DEVELOPING NEW PRODUCTS

AND SERVICES

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APPLE: THE WORLD-CLASS

NEW-PRODUCT MACHINE

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APPLE: THE WORLD-CLASS

NEW-PRODUCT MACHINE

 Apple’s Innovation Machine

 iCloud: Where the Digital

Lifestyle is Heading

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 WHAT ARE PRODUCTS AND SERVICES?
A LOOK AT GOODS, SERVICES, AND IDEAS
 Products
A product is a good, service, or idea consisting of a
bundle of tangible and intangible attributes that
satisfies consumers’ needs and is received in
exchange for money or something else of value.
 Goods

• Nondurable • Durable
Goods Goods

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WHAT ARE PRODUCTS AND SERVICES?

A LOOK AT GOODS, SERVICES, AND IDEAS

 Services
Services are the intangible activities or benefits that an
organization provides to satisfy consumers’ needs in
exchange money or something else of value.

 Ideas
A thought that leads to a product or action like a
concept for a new invention or getting people out
to vote.

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Classifying Products
 Consumer Products
Consumer products are products purchased by the
ultimate consumer.

Convenience products: products and services that the

customer usually buys frequently, immediately, and with
minimum comparison and effort :

Shopping products: products and services that the customer

compares carefully on suitability, quality, price, and style .

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 Classifying Products
Specialty products: products and services with unique
characteristics or brand identification for which a
significant group of buyers is willing to make a special
purchase effort
Unsought products: products that the customer does not
know about or does not normally think of buying

Shopping product
Vs.
Specialty product

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PRODUCT CLASSES, FORMS, ITEMS, LINES, AND MIXES

 Product Class

 Product Form

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PRODUCT CLASSES, FORMS, ITEMS, LINES, AND MIXES

 Product Item

 Product Line

 Product Mix

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 PRODUCT CLASSES, FORMS, ITEMS, LINES, AND MIXES

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WHAT IS A NEW PRODUCT?

 Newness: The Consumer’s Perspective
• Continuous Innovation

• Dynamically Continuous Innovation

• Discontinuous Innovation

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WHAT IS A NEW PRODUCT?

 Newness: The Organization’s Perspective

• Product Line Extension

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 WHAT IS A NEW PRODUCT?
• Jump in Innovation

• Brand Extension

• Radical Innovation

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What Research Studies has found……

Studies showed that companies that led

their industries in sales growth and
profitability generated ½ of all revenues
from products introduced within the
previous 5 years.

But Product Development is a costly

activity filled with uncertainty. About
35% of new products that reach the
marketplace fail, a majority never even
reach the market.

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NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL

 What it Takes to Launch a

Commercially Successful New Product

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NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL

 Marketing Reasons for New-Product

Failures
• Insignificant Point of Difference
• Incomplete Market and Product Protocol
Before Product Development Starts

• Not Satisfying Customer Needs on

Critical Factors
• Bad Timing

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NEW PRODUCTS AND WHY THEY SUCCEED OR FAIL

 Marketing Reasons for New-Product

Failures
• No Economical Access to Buyers

• Poor Product Quality

• Poor Execution of the Marketing Mix

• Too Little Market Attractiveness

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Product Life-Cycle Strategies

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 Product Life-Cycle Strategies
Introduction
• Slow sales growth with little or no profits
• High distribution and promotion expense to
educate and attract customers
• Few basic models offered

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Product Life-Cycle Strategies

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Product Life-Cycle Strategies

Growth
• Sales and profits increase
• New competitors enter with new product features
• Continued consumer education

What is the marketing objective for the

growth stage of the product life cycle? Slide 5-21

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 Product Life-Cycle Strategies
Maturity
• Slowdown in sales
• Many suppliers and substitute products
• Increased promotion and R&D to support sales and profits
• Successful strategies
– Market modifying: increase consumption by finding new segments
– Product modifying: alter features to attract new buyers
– Marketing mix modifying: alter marketing mix elements

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Product Life-Cycle Strategies

Decline
• Sales drop
• Cost reduction & profit extraction
• Competitors leave market
• Strategies
– Product deletion drops a product from the company’s product line.
– Harvest product, meaning to reduce various costs (plant &
equipment, maintenance, R&D, advertising, sales force) to raise
profits

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Which stage of the product life cycle?

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Prerecorded music product life cycles by product form

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Five categories and profiles of product adopters

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