Developing and Managing Offerings

Read this chapter. Pay attention to the section on managing new products and the product life cycle, and watch the videos.


Having something that customers want to buy is important to any company. Most companies are started by people who get an idea about how to make something better. Hewlett-Packard, for example, began in 1939 in a garage (now a California Historic Landmark) when two young engineers, Bill Hewlett and Dave Packard, thought they had a better idea for designing and making a precision audio oscillator, which is an electronic device that tests sound. Their product was so much more precise than competitors' products that it was manufactured and sold around the world for over thirty years. In fact, it is probably one of the longest-selling electronic devices ever. It also sold for just $54, whereas competing products sold for over $200. Hewlett-Packard, now more commonly known as HP, has not been located in a little garage for many years. Yet the company's ability to grow by successfully designing and marketing new offerings continues.

Figure 7.1

Hewlett-Packard was founded in this California garage, which is now a national landmark.


Developing new offerings is a constant process in most companies. In some instances, a company starts with a price and then develops products and services to fit that price. IKEA is an example of a company that does this. IKEA looks at the various prices consumers are willing to pay for home furnishings and then works backward to design products that match those prices (using a demand backward pricing strategy is discussed in the pricing chapter). In other situations, the goal is simply to develop a better product that adds value to existing products, and the price comes later. Hewlett-Packard's audio oscillator is an example of this type of product.

Keep in mind that a "new" product can be a "new and improved" product, such as laundry detergent; an addition to a product or service line, such as Marriott adding the Courtyard by Marriott and the Fairfield Inn or Capri Sun adding new flavors; a repositioned product or company, such as Hyundai Motor Company trying to change the perceptions of Hyundai automobiles from being inexpensive to being "an overachieving, underappreciated brand that smart people are discovering". or a totally new innovation, such as the iPad computer. What is new for one company may not be new to another. For example, one hotel may already have budget properties, but when a luxury hotel adds a budget property, that property is considered a new offering for them.

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