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Principles of Marketing - Philip Kotler

The strategy to develop new products

Given the rapid change in tastes, technology and the state of competition the firm can not rely on existing products today. The consumer wants and waits for new and improved products. And competitors will make every effort to ensure that it is these innovations. Consequently, each company must have its own program to develop new products.

The company can get new items in two ways. Firstly, by acquiring from the side, i.e. buying a whole some company, patent or license for the production of another product. And secondly, through their own efforts, ie creating at the research and development department.

Let us consider the process of developing new products. Under the "what's new" we mean original products, improved versions or modifications of existing products as well as brand-new fruits of R & D manufacturer. At the same time we consider the question whether the consumer thinks again offered him a novelty item.

Innovation can be a risky business. At its ill-fated model "Edzel" firm "Ford" lost, according to experts, about $ 350 million.. (See para. 20, inset). Approximately cost of the corporation "Dupont" the failure of her "Corfu" synthetic leather (see. Saver to Ch. 5) to $ 100 million... Holocaust turned "Xerox" company's attempt to enter the PC market. Never pay back the investment in the creation of a French airliner "Concord". In the market of packaged consumer products repeatedly failed innovations such seasoned experience in companies such as "Campbell", "Gillette", "Lever Brothers," "General Foods", "Bristol-Myers" and others.

According to one study, the market for consumer goods fails 40% of all new products offered on the market for manufactured goods - 20, and in the market - 18% 2. Especially alarming failure rate of new consumer goods.

Why fail novelties? There are several reasons. A senior manager can "push" your sweet heart the idea, despite the negative results of the market research. In another case, the idea itself was good, but clearly overestimated the size of the market. It may be that the goods in its specific performance is not designed as it should. Or maybe it incorrectly positioned in the market, badly advertised or assigned to him too high a price. In some cases, the cost of product development are much higher than estimated, and sometimes retaliate rivals appears stronger than expected.

Thus, before the company is a dilemma: on the one hand, to develop new products is necessary, and on the other - the chances of success of new products not too much. The answer lies partly in the fact that the company purposefully orient, organizational adapt it to work with the news. In addition, a team of specialists - creators of new products need to carefully work through each step of the creation of new products. The main stages of this process are shown in Fig. 54 and described below.

Fig. 54. The main stages of development of commodity-news

Box 20. One of the most expensive commodity failures of all time - the car "Edzel" firm "Ford"

One of the most expensive commodity failures of all time - the car "Edzel" firm "Ford", released on the market in 1957. In the early 50s the company "Ford" has started to feel the need to increase its range of the new model. In those years, the car "Ford" and "Chevrolet" accounted for 25% of the automotive market. But there was one difference. With the growth of the welfare of the owners of the "Chevrolet", produced by the company "General Motors" car, rose to the level of the owners of the models of the "Pontiac", "Buick" and "Oldsmobile", produced by the same "General Motors". Wealthy owners of "Ford" with the purchase of more expensive machines also preferred to "Pontiac" model, "Buick" and "Oldsmobile." A more expensive model of the company "Ford" - "Mercury" - they did not like, and the elegant Ford "Lincoln" was not affordable.

It was necessary to create a car of the middle class value, attractive for wealthy owners obychnyx "Ford" and "Chevrolet". Conducted by the company "Ford" marketing study showed that members of the numerically growing middle class ready to buy cars of higher quality. After examining demographic characteristics, desires and preferences of car owners, the company "Ford" has started to create a model that attracted these buyers. Features news was kept secret, although the company is constantly distributed promotional materials in an effort to sharpen public interest in the rapid emergence of a new, unique car. Ignoring the huge costs, the company decided to organize the sale of "Edzel" model through a separate dealer network. "Edzel" only dealers had sold, which was granted for this exclusive right. When you select a name for the model company considered 6000 names, including some proposed by the poet Marianne Moore. Having rejected all of them, the company called the car "Edzel" in honor of Henry Ford's only son.

"Edzel" The model was launched in the market with great fanfare September 4, 1957 For one day able to sell and get orders for 65 thousand. Machines. It was a day of triumph, but a single day. Despite the fact that more than two and a half million people have visited the showroom to look at the new product, bought her a few. By January 1958, the firm eliminated the network of dealers exclusive sales model "Edzel" and at the same time created at the new production department "Mercury Edzel Lincoln." In November 1959 the model "Edzel" was taken out of production.

Why "Edzel" failed? First, many consumers simply do not like the car. The front part of the machine was built vertically, and back - the horizontal, as if on opposite ends of the car are working different groups of designers. Moreover, a strange kind of grille gave rise to many jokes with Freudian bias. Secondly, the company "Ford" advertised "Edzel" as a new type of car. However, consumers have not seen it novelty. For them it has become just another vehicle of the middle class value. So firm was the victim of its own excessive promises. Third, slowly release a new car company "Ford" relaxed attention to quality control, and many "Edzely" turned to marriage.

It was unsuccessful and exit time from the vehicle to the market. "Edzel" appeared in 1957, when the economy there has been just a deep recession. People need the machine cheaper, and they began to buy "Volkswagen" and model "Rambler" Corporation "American Motors". The audience reacted very negatively to the gleaming chrome cars pretentious like "Edzel". But, according to the results of preliminary studies, there were no signs of any future changes in the economy or changes in consumer preferences. "Edzel" fell victim to poor planning and poor choices of time. All this cost the company "Ford" at $ 350 million.. Losses.