Page 344 - Introduction to Business

318 PART 3 Marketing

stays on the market less than a year? Should a product be considered a failure if it
does not achieve a particular market share or level of revenues? Because of these
different standards, it is best to consider a product successful if it obtains all or most
of the objectives set for it by the company developing it and bringing it to market.

LEARNING OBJECTIVE 5
List the steps in the process for developing new products and explain how each
should be performed.

EXHIBIT 9.1 Steps in the New Product Development
Generating new Process. Exhibit 9.1 shows the steps required to
Steps in the New Product product ideas
Development Process develop new products, steps that if performed cor-
rectly will increase the likelihood that new products
will be successful.
Screening
GENERATING NEW PRODUCT IDEAS. Companies can
look externally or internally for potential new prod-
external source A source for new ucts. The market may be the most important external
products that is located outside of a Concept testing source. Its new product needs should be carefully
company
ascertained. Lead users—the large, high-profile firms
lead users High-profile firms in an
industry that are good sources for new in an industry whose business methods are often emu-
industrial products because their lated by other companies—are especially good sources
Business analysis
business methods are often emulated for new product ideas for industrial markets. Other
by other firms in the industry
companies’ new products should be considered, as
technology transfer The adoption by well as technology in other industries, because about
one company for the development of
new products of a technology that Development 50 percent of new product ideas come via technology
originated with another company transfer from one company to another.
Patent offices are good sources for new product
ideas. Individual patents can provide specific possibil-
Testing ities, and the analysis of patents over time can yield
important new product trends. Scientific and profes-
sional meetings are an external source that is often
overlooked. At such meetings, there is often an
Commercialization exchange of information that may suggest fruitful
areas for further consideration.
Independent inventors can be a viable source for
new products. Many of the truly significant inventions of the twentieth century were
developed by individual inventors such as Frank Whittle (jet engine), Chester Carl-
son (photocopying), and Edwin Land (Polaroid instant camera). However, compa-
nies are well advised to have a structured procedure for dealing with such individu-
als in order to minimize some of the legal problems that may occur involving
ownership, method of payment, and so on. The developer of the modern carburetor
accused one of the car companies in the early 1900s of stealing his idea. One of the
three developers of the automatic inoculation gun absconded with the idea.
Universities often have a unit that is responsible for developing new product
ideas that can then be licensed to outside companies. One of the most successful is
the one at Cambridge University in the United Kingdom. Venture teams, R&D per-
internal sources Sources for new sonnel, the marketing department, and company employees are examples of the
products that are located within a firm
internal sources for new product ideas. Venture teams are temporary units formed
venture team A temporary group that a to come up with new product ideas. They are made up of individuals from various
company establishes to come up with
new product ideas departments who are highly regarded for their creativity.

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