Adding Products and Services
Introduction
The twenty-first century marketplace is dynamic and fast
changing. As a result, organizations are under pressure to evaluate
their existing product line and to make continuous decisions about
adding new products or deleting existing products. For instance, the
graph in Exhibit 1 shows how an organization must establish a series of
successful products, if that organization wants to maintain a consistent
stream of sales or else grow sales over time. One reason for this
pattern is the product life cycle. As shown in the graph, no product
lasts forever, and sales levels can fluctuate dramatically over time.
The company illustrated in Exhibit 1 has marketed 8 different products
over time. In the past, four of these products have been deleted (the
products labeled as A, B, C, and F). As a result, the sales level in
the most current period depends upon the success of the remaining four
products. If the firm has a goal to increase sales in the coming years,
then it is imperative for that firm to introduce a new group of
successful products.
Organizations invest a lot of
money to create new products that perform effectively. Nonetheless,
firms often struggle to convince people to incorporate these new
products into their routines. For example, it took 18 years
for microwave ovens to gain acceptance in Greece. The ultimate success of new products depends on consumers
accepting them.
The term "product" refers to both goods and services. A product is anything that can be offered to a market to satisfy a want or need. There are a number of ways to classify products, and those methods are discussed later in the chapter. In this chapter, we discuss the following topics: (a) Where do innovations come from? (b) product categories; (c) Innovation through business models; (d) Evaluating innovations; (e) When innovation fails: deleting products; and (f) chapter summary. In the next two sections, we briefly discuss innovations and their origins.
Sales of individual products and total sales
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