NEW PRODUCTS
MANAGEMENT
Merle Crawford
Anthony Di Benedetto
10th Edition
McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 20
Public Policy Issues
20-2
Public Policy Concerns
Product developers have to be aware of
emerging public policy concerns and consider
their impact on product development and launch.
How do the following affect product decision
making?
Concern about the environment and the results of
climate policy, government mandates on fuel
emission, etc.
Concern about poor diets leading to heart disease,
high cholesterol and diabetes, including among young
people.
20-3
Life Cycle of a Public Concern
Stirring
Trial Support
Political Arena
Regulatory Adjustment
20-4
Product Liability:
Typology of Injury Sources
Inherent Risk in Product
Design Defects
Dangerous Condition
No Safety Device
Inadequate Materials
Defects in Manufacture
Inadequate Instructions or Warnings
Dangers After Use
20-5
Four Legal Bases for Product
Liability
Negligence
Manufacturer let the product be injurious
Warranty
A promise
Express warranty: a statement of fact about a product
Implied warranty: arises when product is made available for a
given use
20-6
Four Legal Bases for Product
Liability (continued)
Strict Liability
Seller is responsible for not putting a defective product on the
market
Defenses: assumption of risk; unforeseeable misuse; not
defective
Misrepresentation
Implied use of product, even if not defective
Other Legislation
Consumer Product Safety Act/Safety Commission
20-7
Which Are the Real Product Warning Labels?
1. On a disposable razor: Do not use this product during an earthquake.
2. On a rock garden: Eating rocks may lead to broken teeth.
3. On a roll of Life Savers: Not for use as a flotation device.
4. On a hair dryer: Do not use while sleeping.
5. On a piano: Harmful or fatal if swallowed.
6. On a cardboard windshield sun shade: Warning: Do not drive with sun shield in place.
7. On shin guards: Shin guards cannot protect any part of the body they do not cover.
8. On syrup of ipecac: Caution: may induce vomiting.
9. On an iron: Do not iron clothes while being worn.
10. On a plastic sled: Not to be eaten or burned.
11. On work gloves: For best results, do not leave at crime scene.
12. On a cell phone: Dont try to dry your phone in a microwave oven.
13. On a carpenters router: This product not intended for use as a dentists drill.
14. On a blender: Not for use as an aquarium.
15. On a stroller: "Always remove child from stroller before folding.
16. On a washing machine: Do not put any person in this washer.
17. On a fireplace log: Caution risk of fire.
18. On a laser printer cartridge: Do not eat toner.
20-8
Which Are the Real Product Warning Labels?
1. NO
2. On a rock garden: Eating rocks may lead to broken teeth.
3. NO
4. On a hair dryer: Do not use while sleeping.
5. NO
6. On a cardboard windshield sun shade: Warning: Do not drive with sun shield in place.
7. On shin guards: Shin guards cannot protect any part of the body they do not cover.
8. NO
9. On an iron: Do not iron clothes while being worn.
10. On a plastic sled: Not to be eaten or burned.
11. NO
12. On a cell phone: Dont try to dry your phone in a microwave oven.
13. On a carpenters router: This product not intended for use as a dentists drill.
14. NO
15. On a stroller: "Always remove child from stroller before folding.
16. On a washing machine: Do not put any person in this washer.
17. On a fireplace log: Caution risk of fire.
18. On a laser printer cartridge: Do not eat toner.
20-9
Preparing For the Product Recall
Prior to the Recall
Designate the recall program coordinator
(spokesperson)
Develop channels for communicating with customers
directly
During the Recall
Assess safety risk and take corrective action
Inform customers as well as intermediaries of the
risks
After the Recall
Strive to restore company reputation
Monitor recall effectiveness
20-10
Public Policy Problems and the
New Products Process
20-11
Other Areas of Public Policy
Debate
Environmental Needs
Product Piracy
Worthy Products
Morality
Monopoly
Personal Ethics (what would you do?)
20-12
Environmental Needs
A new product is said to hurt the environment if:
Its raw materials are scarce or hard to get to.
Its design or manufacture causes pollution or excess power
usage.
Its use causes pollution.
Its disposal cannot be handled by recycling.
Some companies test market their products in Germany and
Scandinavia, because of the strict greenness tests there.
Business objectives should be aligned with environmental initiatives,
otherwise product teams will not feel supported in pursuing projects
with real environmental benefits.
Taking a leadership position in green product development could turn
out to be a sustainable competitive advantage.
20-13
Product Piracy
Threatens brand equity and intellectual property
of firms.
Categories of product piracy:
Counterfeiting: unauthorized production of goods
Brand Piracy: unauthorized use of copyrights or
patented brands (the $20 Rolex)
Near Brand Usage: slightly different brand names
(Tonny Hilfiger clothes)
Intellectual Property Copying: Unauthorized copying
of CDs and DVDs, for example
20-14
Protection Against Product Piracy
Communication
Legal recourse
Government
Direct contact
Labeling
Strong proactive marketing
Piracy as Promotion
Source: Laurence Jacobs, A. Coksun Samli, and Tom Jedlik, The Nightmare of International Product Piracy, Industrial
Marketing Management 30, 2001, pp. 499-509.
20-15
Worthy Products
Coffee manufacturers agreed to produce some
brands containing no beans from El Salvador.
Manufacturers have been asked to produce
special exercise equipment for the
handicapped or modified products for the
elderly.
Orphan drugs supported by the federal
government; otherwise would not be
commercially feasible due to few users.
20-16
Personal Ethics What Would You
Do?
1. You introduce a temporary product and are told not to let distributors or your sales
force know it is only temporary and will soon be replaced.
2. You are marketing a new seminar service to train bank personnel in investment
counseling, but you dont know they will really learn how to counsel.
3. You are working on an item to be sold to virtually every K-12 school. You calculate
gross margin at about 80%. The price could be cut in half and your company
margin would still be 60%.
4. Your database service collects patient records from physicians and offers a new
service of information for pharmaceutical firms, including patients name, age, sex,
and so on, as well as illnesses and treatments.
5. Your companys educational game cards are known to be bought by less
sophisticated parents: there are several far better games on the market.
6. Your brewing company markets a new beer containing legal (sterilized) hemp
seeds, mostly as a gimmick. Nevertheless, your advertising contains obvious drug
imagery.
20-17
What Can the New Product
Manager Do?
Include in Strategy and Policy
Consider public policy implications in PIC
Control Systems
Product Testing
Marketing Prepares Warnings/Labels
Adequate Market Testing (to identify
miscommunications)
Education (to company personnel and customers)
External Affairs
20-18
