CHAPTER 2 NEW PRODUCTS

Product modifications
Modification can be in 3 types: 1. Clearly better (eg: an upgrade) 2. Different (eg: Styling or ingredient change that is likely to appeal more to some customers and less to others) 3.Inferior (eg: the substitution of a less expensive ingredient or aspect of the offering)

Product Stages
1.Idea generation 2.Concept development 3.Feasibility screening 4.Concept testing 5.Product development 6.Product testing 7.Market testing 8.Go-no go decision

Line Extensions
Definition: Introducing additional product variants that use the existing brand name. Eg: Listerene : Sweet-flavored versions of mouth-wash.

-They can appeal to multiple segments either increasing potential sales (the customer base) or allowing for price discrimination among users with slightly different needs and preferences (e.g multiple fares and conditions for airline seats) - Too many options confuse customers.

Adding a product variant

One Reason: To attract new customers (i.e: market development or penetration) One concern : Cannibalization (current switching) Customer confusion and dilution of brand equity Dropping a Product Variant Decision to drop a variant (product deletion) - Slow sales or low profits

Getting Idea For new Products

1. Customer analysis 2.Competitor analysis 3.Active search 4.Category analysis 5.Brainstorming

Testing slightly new product

Concept Testing -Surveys -Focus Groups -Demonstrations Product Testing -Product Tests -Discrimination and preference testing Market Tests -Action Standards -Where to test -What to do -How long -Cost

Brand Extensions
Definition: Extending brands beyond their original category (e.g: Levis into dress clothing, Nike into sportswear) Riskier than adding variants (line extensions)

Really New Products

1.
2.

3.
4.

Create or expand a new category (e.g: fruit teas VS soft drinks) Are new to customers for whom substantial learning is often required Raise broad issues such as the appropriate channels of distribution and organizational responsibility Create a need for infrastructure, software and add-ons.

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