons. Introducing successful new products is difficult, but (1) having a
clear product concept and definite point of difference, (2) knowing traditional marketing reasons
for failure, and (3) conducting simple marketing research can reduce the new product risks.
Chapter 10 – Developing New Products and Services
10–49
SIX CONSUMER PRODUCTS WITH PROBLEMS HANDOUT
A. Body Smarts:
Produced by Adams
(a division of Pfizer).
Nutritional crunch bars and
fruit chews.
B. Surge:
Produced by Coca-Cola.
High caffeine, citrus-flavored
soft drink.
C. Wheaties Dunk-A-Balls:
Produced by General Mills.
Basketball-shaped sweetened
corn and wheat puffs
breakfast cereal.
D. Garlic Cake:
Produced by Gunderson &
Rosario. A hors d’ oeuvre for
cocktail parties.
E. Special K Plus:
Produced by Kellogg’s.
An extension of Special K
cereal with more calcium,
packaged in a recloseable
milk carton-like container.
F. Dr. Care:
Produced by Dairimetrics, Ltd.
A vanilla mint-flavored
toothpaste in an aerosol
container.
Chapter 10 – Developing New Products and Services
10–50
WORKSHEET TO ANALYZE WHY
SIX CONSUMER PRODUCTS FAILED
TARGET
MARKET
REASON (S) FOR FAILURE
POSSIBLE
MARKETING
RESEARCH
1
Bad
Pt. of
Diff.
2
Bad
Prod/
Mkt
Def.
3
Too
Small
Mkt
4
Bad
Mkt
Mix
Exec
5
Poor
Prod
Qual
6
Bad
Time
7
Poor
Access
to
Buyers
Nutrition-
conscious
adults
Consumer
taste tests
18–34
year old
males
Paired-
comparison
taste test with
Mountain
Dew
Kids
Ask moms
about product
concept
Adults
Consumer
education &
taste tests
Health-
conscious
adults
Package
tests on
consumers
and retailers
Families
Ask moms
and dads
about product
concept
Chapter 10 – Developing New Products and Services
10–51
ANSWERS TO WORKSHEET TO ANALYZE
WHY SIX CONSUMER PRODUCTS FAILED
TARGET
MARKET
REASON (S) FOR FAILURE
POSSIBLE
MARKETING
RESEARCH
1
Bad
Pt. of
Diff.
2
Bad
Prod/
Mkt
Def.
3
Too
Small
Mkt
4
Bad
Mkt
Mix
Exec
5
Poor
Prod
Qual
6
Bad
Time
7
Poor
Access
to
Buyers
Nutrition-
conscious
adults
√
√
Consumer
taste tests
Adults
√
Families
10–52
ICA 10-3: IN-CLASS ACTIVITY
Using Method 6–3–5 to Find New-Product Ideas for Magnetic Poetry3
Learning Objectives. To have students (1) participate in Method 6–3–5,4 an idea
generation technique and as a result (2) develop new product ideas for Magnetic Poetry’s
“Little Box of Words” line of products.
Nature of the Activity. To have students participate in small groups to generate ideas
for line and brand extensions for Magnetic Poetry’s “Little Box of Words” product.
Estimated Class Time and Teaching Suggestions. About 15 minutes, taught in class in
4- to 6-person teams.
Materials Needed. Copies for each student of the:
• “Ground Rules for Method 6–3–5” handout.
• “Using Method 6–3–5 to Find New Product Ideas for Magnetic Poetry’s “Little Box
of Words” handout.
Steps to Teach this ICA.
2. Magnetic Poetry’s Little Box of Words. This product is based on the familiar
refrigerator magnets of words or letters that can be arranged to spell out messages,
stories, and poems.
3. Give the following mini-lecture on Magnetic Poetry’s “Little Box of Words”:
“The story behind the creation of Magnetic Poetry has taken on the quality of urban
legend, but this one is true, and the man who sneezed it into being is Dave Kapell.
Dave, at the time a cash-poor songwriter and ex-cab driver, was cutting up things,
like old letters and newspaper articles in ransom-note style, as a lyric writing
experiment. When Dave sneezed, it sent all of his carefully arranged words and
3 The authors wish to thank Becky Hickel and Katherine Hamilton of Magnetic Poetry, who assisted in the development of this ICA.
4 Bryan Mattimore, “Eureka: How to Invent a New Product,” The Futurist (March-April 1995), pp. 34-38.
Chapter 10 – Developing New Products and Services
10–53
4. Form students into 4- to 6-person teams. [NOTE: This is the ‘6’ in Method 6–3–5.]
5. Pass out copies of the “Ground Rules for Method 6–3–5” Handout and the “Using
Method 6–3–5 to Find New Product Ideas for Magnetic Poetry’s ‘Little Box of
Words’” Handout to each student.
6. Introduce the Method 6–3–5 activity as follows:
“We’ve all heard of brainstorming as a technique for generating ideas. Organizations
7. Ground Rules for Methods 6-3-5 and briefly go over the instructions for this activity.
8. Using Method 6–3–5 to Find New Product Ideas for Magnetic Poetry’s Little Box of
Words Handout. Tell the student teams they will have 3 minutes (the ‘3’ in Method
6–3–5) to come up with 5 (the ‘5’ in Method 6–3–5) new line and brand extensions
for Magnetic Poetry’s “Little Box of Words” product that the company might bring to
9. After 3 minutes, have each team member pass their ideas on to the team member to
the left, who spends 3 minutes elaborating and improving on the 5 ideas on the paper
10. Ask each team to share 3 of their better ideas with the class and discuss what they
thought of Method 6–3–5 for generating ideas. Did the opportunity to elaborate on
other team members’ ideas help to refine those ideas or generate more new ideas?
11. Some of the line and brand extensions that students generated as a result of Method
6–3–5 may consist of the following:
a. Line extensions:
• Foreign language kits.
• Specialized kits. For cooks, artists, dog lovers, etc.
Chapter 10 – Developing New Products and Services
10–54
• College kits. For colleges and universities; Harvard and Yale have their own
kits.
• Others as identified.
b. Brand extensions:
• Poetry Stones™. A kit for making tinted, word-bearing concrete cobblestones
to border gardens or walkways.
• Magnetic Poetry: The Game. A fast-paced board game where teams earn
points creating poetry.
WARNING: The Little Box of Words website shows some products that are
provocative and may be offensive to some students and instructors.
Marketing Lesson. Method 6–3–5 demonstrates one of many techniques used to
develop new or improve existing products and services.
Chapter 10 – Developing New Products and Services
10–55
GROUND RULES FOR METHOD 6–3–5
1. Use teams of 6 people each and sit in a circle.
2. In 3 minutes, have each team member come up with
3. After 3 minutes, have each team member pass their ideas
on to the team member to the left who spends 3 minutes
elaborating and improving on the 5 ideas on the paper in
front of them.
4. After 3 minutes, repeat Step 3 (above) again.*
* This could be repeated all around the circle, but to save
time only 2 improvement iterations are done here.
Chapter 10 – Developing New Products and Services
10–56
USING METHOD 6–3–5 TO FIND NEW PRODUCT IDEAS FOR
MAGNETIC POETRY’S “LITTLE BOX OF…”
IDEA
ORIGINAL
IDEA
FIRST
REWORK
SECOND
REWORK
#1
#2
#3
#4
#5
Chapter 10 – Developing New Products and Services
10–57
Connect Application Exercises
Application Exercise 1: New-Product Development Process
Activity Summary: In this click and drag activity, students are provided with the seven stages in
the new-product development process. Students are asked to evaluate the new-product
development process that occurred during the development of Apple’s iPhone. Students drag
seven items (Jobs’ vision, Apple pow–wow, weed ‘n feed, numbers matter, concept becomes
reality, secrecy vs. information, lined up) onto the correct stage of the new-product development
process (new-product strategy development, idea generation, screening and evaluation, business
analysis, development, market testing, commercialization).
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: New-product Development
Learning Objective: LO 10-05 Explain the purposes of each step of the new-product
development process.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to some up with examples of new-product
introduction failures. Ask students to identify a reasonable explanation for why the new-product
Application Exercise 2: Classifying Consumer Products
Activity Summary: In this click and drag activity, students learn about the differences between
the four types of consumer products (convenience, shopping, specialty and unsought). The eight
draggable items (bar soap, Doritos, Blu-ray player, dishwasher, Patek Philippe watch, Hermes
handbag, coffin, and tires) provide students with a product description when moused-over.
Students complete the activity by dropping the product examples onto the correct category.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Types of Consumer Products
Learning Objective: LO 10-02 Identify the ways in which consumer and business products and
services can be classified.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could create a larger list of products on the board for products
Chapter 10 – Developing New Products and Services
10–58
Application Exercise 3: Why Products and Services Succeed or Fail
Activity Summary: In this case analysis, students learn about the importance of a well-defined
product protocol in a successful new-product launch and the common causes of new-product
failures. A short mini-case describes the launch and demise of PepsiCo’s morning cola, Pepsi
AM. Students then answer five questions about the product and positioning of Pepsi AM which
likely led to the product’s failure.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: New-product Development
Learning Objectives: LO 10-03 Explain the significance of “newness” in new products and
services as it relates to the degree of consumer learning involved.
LO 10-04 Describe the factors contributing to the success or failure of a
new product or service.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could provide students with examples of additional new-product
Application Exercise 4: iSeeit! Video Case: New Product Development
Activity Summary: In this straightforward whiteboard animation video, the new-product
development process at Hope Springs Water Co. is discussed as the firm investigates the
possibility of developing a complementary product. After watching the 3-minute video, students
are asked four follow-up questions related to the new-product development process.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: New-product Development
Learning Objective: LO 10-05 Explain the purposes of each step of the new-product
development process.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to suggest additional complementary
Application Exercise 5: Defining “New”
Activity Summary: In this click and drag activity, students are introduced to the concept of
newness from a consumer’s perspective. The three consumer classifications of new products are
Chapter 10 – Developing New Products and Services
10–59
given as drop zones (continuous innovation, dynamically continuous innovation, and
discontinuous innovation). Students evaluate three products (Pumpkin spice Kit Kat, Power
generating shirt, and Apple watch) and three marketing tactics (People ad, big billboard, and
Genius Bar) which are to be classified as examples of continuous innovation, dynamically
continuous innovation, or discontinuous innovation.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: New-product Development
Learning Objective: LO 10-03 Explain the significance of “newness” in new products and
services as it relates to the degree of consumer learning involved.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to apply the other points of view of newness
Application Exercise 6: GoPro: Making All of Us Heroes with Exciting New Products
Activity Summary: In this video case, students learn about the importance of new-product
development at GoPro. Since it’s the release of its first camera, GoPro has pioneered products
that allow its users to preserve their memories – from the everyday to the one-in-a-lifetime
experience. After watching the video, students are asked five questions covering new-product
strategies and the new-product development process.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: New-product Development
Learning Objective: LO 10-05 Explain the purposes of each step of the new-product
development process.
AACSB: Knowledge Application
Blooms: Apply
Difficulty Level: 2 Medium
Follow-Up Activity: Instructors could ask students to visit a local grocery store and locate 10
Analytics Exercise 7: Marketing Analytics: New Products
Activity Summary: In this analytics activity, students read a mini-case about a small clothing
company offering a children’s clothing delivery subscription service. The owner is debating
whether or not a premium service should be added to the product mix. Students are provided
with an interactive spreadsheet in which they can manipulate the values for sales and price to
Chapter 10 – Developing New Products and Services
10–60
help them evaluate the impact on firm profit. Based on their findings, students make strategic
recommendations as they answer five multiple choice questions.
Tagging (Topic, Learning Objectives, AACSB, Bloom’s, Difficulty)
Topic: Marketing Analytics
Learning Objective: LO 10-04 Describe the factors contributing to the success or failure of a
new product or service.
AACSB: Analytical Thinking
Blooms: Analyze
Difficulty Level: 2 Medium
Follow-Up Activity: This activity provides an excellent launching point for a discussion about
product mix, pricing, target markets, and cannibalization. The variables in the activity (see
Standard service sales (units)
Premium service sales (units)
Basic service sales (units)
Price – standard subscription
Price – premium subscription
Price – basic subscription
Sales revenue – standard
Sales revenue – premium
Sales revenue – basic
Firm’s total revenue
Profit – standard
Profit – premium
Profit – basic
Firm’s total profit
Total industry revenue
Firm’s market share