Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

10. Product Management
    and New−Product
    Development

Text © The McGraw−Hill

Companies, 2002

Product Management and New-Product Development 291

firms use what’s called reverse engineering. For example, new-product specialists at

Ford Motor Company buy other firms’ cars as soon as they’re available. Then they

take the cars apart to look for new ideas or improvements. British Airways talks to

travel agents to learn about new services offered by competitors. Many other compa-

nies use similar approaches.^21

Many firms now “shop” in international markets for new ideas. Jamaica Broilers,

a poultry producer in the Caribbean, moved into fish farming; it learned that many

of the techniques it was using to breed chickens were also successful on fish farms

in Israel. In the same vein, food companies in the United States and Europe are

experimenting with an innovation recently introduced in Japan—a clear, odorless,

natural film for wrapping food. Consumers don’t have to unwrap it; when they put

the product in boiling water or a microwave, the wrapper vanishes.^22

Research shows that many new ideas in business markets come from customers who

identify a need they have. Then they approach a supplier with the idea and perhaps

even with a particular design or specification. These customers become the lead users

of the product, but the supplier can pursue the opportunity in other markets.^23

But finding new product ideas can’t be left to chance. Companies need a formal

procedure for seeking new ideas. The checkpoints discussed below, as well as the

hierarchy of needs and other behavioral elements discussed earlier, should be

reviewed regularly to ensure a continual flow of new, and sound, ideas. And com-

panies do need a continual flow so they can spot an opportunity early—while there’s

still time to do something about it. Although later steps eliminate many ideas, a

company must have some that succeed.

Screening involves evaluating the new ideas with the type of S.W.O.T analysis

described in Chapter 3 and the product-market screening criteria described in

Chapter 4. Recall that these criteria include the combined output of a resource

(strengths and weaknesses) analysis, a long-run trends analysis, and a thorough

understanding of the company’s objectives. See Exhibit 3-1 and Exhibit 4-5. Fur-

ther, a “good” new idea should eventually lead to a product (and marketing mix)

that will give the firm a competitive advantage—hopefully, a lasting one.

Opportunities with better growth potential are likely to be more attractive. We

discussed this idea earlier when we introduced the GE planning grid (see

Exhibit 4-7). Now, however, you know that the life-cycle stage at which a firm’s

new product enters the market has a direct bearing on its prospects for growth.

Clearly, screening should consider how the strategy for a new product will hold up

over the whole product life cycle. In other words, screening should consider how

attractive the new product will be both in the short- and long-term.

Some companies screen based on consumer welfare

Screening should also consider how a new product will affect consumers over time.

Ideally, the product should increase consumer welfare, not just satisfy a whim.

Exhibit 10-5 shows different kinds of new-product opportunities. Obviously, a socially

responsible firm tries to find desirable opportunities rather than deficient ones. This

may not be as easy as it sounds, however. Some consumers want pleasing products

Desirable products Salutary products

Pleasing products Deficient products

High Low

Immediate satisfaction

High

Low

Long-run

consumer

welfare

Exhibit 10-5

Types of New-Product

Opportunities

Step 2: Screening