Saylor URL: http://www.saylor.org/books Saylor.org
1939 in a garage (now a California Historic Landmark) when two young engineers, Bill Hewlett and Dave
Packard, thought they had a better idea for designing and making a precision audio oscillator, which is an
electronic device that tests sound. Their product was so much more precise than competitors’ products
that it was manufactured and sold around the world for over thirty years. In fact, it is probably one of the
longest-selling electronic devices ever. It also sold for just $54, whereas competing products sold for over
$200. Hewlett-Packard, now more commonly known as HP, has not been located in a little garage for
many years. Yet the company’s ability to grow by successfully designing and marketing new offerings
continues.
Figure 7.1
Hewlett-Packard was founded in this California garage, which is now a national landmark.
Source: Wikimedia Commons.
Developing new offerings is a constant process in most companies. In some instances, a company starts
with a price and then develops products and services to fit that price. IKEA is an example of a company
that does this. IKEA looks at the various prices consumers want to pay for home furnishings and then
works backward to design products that match those prices (using a demand backward pricing strategy is
discussed in Chapter 15 "Price, the Only Revenue Generator"). In other situations, the goal is simply to
develop a better product that adds value to existing products, and the price comes later. Hewlett-
Packard’s audio oscillator is an example of this type of product.
Keep in mind that a “new” product can be a “new and improved” product, such as laundry detergent; an
addition to a product or service line, such as Marriott adding the Courtyard by Marriott and the Fairfield