1000 Business Lessons Every Businessman Must Know

Chapter 18 Product Decision-Making: Starting from Development and Using Positioning and Combination as Means (1)
[-]. New product development

134. How to classify new products
The so-called new product refers to a product that has innovation or improvement in one or several aspects such as principle, structure, performance, technology, material, and application.

In order to facilitate the analysis and research of new products, we can classify them from multiple angles.

1. Classify according to the geographical characteristics of the new product
(1) International new products.It refers to the product successfully developed and sold for the first time in the world.

(2) New domestic products.Refers to products that have been successfully trial-produced abroad, but are still produced and sold for the first time in China.

(3) Regional or enterprise new products.Refers to products that have already been produced in other regions or enterprises in China, but are produced and sold for the first time in this region or enterprise.

2. Classified according to the degree of innovation of new products
(1) Brand new new product.Refers to the use of new scientific and technological achievements, using new principles or technology to produce products.

(2) Substituting new products.It refers to the use of new technology, new material or new structure on the basis of the original principle, and its performance index is greatly improved compared with the original product.

(3) Improve new products.Refers to the products made by improving the function, appearance and model of the original products by using improved technology.

3. Classified by new product development methods

(1) Independently develop new products.Refers to independently developed and manufactured products that start from the product functions required by users, explore the principles and structures that can meet the functional requirements, and combine the research of new technologies and new materials.

(2) Technology introduces new products.It refers to avoiding the difficulties of weak self-development capabilities and directly introducing products manufactured with mature technologies already on the market.

(3) Mixed development of new products.It refers to the new product produced by the organic combination of the independent development part and the direct introduction part in the development process of new products.

135. What are the characteristics of a successful new product

Generally speaking, successfully developed new products have the following characteristics:
(1) The relative advantages are prominent. Compared with the original products in the market, the new product has unique advantages, such as good performance, high quality, easy to use, easy to carry or low price, etc.

(2) Strong adaptability, new products must adapt to people's consumption habits and people's concept of products.For example, in the trial production of electronic pianos for preschool education systems, it is necessary to adapt the products to the usage habits and product concepts of the system users.

(3) Conducive to the protection of the environment, the new product is energy-saving, or the consumption of raw materials is very low, or it is beneficial to the protection of the environment, and is effective in eliminating the "three wastes" and "three evils".

(4) Strong sense of the times, new products can reflect the spirit of the times, cultivate and trigger new demands, and form new markets.

(5) Multi-function, so that the new product has multiple uses, which is convenient for buyers to use and can increase buyers' interest in buying.

(6) Ergonomics, more consideration should be given to consumer goods.

(7) Simplification, try to make the structure and method of use convenient for users and easy to maintain.

(8) Miniaturization and portability, under the premise of ensuring quality, make the product smaller in size, lighter in weight, and easy to move.

The above aspects are the requirements for enterprises to develop new products, and also indicate the development trend of new products in the future.

136. Guarantee of successful development of new products

For enterprises, the most fundamental guarantee for the success of new product development is to do a good job in two aspects:
1. Careful market research must be carried out

According to a survey, the success rate of products with a higher advantage over competitors is 98%, that of those with a greater advantage is 58%, and that of a product with a slight advantage is 18%.

2. There must be a reliable and effective organizational guarantee

There are several ways companies approach new product development:
One is to hand over new product development to their product managers.There are flaws in this system.Because product managers have little time to think about new products; at the same time, they lack the proprietary skills and knowledge needed to develop new products.

One is to have a new product manager position within the company led by a product manager.On the one hand, this position professionalizes the function of developing new products; on the other hand, the work of new product managers is limited to product improvement and product line expansion in their product market range.

One is to form a high-level management committee responsible for reviewing new products.

One is to have a permanent new product department headed by real power and close ties to top management.Its main responsibilities include generating and screening new ideas, directing and coordinating research and development efforts, conducting field testing and commercialization.

To speed up the development of new products, many companies adopt a team-oriented approach, which is called simultaneous product development.This organizational structure ensures that product development requires close coordination from the outset with people from development, engineering, manufacturing, purchasing and marketing.

137. Propose goals, collect "ideas"

New product "ideas" are developed on the basis of corporate strategy.It is also called "idea" or "idea".Where does the "idea" of new products come from? The main sources are buyers (including consumers and industrial users), experts, wholesalers, retailers, competitors, marketing staff of enterprises and decision makers at all levels.

The company's work for the above personnel includes:
(1) Look for "ideas" and try to discover good "ideas" about products from the environment, such as from consumers' opinions on existing products, from experts' new scientific and technological achievements, or from competitors Think about the company's products.

(2) Encourage "ideas" and try to encourage internal staff to generate and develop new "ideas". In this work, the role of marketing personnel cannot be ignored because they often deal with customers and understand customers' likes and dislikes of products. Often new "ideas" can emerge.

(3) Adding ideas, sending the collected and assembled "ideas" to relevant internal departments of the enterprise, soliciting amendments and supplementary opinions, so as to improve the original "ideas".

In the process of collecting "ideas", how to most effectively discover "ideas" requires a certain method.Available methods are:
(1) List method.List the characteristics of a certain product, and then scrutinize them one by one, in order to find another combination of characteristics to improve the product;
(2) Rigid combination method.Arrange different product items, through free association, consider the relationship between different products, and then combine them into a new product "idea";
(3) Multi-factor analysis.Propose several important factors that exist, consider the possibility of each change, and test the possibility of improvement on the basis of these factors; the fourth is the brainstorming method, which can be used in groups of several people (6 ~10 people are the most suitable), tell everyone the problem, let them express their views on the problems they encounter, such an idea will stimulate the generation of another new "idea".

138. Methods for evaluating new product ideas
In order to screen ideas scientifically, a comprehensive measurement should be made according to the specific internal and external conditions of the enterprise.American business circles generally adopt a method of evaluating new product ideas. This method first subdivides the factors that determine the success of new products into seven aspects, and gives different weights to the importance of these seven aspects, and then targets each idea. Score its performance in these seven aspects, and get the total score of each idea after weighting, so as to obtain the evaluation of the amount of ideas.These seven aspects are:
(1) Corporate strategy and goals.

(2) Marketing technology and experience.

(3) Financial status.

(4) Distribution channels.

(5) Production capacity.

(6) Scientific research and development capabilities.

(7) Supply capacity.

After screening, new product ideas must also be concretized to form a relatively complete product concept.The concept of the product should be able to clearly and clearly express the intention of product planning.The so-called product concept refers to a well-articulated idea expressed in meaningful consumer terms.Consumers don't buy product ideas, they buy product concepts.A product idea can be transformed into several product concepts through different incarnations.Which product concept a marketer chooses requires a study of the size of the market segments with different preferences.

139. Cost accounting for market trial sales

For high-risk products or products with novel features, test marketing is a must.The purpose of market testing is to understand how consumers and dealers respond to handling, using and repurchasing the actual product, and how large the market is.Valuable information can be obtained through market testing, such as buyers, distributors, effectiveness of marketing programs, market potential and other matters.

There are many methods of market test marketing, and the costs of these test marketing methods vary:

The cheapest is the sales wave study, in which a company pays close attention to how many consumers choose the company's product again and their comments on satisfaction after offering the company's product or a competitor's product for free or at a low price several times.Of course, you can also not provide products, just let consumers come into contact with the company's advertisements a few times, and then observe their purchasing behavior.

The other is a simulated sales method, in which the company selects some consumers and provides them with a certain amount of money without telling them about the company's products in advance, and then observes their purchase behavior to determine their attitudes, usage conditions, and satisfaction with the products. levels and repurchase intentions.The accuracy of this method is often relatively high.

There is also a method of controlling sales. The company selects some stores and gives them a discount or a certain fee to test-market the company's new products. Controlling sales allows the company to test the influence of factors in the store.And then use the method of sampling survey to select a part of consumers to solicit their impressions of the product.A company can do without using its own sales force, but this method exposes its products to competitors.

One of the most expensive methods is the full test method.Generally, companies need to work with outside research firms to select a small number of representative test cities, where the company's sales force works hard to market the product to commercial sector distribution and to obtain good shelf display opportunities for it. , the cost of such a comprehensive test is considerable, and it is a preview of the official sale.

140. Use Product Development Strategies Cleverly

Enterprises want to remain invincible in the ever-changing market. If they compete with competitors only by strength, they will often be beaten passively. Therefore, they must rely on resourcefulness and clever use of product development strategies to remain invincible in the market. place.

1. Leading strategy
This strategy is to use new principles, new technologies, and new structures to develop new products first in the fierce product competition, so as to be the first to get ahead and enjoy the infinite scenery in the market.The development of such products is mostly within the scope of inventions and creations. Using this strategy requires a large amount of investment, a large amount of scientific research work, and a long time for new product experiments.

2. Follow strategy
Manufacturers adopting this type of strategy often imitate or make partial improvements and innovations to existing products in the market, but the basic principles and structures are imitated.This kind of manufacturers closely follow the pioneers of established technologies in order to obtain mature finalized technologies with less investment, and then use their unique market or price advantages to erode the commercial status of early developers in the competition.

3. Gaps filling strategy
It is impossible for any enterprise to meet all the needs of the market, so there are always unmet needs in the market, which leaves a certain room for development for manufacturers.This requires enterprises to conduct a detailed analysis of existing products and consumer needs in the market, and discover unoccupied markets from it.This strategy can be summed up in the words of Akira Sagi, the founder of the Japanese computer company: Use technology that is no better than others to develop social needs that others have not noticed.

[-]. Product mix
141. Characteristics of Product Portfolio

With the development of contemporary society, on the one hand, enterprises must obtain greater economic benefits through mass production, and on the other hand, due to changes in the market and consumer demand, they must develop a variety of products to adapt to the diversification of consumer demand.How to match and combine products in production and distribution has become an important issue that enterprises must face in their business decisions.

Analyzing the characteristics of a product portfolio can be done in several ways.

1. Product line

A product line refers to a group of closely related products, which have the same function, are sold to the same customer group, and are sold through the same channel, and the price varies within a certain range.With the definition of the product line as a basis, we can define the width of the product portfolio, which refers to the number of product lines owned by the company.For example: Procter & Gamble has a width of 7, which are product lines such as detergent, toothpaste, bar soap, diapers, paper towels, mouthwash, and toilet paper.

2. Product line length

The number of product items in each product line is called the length of the product line. Of course, if a company has multiple product lines, we can add up the lengths of all product lines to obtain the total length of the company’s product portfolio divided by the width. Get the company's average product line length.

3. Product Portfolio Depth
The number of varieties in each product category is called the depth of the product portfolio. For example, LMZ toothpaste has a variety of flavors and fragrances, which constitute the depth of LMZ toothpaste.

4. Product relevance

Different product lines may be related to some extent in terms of end use, production conditions, distribution channels, or other aspects. We call this relationship degree of correlation.

(End of this chapter)