Chapter 9: Developing new products and managing product life cycle

Question 1

What are the 2 ways through which a firm can obtain new products

Answer 1

• Acquisition
• New product development (by the company).

Question 2

What does it mean when a company obtain new products by acquisition?

Answer 2

= By buying a whole company, a patent, or a license to produce someone else’s product.

Question 3

What does it mean when a company obtain new products through the firm’s own new product development ?

Answer 3

= by ‘new products’ we mean original products, product improvements or modifications and new brands that the firm develops through its own product develop.

Question 4

Why are new products important

Answer 4

They bring new solutions and variety to customers’ lives

+ They are a key source of company growth

Question 5

What’s an issue with developing new products

Answer 5

• it can be expensive and risky
  = new products face tough odds

Question 6

Why do so many new products fail?

Answer 6

• Company may overestimate market demand (even if idea is good)
• the actual product may be poorly designed
• product might be incorrectly positioned
• might be launched at the wrong time, priced too high or poorly advertised.
• competitors might fight back harder than expected.

Question 7

What are the major stages in New product development

Answer 7

1. idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization

Question 8

What does new product development start with

Answer 8

Idea generation

Question 9

What are major sources of new product ideas

Answer 9

• Internal sources
• External sources e.g. customers, competitors, distributors, suppliers.

Question 10

What are some internal idea sources

Answer 10

• R&D Research centers
• Employee creativity
• Hackathons
• Unexpected discoveries
• Using technology
• Repurposing or unbundling products.

Question 11

what are some external idea sources

Answer 11

• suppliers and distributors
• competitors
• other industries
• customers
• crowdsourcing

Question 12

What is idea screening and what stage is it in the development of new products

Answer 12

It’s the 2nd stage.

= It helps spot good ideas and drop poor ones.

Question 13

In the stage of idea screening, what do many companies require their executives to do

Answer 13

write up new products ideas in a standard format the can be reviewed by a new product committee.

Question 14

Describe the ‘write up’ executives do during idea screening

Answer 14

The write up describes - the product or the service
- the proposed customer value proposition
- the target market
- the competition
+
makes rough estimates of
- market size
- product price
- development time and costs
- manufacturing costs
- rate of return

Question 15

In line screening, What’s the ‘new’ product screening framework that asks three questions.

Answer 15

The R-W-W (real, win, worth doing)

1. is it real? Is there a real need for this product, will customers buy it? Is there a clear product concept, will it satisfy the market?
2. Can we win? Does the product offer a sustainable competitive advantage? Does the company have the resources to make such a product a success
3. Is it worth doing? Does the product fit the company’s overall growth strategy? Does it offer sufficient profit potential?

company should answer all 3 questions before developing the new product

Question 16

What’s stage 3 of developing a new product?

Answer 16

Concept development and testing

Question 17

Distinguish between a (1) product idea (2) a product concept (3) and a product image.

Answer 17

(1) Product idea: Idea for a possible product that the company can see itself offering to the market.

(2) Product concept: A detailed version of the idea stated in terms that are meaningful to the consumer.

(3) Product image: the way consumers perceive an actual or potential product.

Question 18

What is concept testing (stage 3 of new prod. dev.)

Answer 18

= Testing new product concepts with target consumers .
- by answering questions too reveal which concepts have the strongest appeal

Question 19

What happens in Marketing strategy development ? (Stage 4)

Answer 19

Designing an initial marketing strategy for introducing the product -> Marketing strategy statement.

Question 19

What is the fourth stage of new product development

Answer 19

Marketing Strategy Development

Question 20

What are the 3 parts the marketing strategy statement consist of

Answer 20

1. describe target market, planned value proposition, sales, market-share, and profit goals for the 1st few years.
2. Outlines the planned price, distribution and marketing budget for 1st year.
3. Describes the planned long-run sales, profit goals and marketing mix strategy.

Question 21

What’s stage 5 of new product development.

Answer 21

Business analysis

Question 22

What happens in Business Analysis

Answer 22

Once management decided on product concept and marketing strategy. It can evaluate the business attractiveness of the proposal.

= Involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company’s objectives.

If they do the product moves to the product development stage.

Question 23

What’s stage 6 of new product development

Answer 23

If the product concept passes the business test, it moves to this stage

=> Product development

Question 24

What happens in Product development (stage 6)

Answer 24

R&D or engineering develops the product concept into a physical product or a detailed service blueprint.

But the product development step calls for a huge jump in investment. + Will show if the product concept can be turned into a workable product.