hey class uh again apologies for not being able to be there for this lesson uh but um I'm glad we got a chance to to record it and um and look forward to your feedback or questions um once we return in person so just a reminder here so today we're uh we're going to be covering new product development and services it's kind of a a bit of a hybrid here because of the uh the challenges with the the Mondays off had a lot of Monday Vacations so um they're going to we're going to be recording two of these sessions so that we can get right back into group presentations uh when we uh regroup on July the 8th okay so uh week eight we're going to talk about marketing of services and new products okay so Services marketing so let's talk a little bit about the nature of what a service is let's review the four kinds of services and then we're going to talk about kind of how do you measure service excellence and the quality uh as a marketer to make sure your service is delivering what customers want so what's a service right there's a lots of things we use um a lot of services uh you might hear the term service economy so we've actually um the economy especially in Canada has really transformed from a manufacturing products economy to a Services economy so we we have a lot of things like banking Transportation Uber Eats all these things that are services so a service is an act is an act that one entity performs on another that is essentially intangible does not result in ownership of anything so you get something like a haircut you take a ride but you don't own anything and that's an important designation of a service so uh some of the different services that we have we have government services so you know you think about all the health care and everything that happens in government services private not for-profit charity type stuff um educ type stuff business sector so lots of services there um that we all use manufacturing sector so there services in the manufacturing sector where you know you'd be doing things like cleaning a factory fixing machines that type of stuff and then certainly in the retail sector we have lots of services I mentioned haircuts uh any kind of uh you know personal um service type business uh dry cleaning there's all sorts of things that are services that are provided uh and you could argue that food uh eating out is also a service we are getting food but we don't really own the food we're not buying the food we're just consuming it so that's considered a service to um it's it's difficult to manage uh or to measure the the um the quality of a service right because it's um it's not really tangible right so these are things that you're getting and you have to really um think about how do people evaluate the quality of a service and that's a very important part of a service as a service marketer is to really think about how can you show people the value also demonstrate that they've received good service when there's really nothing in nothing tangible they're not taking anything home it cannot be seen tasted felt heard or smelled before they're bought or even sometimes while you're uh while you're using them you know furnace repair how do you know if your furnace was repaired well Tax Services plumbing services these are all things you're not really sure uh how good the services uh actually were that you got and you're trying to even choose a vendor it's difficult but things like Customer Loyalty Word of Mouth personalized selling and then demonstration of um others that have had work done for them or have used the service things that Google ratings are very important for services you all probably use Google ratings I use them all the time when you're not sure about the service you want to hear from others physical Goods are um are kind of manufactured inventory and distributed and later consumed whereas services are typically produced and consumed uh right away right so physical Goods like we said you're making it you're inventorying it you're transporting it you're putting it in the store and then we're consuming it but Services if you think about let's getting a haircut for instance you go you get your haircut the person Cuts your hair is the service provider there's no storage there's no manufacturing and then you walk away when you pay so you you're really consuming the service um at the same time you're you're paying for it and there's lots of um kind of uh there's not there are businesses that are not one end or the other you're not just a product or just a service there's lots that are in the middle and that's typically where a lot of businesses are they have a little bit of product and a little bit of service so you think about car repairs or cars um you buy a car you're buying a product but then there's all sorts of maintenance services that are prepared oil uh changes that are done um car washes waxes vacuuming all sorts of things that are done to the car once you own it or Services um restaurants again are another example we talked about a second ago where your consuming food you technically own the food for a second then you're consuming it but it is a bit of a hybrid airlines are another one um if you think about that you're you may be getting uh products like a snacks or something like that but you're the real service is moving you from one city to another city and then a Pure service which is just you go in haircut massage uh physiotherapy where you just go in you get the service and you leave so again a real Continuum from businesses that are product Centric and AD services like a car manufacturer to a Pure service where the service is what you're paying for uh like a haircut and this is a good example to think about it where you know you see things that go from uh product pure products with really no no Services attached if you think about table salt it's strictly you know you there's no there's no service provided you go you buy Sal you use it and then if you go to the other end which is like teaching nursing where there is no tangible product that you're walking away with you're walking I guess a degree or you're feeling better but you're this the um the exchange between you and the service provider was strictly done on premises and it's it's an exchange you learned something you had stitches put in whatever it is and then you go away and then in the middle there all some of these businesses we talked about where if you think about walking into a place or going to get a product there's a little bit of service could be setup it could be um just other things that happen around the product that are kind of in the middle and that's where a lot of businesses are and and frankly more and more product based businesses are trying to add a service level think about subscription services and things you want to add after to get more Revenue out of their customers um so if we think about the four characteristics of services um let's just talk through them so the first one is it's intangible so we talked about this so it doesn't have any physical attributes you don't hold it you can't smell it um it's strictly something that doesn't exist it's something performed on you or something you uh on your car on your house or your factory you could paint something you could uh um you know clean something it's very intangible it's Inseparable so um you are consuming and use and uh and getting the service at the same time you can't kind of separate the two right the person that is providing the service is also the service so you're they're combined together so somebody comes and fixes your furnace somebody cut your hair the service provider and the service are um interceptable and that's again very important for services they're um they're extremely variable so it really uh has to do with the person providing you the service so if you think about going to a coffee shop or uh anything that you do it's a service if the person if you go to the same person all the time you you expect a certain quality a certain way they do your haircut for instance you go and there's somebody new there you you're not sure what you're going to get and you get nervous and it's again as a service business we talk about in a second a variability and how do you make sure every customer is getting the same level of service uh and meeting their expectations is a big challenge so variability because of this um in interconnectivity between the provider and the actual service value it's being performed by a person um the variability is something it's a challenge uh it's perishable so you know Services think of them as ours so if you're cutting if you're somebody that cuts hair every hour that goes by that you don't cut hairir you can't get that hour back you can't sell two of them you can't sell two hours the next hour so it's perishable so it's time based right so if you have people uh providing Services you can only do so many in a certain given uh period of time so some examples here are things like amusement parks Canada Wonderland if any of you have been there if they are closed for a day they can't get that money back they're providing an entertainment service you go to the park you use their facilities you get an entertainment service but they can't make up hours right um they can only provide so much service to people um given in a certain period so they can't really scale it out so we think about um again just to summarize this so we've got four these four key um kind of um characteristics of a service and again they're very important to understand these and think about it um and so Inseparable intangible variable and perishable those are uh really important to understand those elements of a service so if we talk about now what's uh entail with achieving service excellence and managing service quality so imagine you're running a business that relies on delivering services so we talked about those four characteristics so you have to be able to deliver Great Value to your customers consistently despite those kind of um the situation you know it's perishable so you've got to always have people in there it's um it's intangible they can't feel it and it's variable so all these types of things so if we start looking at this there's five things that um five factors that we really have to work on when we're delivering services and this comes down to the business the product Dem marketers that develop the service to really Define these so the first one is reliability we have if we want to deliver for instance we want to start again let's go back to the haircut it's a simple example we want to start a a Sal where we're doing haircuts how are we going to put processes in place be it hiring uh qualifications training qualifications to guarantee reliability so when you come and use our hair cutting service you are getting a consistency uh and a value for your money so just think about all the things we have to do when we make sure that everybody that walks in the door gets the haircut that they want consistently so that idea of reliability so we have to think about how to design the service and the business to do that responsiveness so again you can all think about Services Services you a lot of times you need them when you need them so our business again has to be able to be responsive so if we have customers coming in for a haircut how can we manage them when they want to come in how can we be responsive do we have extra people there do we have um discounts to come in for certain times of the day so that we can service them when they expect do we have a scheduling program so that we make sure you know you come in at three and you get your haircut at three so how can we make sure we're satisfying the customer's expectation around responsiveness um Assurance so how can they trust our service right how can we make sure that they are confident that we know what we're doing and that we're able to deliver the quality that they expect and there's some we'll talk more about how some different ways we can do this empathy how can we make sure that every customer feels like we're listening to them and we're delivering the service for for them and that we're individualizing it as much as we can and that every customer is getting um you know a good uh Quality Service level that they expect and then the uh the tangibles so things like other things we can control around the service like the physical uh appearance of the facilities the equipment you know how attractive is the store when you walk in uh what is the smell like is there music playing what's see the whole environment of the service provider or if you're having a furnace repaired when the person shows up their appearance whether they're wearing a uniform are their tools organized you know do they do they put booties on if you anyone's ever had somebody come to their house sometimes people will put booties on so their shoes don't make marks all those things are physical tangible things that help the customer feel good about the service and um and those are things you can even despite the service is a furnace repair that's part of the experience of the service is those tangible items what the the truck looks like all that kind of stuff so when we think about best practices for top service companies there's some really important things so start thinking about how do you design a business with all of those five components in it um the customer centricity you hear that a lot with service businesses they have to be so focused on the customer because the customer is getting the service at the time they're paying for it so if you think about a and you can't return a service so if you think about you know you order a jacket and you don't like it you can send it back you going to get a bad haircut um there's nothing you can do about it right you're kind of stuck with it you've already paid for it you might get your money back but that's about all the company can do they can't fix it um and then the service quality so really being super super focused on those quality standards and able to audit and see how they're doing so they constantly they know that for instance the quality of the haircuts has to be cons assistant so they may do things like survey the people when they leave the store are you happy with your haircut yes or no collect that data but they're obsessed with understanding the service quality and what customers thought did they get what they expected are they happy are they going to come back again that's another thing about um service businesses you a lot of it is repeat business you don't want to have imagine if you're a hair cutter and you only cut everybody's hair once they never come back that's a very hard business to uh to kind of build most service businesses like that they build a clientele over time and then at some point it's a profitable business and they're very happy with the customers catering to high value customers so again if you think about um people that um really understanding when you come in you say you came into a hair cutter that you know this this customer is going to get hair colored and she's she's going to be spending some money on other things understanding that we've got to treat her a certain way she's a high value customer and perhaps upsell cross sell different services to people to really try to increase the value of them and then managing customer complaints we talked about this a little second ago about having a bad haircut what do you do but the top companies understand how to handle those complaints maybe money back guarantee and maybe you can come in the next time for free come back the next day we'll fix it um anything they can do to really uh make sure that customer doesn't walk away unhappy because they're probably not going to come back and a lot of companies like best-in-class top service companies Empower their employees to remedy the situation so they don't have to go find the boss they're allowed to make sure that their customer is happy and if if that's their mandate is do not let someone walk away that's not happy with the service do whatever it takes um within reason probably but that's important aspect of a of a good service company okay so that was it on services so again services are um they're a fun part of the economy it's a big part of the economy there's a a lot of great service companies many of you will probably work for service companies of some type even in the marketing department but it's a you know it's it's a great spot to work um there lots of jobs and uh it's a growing part of certainly the Canadian and most economies um and maybe next time we get back together we'll talk a little bit more about Services when we kind of go through some of the material okay so now we're going to move into new product development and talk about how companies develop new products and um how they bring them to Market some of the things they look for and some of the technical parts of it so really there's if you think your your company and you need to find new Revenue opportunities you've come up with an idea that there's an opportunity you know we're at Coca-Cola and we're trying to think about ways to grow and we think you know what there's a real opportunity to do sports drinks um so we have some a couple choices we don't currently have a sports drink we have people who could develop a sports drink so we could develop it using r so we could get our our product team to go away and figure out how to make a great sports drink you know figure out the packaging the advertising The Branding um you know the the how we going to manufacture it all that kind of stuff distribute it price it so we could develop it inhouse on our own the other option which is you know again very popular is to acquire so if we're Coca-Cola we can just go and buy something we can go buy um uh Gatorade or a company like that that already has it all figured out they've already got the product they've already got the pricing they got distribution um they know what they're doing and we just simply buy the company and so you see both of these happen a lot in the industry and again most times it's to grow your market share you're looking for opportunities to get into new areas it could be an exp like we've talked before a line extension uh expansion a new brand breaking into a new area all the things we talked about with kind of product development uh and how you design product strategy but this is a way to start filling the gaps in those product lineups if you feel like you have them and so again this good example so you know PepsiCo I guess they were the ones that actually bought Gatorade so Pepsi they found it easy to develop the diet Pepsi because it was maybe a simpler thing for them and they already had the formulas just had to make them sugar-free or low calorie but when they thought about well how do we do orange juice how do we do um Gatorade and sports drinks they decide to acquire those companies instead of trying to figure out how to do it on their own but again they want to have the profitability and and be able to get into those those uh parts of the market but they just don't want to build it themselves so they they're they're a combination like most companies are a combination of Acquisitions and development depending on you know how much money they have for acquisition or how strong their development team is um new products typically have a very high fail rate so 95% of all new products created each year fail um we're going to talk a little bit about why that is but it is you know it is challenging to launch a new product um it's expensive and um it's there's a bit of risk because you're always you're not sure people are going to want it right so if we think about different reasons uh why uh companies fail when they launch new products this is the the first one right so you know you're you're working for somebody and they're like can you go and figure out how much Sports strength do you think we could sell typically you're you're overestimate it you talk to sales you talk to your customers everybody gives you some numbers you calculate it but it becomes that it never really happens the way or you know adoption was slower customers didn't buy it as much as you expected and you overestimate and that really kind of throws a a a a wrench into the entire business plan because you expected to sell a million units you've only sold 500,000 now the plant is producing way too many you don't have anything to do with them you can't sell them you can't cut back on the production because the costs go up too much so it's a real problem uh poor design so perhaps you did consumer research uh maybe you R the wrong color the wrong shape uh there was something else about the design of the product or the flavor of the product that people don't like um and you know this is why when you we talked about doing testing and market research when you do that you really want to make sure that you're not hearing what you wanted to hear in the research you've got to really listen to what people are saying um and it does happen a lot where some goes ah you know that that research isn't quite right I know they want this or One customer said that this happens a lot where One customer says oh yeah everybody wants this and you make it and then nobody else wants it uh incorrect positioning so this could be something like we've priced it to high uh We've based it on a a feature or benefit that they're not interested in could be just kind of bad advertising where we picked the wrong kind of tagline or something for it uh bad timing is another thing I think about some of the products that have launched right like right now is a bit of a downtime you don't launching High luxury items into this uh Market um a good example is you know uh there's a lot of real estate developers that have on developments um coming into market and the timing's bad because no one's buying real estate right now the interest rates are very high just bad timing and you know it's not that they did anything wrong but they just came into the market in the wrong time price too high we kind of talked about before this is very common right you go out and think oh I can sell it for this and then people won't buy it for that and it becomes a bit of a problem ineffective promotion so this is when us as marketers didn't do a very good job we didn't get the word out so maybe people didn't hear about it we didn't get distribution um we didn't do enough job promoting it to get people to try it because if it's a new product you can make people aware of it but you have to sent them to try it so if we we may have spent all our money on awareness and not enough on trial and all of a sudden we can't get people to try it so that's important that with new product development that we when we launch something we we get the awareness but we also get people to try it and hopefully use it over and over again especially if you're thinking about food or services or that type of thing and then this this is very common so if anyone's ever worked for a big company um sometimes you'll come in with research you'll be recommending a product design and and pricing strategy for this new product and management is like no I don't think so you got to price it higher and I want it in blue instead of red and they changed the product design or they changed the pricing or the positioning uh or the timing and all of a sudden it doesn't work anymore so again it might not be your fault as a marketer might be that your your Executives had a different motivation or a customer or somebody said no no you can't launch in September you got to launch in December and uh it just doesn't work at that timing and the product fails so lots of reasons that this happens and high development cost another one where you know if you develop a product and it costs a lot of money to develop it you have to recoup that money and it may mean you have to price it much higher than you wanted to to get to recoup the money on the development and when you do that uh it could bomb the the launch and so all these things kind of are very important and things that you've got to think about uh going forward competition's another one right so um you launch and somebody counters so you you didn't know that your diet Pepsi you just your Co Pepsi you're going to launch Diet Pepsi and Coke comes out two weeks earlier than you with Diet Coke and they make this big splash and everyone's all excited they all try the Diet Coke and love it and then when you come in two weeks later and um there's no one left for you to to get to to come try your product so there's usually kind of gates when you so now we go back to kind of the you know the company and you're you're working for a company and you've got to um kind of come through the process to get uh a product out launch so there's several stages so the first stage is kind of this idea of idea generation so could be sitting around it could be a formal process where we brainstorm new product ideas it could be an idea that just came to somebody one of the product managers an executive or somebody uh where they were walking around or they saw something they went traveling to Asia and they saw some cool product like we should have that so somewhere you get this this this idea then you have these Gates so gate one would be just thinking is that a good idea or not just really AR is it worth going to the next stage which is scoping so scoping would mean okay let's actually think about this through I know is there a market for it how big is the market um would people buy this what would it look like what would roughly the price be can we even make it all those things that are kind of is this realistic that we should even think about this then you go through gate two and decide yes or no each one of these Gates is like a yes or no test then you go to stage two which is okay now we we kind of figured out this this might work let's actually do a formal business case so you're going to actually build what how much volume can we sell what's the price how much the raw materials cost manufacturing cost marketing cost everything like that demand curves all that kind of stuff but you do a robust curve then you go through that gate again yes no does it pass or not then you go into development if that passes that gate now you actually build a prototype you may test it with um with different people um but you really kind of going into the actual figure out how to make this how to build it um you know what's the manufactur plant's going to look like all that kind of stuff and then when you get done that you're again going okay is this going to like can we actually make this thing then we go into the testing now you're going to test it with consumers you're going to test it with customers you're going to test it with whoever you need to test it with to make sure again you're you're you you you've guessed what they're going to need you can make it you've gone through the whole business case now you've got to see if people actually want to buy it might do test markets which we'll talk about later all sorts of things then you you g it again then you okay well based on the testing results how did it go if it's a if it's still a go then you launch right so we're going to launch the product into the market roll at the advertising campaigns deliver it make it ship it turn on the factory whatever you need to do and then after the launch we're going to do a post-launch review where we're going to say okay is this going the way we thought it was going to go back in the business case and um this is where products could not perform up to the business case it's which coin is like do we pull this thing do we stop it uh what do we want to do so um that's typically the cycle that you go through in every company you could go through it very quickly or you could go through it very slowly I've worked for companies where this could take years uh very complicated products um there I've also worked for startups where we do this in an afternoon so um it really depends on the type of product also the you know if you're at doing an add-on to an existing product you know if you work for say a software company someone has an idea for a little widget or a button or something or a little thing to build into the software you do it you see if people like it you see if it works if it doesn't work you turn it off if it does you you kind of expand it again this is the same kind of uh idea you know where we really work through idea generation concept development business model design which is the math part um developing the offering and then the what we call Commercial development which is uh you know really going to Market and and getting the customers really this this stage gate framework that we just went through in those two scenarios um there's a few reasons we do this right the first one is um we want to develop a desirable offering that our customers so we want to test it we want to validate that that kind of thing the second one is really about feasibility so you know is it practical to make this can we do it for a reasonable cost right can we actually make a package that looks this way can we actually ship the package um what does the costing look like is it realistic and then the viable uh is the viability is the last one where it's like this is like okay is this really a business is there enough people that want to buy this thing um will we actually be able to make any money at it will customers support it um so really these three things uh are what you're looking at at each stage in the gates each gate in the in the process you're really going through these three areas right desirable viable and feasible moving to the next one and and you're really using those as filters uh and again these the process can go more quickly or more slowly depending on the company and the product uh but you're always going through the same thing it's always the same idea do people want it can we make it are we going to be able to make any money at this so one of the things just to kind of go through this a little more detail we'll talk a little more um about some highlights and then you guys can go back in more detail but really in idea generation if you think about what is the spark that um causes you to come up with a new product idea a lot of times it's an unmet need right so you think about for instance traveling is one of the ones you hear a lot about products where somebody goes to a different country and they see something that Sparks an idea about wow we don't do that or we can't do that or you go see um or you're talking to a customer they're like oh I wish it my your product did this so there's some sort of unmet need that Sparks the product development process right and that can either go from top down where an executive goes to see a customer the customer says I wish your product came in brown and they force that down in the organization and we solve that problem or it could be bottom up this could be like we say somebody's gone traveling they see something on a shelf they're like wow that's really cool we should have that so it kind of comes up from the bottom so ideas can start both ways right and sometimes you're not even sure there is a need right so um it's an unmet need that nobody really knew how to deal with right so you know you think about a phone when it was first starting no one really knew they needed a mobile phone right they may have said wow it's great that it'd be nice if this phone came off the wall and I could walk around but you know it was an unmet need in the market that they had to do some work the electric cars are another good example right kind of an unmet need everybody wanted a more environmentally sustainable car uh quieter cleaner all that kind of stuff and they've come up with that idea Dyson's another one if anyone's ever used one of these Dyson products they're phenomenal they're really revolutionary design and they really they approach kind of cleaning solutions really different than a lot of typical manufacturers Airbnb is another good example right no one even knew they needed that until people understood that people need places to live or to stay when they travel we've got all these empty houses and apartments well wouldn't it be great if people that were traveling could use them so that was kind of a you know an unit need in the market that they came up with in different ways we can kind of um validate these ideas we can do we observe customers interview customers interview employees and experts analyed competition crowdsourcing so if we come up with these ideas before we ever move to the nether gate we're going to just like does this make any sense and kind of do a rough vetting and then we get into this concept development we talked about this before but we're going to prototype it so we're going to build one we're going to draw it a working model be a washing machine or a service whatever we're going to test it within the company called Alpha Testing so give it to employees see if they like it and then beta testing where we actually go out and test with uh actual customers um we're g to do all sorts of market research like we talked about we're going to talk about you know competition price points promotion brand name all that see what customers uh react to it um and really what the two key questions we want to do in the concept development is can we build a functional prototype and then can we build a real prototype so this is this viability can we even do this and does it fulfill the identified customer need better than alternative solution so if you think back to the airbnbs is that better than a hotel can we actually figure out a way to to organize imagine when they were thinking about Airbnb be how are we going to get everybody to put all their empty apartments and condos and whatever on into this system and then get all the people to go and look for it it's never existed before we've got to get people that were using hotel booking sites to come over here we've got to get them to trust it we've got to get people that to not think someone's going to wreck their house so all the things that they needed to do to do that so then it becomes like the business model design so if if if it makes sense the concept satisfying the need then we get into okay how do we actually deliver this thing right and this is where we get into the desirability feasibility viability uh of the actual commercialization so is there a business here who will be able to make money at this um and all sorts of things we talk about in that stage and then we've got to really develop the offering so the specifics right the core resources what business facilities do we need to manufacture it or service it Supply chains distribution channels what kind of skills employees need to have do we have enough Capital to actually do this um we've got to make the Prototype Market ready and if you've ever been through a prototyping you know you'll see a a clay version or a rough plastic version and you have to they have to figure out how to make that uh you know at scale so um these are the three important things to take away from this whenever you're thinking about product development think about Gates think about goost from idea to finish product in the market but you're through every step in the process you're going to always think about these three things is it desirable by the customer is it viable for us to make and is it is it kind of feasible uh to make okay so that's the end of um of this week's presentation thank you and the next one will be on pricing and I'll put that video up shortly thank you