Summary
Chapter
8
Marketing
Fundamental
By
Bronis
Verhage
2nd
edition
Chapter
8
–
New
product
development
Contents
8.1
What
is
a
new
product?
8.2
Reasons
for
product
development
8.3
Developing
new
products
8.4
Organising
new
product
development
8.5
Why
new
products
succeed
or
fail
8.6
Diffusion
of
innovations
Learning
goals
1. Recognise
what
is
new
about
a
‘new’
product.
2. Understand
what
motivates
companies
to
develop
new
products.
3. Outline
the
development
process
for
new
products.
4. Identify
various
types
of
new
product
management
organisations.
5. Explain
why
new
products
succeed
or
fail.
6. Discuss
the
implications
of
the
adoption
process
for
strategy
development.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
,8.1
What
is
a
new
product?
Innovation:
Creating
resulting
from
study
and
experimentation
or
the
introduction
of
something
new.
Product
modification:
An
adjustment
made
to
an
existing
product,
usually
made
for
greater
appeal
or
functionality.
A
modification
may
include
a
change
to
a
product's
shape,
adding
a
feature
or
improving
its
performance.
Often
a
product
modification
is
accompanied
by
a
change
in
packaging.
Product
innovation:
A
product
what
is
fundamentally
new
for
the
company
and
for
the
consumers.
A
me-‐too
or,
as
it
is
sometimes
called,
new
category
product
is
an
item
that
is
new
to
the
company,
but
not
to
the
marketplace,
as
it
is
already
sold
by
other
firms.
Product
line
extensions:
New
products,
but
closely
related
variations
of
a
firm’s
current
products
added
to
its
product
line
under
the
same
brand
name.
For
example:
Senseo
Vienna
coffee
pads,
Cherry
Coke
and
the
Gilette
Fusion
razor
blades.
Flanker
brand:
New
item
introduced
under
a
new
brand
name
into
a
product
category
in
which
the
company
already
sells
products.
For
example,
Pulsar
watches
sold
by
Casio.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
,Aesthetic
modifications:
Improving
the
product’s
sensory
appeal
by
changing
how
it
looks,
tastes,
smells,
sounds
or
feels.
Dynamically
continuous
innovation:
A
dynamically
continuous
innovation
is
a
new
product
that
is
released
within
the
marketplace.
Because
of
its
innovative
nature,
it
inspires
consumers
to
reconsider
their
buying
habits.
It
is
typically
done
to
relaunch
failing
products.
Discontinuous
innovation:
Discontinuous
innovations
cause
a
paradigm
shift
in
science
or
technology
and/or
the
market
structure
of
an
industry.
As
they
are
entirely
new-‐to-‐the
world
products,
made
to
perform
a
function
for
which
no
product
has
previously
existed,
discontinuous
innovation
requires
a
good
deal
of
learning
for
the
incumbent
organisation
and
its
value
network,
including
the
user.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
, 8.2
Reasons
for
product
development
Cor
Stutterheim:
“innovation
is
seeing
what
everyone
sees,
but
doing
what
nobody
else
does”.
Excess
capacity:
Output
volume
at
which
marginal
cost
is
less
than
the
average
cost
and,
hence,
where
it
is
possible
to
decrease
average
cost
by
increasing
the
output.
Excess
capacity
may
be
measured
by
the
amount
of
additional
output
that
will
reduce
the
average
cost
to
a
minimum.
Substitute
products:
Products
that
are
viewed
by
the
user
as
alternatives
for
other
products.
Make-‐or-‐buy:
When
a
company
decides
to
introduce
a
new
product
or
service
to
the
market,
there
are
two
strategic
options.
One
is
to
develop
the
product
internally.
The
second
is
to
either
acquire
a
patent,
license
or
established
brand,
or
to
buy
out
a
firm
that
is
already
making
the
product
or
delivering
the
service.
The
make-‐or-‐buy
decision
is
essentially
the
choice
between
doing
it
yourself
and
getting
someone
else
to
do
it.
Return
on
investment:
The
earning
power
of
assets
measured
as
the
ratio
of
the
net
income
(profit
less
depreciation)
to
the
average
capital
employed
(or
equity
capital)
in
a
company
or
project.
Synergy:
The
possibility
of
increasing
the
efficiency
and
effectiveness
of
its
operation
by
carrying
out
activities
jointly
rather
than
separately.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
Chapter
8
Marketing
Fundamental
By
Bronis
Verhage
2nd
edition
Chapter
8
–
New
product
development
Contents
8.1
What
is
a
new
product?
8.2
Reasons
for
product
development
8.3
Developing
new
products
8.4
Organising
new
product
development
8.5
Why
new
products
succeed
or
fail
8.6
Diffusion
of
innovations
Learning
goals
1. Recognise
what
is
new
about
a
‘new’
product.
2. Understand
what
motivates
companies
to
develop
new
products.
3. Outline
the
development
process
for
new
products.
4. Identify
various
types
of
new
product
management
organisations.
5. Explain
why
new
products
succeed
or
fail.
6. Discuss
the
implications
of
the
adoption
process
for
strategy
development.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
,8.1
What
is
a
new
product?
Innovation:
Creating
resulting
from
study
and
experimentation
or
the
introduction
of
something
new.
Product
modification:
An
adjustment
made
to
an
existing
product,
usually
made
for
greater
appeal
or
functionality.
A
modification
may
include
a
change
to
a
product's
shape,
adding
a
feature
or
improving
its
performance.
Often
a
product
modification
is
accompanied
by
a
change
in
packaging.
Product
innovation:
A
product
what
is
fundamentally
new
for
the
company
and
for
the
consumers.
A
me-‐too
or,
as
it
is
sometimes
called,
new
category
product
is
an
item
that
is
new
to
the
company,
but
not
to
the
marketplace,
as
it
is
already
sold
by
other
firms.
Product
line
extensions:
New
products,
but
closely
related
variations
of
a
firm’s
current
products
added
to
its
product
line
under
the
same
brand
name.
For
example:
Senseo
Vienna
coffee
pads,
Cherry
Coke
and
the
Gilette
Fusion
razor
blades.
Flanker
brand:
New
item
introduced
under
a
new
brand
name
into
a
product
category
in
which
the
company
already
sells
products.
For
example,
Pulsar
watches
sold
by
Casio.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
,Aesthetic
modifications:
Improving
the
product’s
sensory
appeal
by
changing
how
it
looks,
tastes,
smells,
sounds
or
feels.
Dynamically
continuous
innovation:
A
dynamically
continuous
innovation
is
a
new
product
that
is
released
within
the
marketplace.
Because
of
its
innovative
nature,
it
inspires
consumers
to
reconsider
their
buying
habits.
It
is
typically
done
to
relaunch
failing
products.
Discontinuous
innovation:
Discontinuous
innovations
cause
a
paradigm
shift
in
science
or
technology
and/or
the
market
structure
of
an
industry.
As
they
are
entirely
new-‐to-‐the
world
products,
made
to
perform
a
function
for
which
no
product
has
previously
existed,
discontinuous
innovation
requires
a
good
deal
of
learning
for
the
incumbent
organisation
and
its
value
network,
including
the
user.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
, 8.2
Reasons
for
product
development
Cor
Stutterheim:
“innovation
is
seeing
what
everyone
sees,
but
doing
what
nobody
else
does”.
Excess
capacity:
Output
volume
at
which
marginal
cost
is
less
than
the
average
cost
and,
hence,
where
it
is
possible
to
decrease
average
cost
by
increasing
the
output.
Excess
capacity
may
be
measured
by
the
amount
of
additional
output
that
will
reduce
the
average
cost
to
a
minimum.
Substitute
products:
Products
that
are
viewed
by
the
user
as
alternatives
for
other
products.
Make-‐or-‐buy:
When
a
company
decides
to
introduce
a
new
product
or
service
to
the
market,
there
are
two
strategic
options.
One
is
to
develop
the
product
internally.
The
second
is
to
either
acquire
a
patent,
license
or
established
brand,
or
to
buy
out
a
firm
that
is
already
making
the
product
or
delivering
the
service.
The
make-‐or-‐buy
decision
is
essentially
the
choice
between
doing
it
yourself
and
getting
someone
else
to
do
it.
Return
on
investment:
The
earning
power
of
assets
measured
as
the
ratio
of
the
net
income
(profit
less
depreciation)
to
the
average
capital
employed
(or
equity
capital)
in
a
company
or
project.
Synergy:
The
possibility
of
increasing
the
efficiency
and
effectiveness
of
its
operation
by
carrying
out
activities
jointly
rather
than
separately.
©
Stan
Meuwissen
Zuyd
University
of
applied
science
