8 IRE TRANSACTIONS-ENGINEERING MANAGEMENT January

(3) The opportunity in his junior days to learn by hand- It gives the company:ling small projects or portions of large projects, (1) Flexibility,

(4) The opportunity to become acquainted with and be (2) Speed of action,an important part of the over-all company picture. He, as (3) The ability to establish a standard of quality, ap-a project engineer, is and must be regarded as an important pearance, and desigrn philosophy,member of the management team. (4) A cost situation which is more than competitive,

It gives the customer: (5) The ability to utilize the technical ability it possesses,(1) Ease of contact, (6) The ability to provide incentive and opportunity for(2) Ability to obtaini decisions and information quickly individual progress and growth,

and reliably, (7) The ability to readily diversify its effort.(3) Excellent relations, While these advantages may sound somewhat Utopian,(4) A lower cost resulting from a higher efficiency. they have been attained. It is important to rememberIt gives vendors easy access to technical information that it is the organizational philosophy that is important-

without losinig the security of a central purchasing decision. not the straight lines on a piece of paper.

Market Development The Neglected Companionof Product Developnment*

A. D. EHRENFRIEDt

PRODUCT DEVELOPMENT-A BILLION-1)OLLAi LOTTERY fully developed, mass-produced, arnd finally presented to

ITHIN technical industry, few matters receive the unisuspecting consumer. By actual count, the newasintensive effort as the continual improvement products put on the market by 200 leading companiesof existing products and the developments of showed a tremendously high 80 per cent rate of failure.

new products. Many managers of technical firms are serious Puttitng new products on the market has thus become oneengineers, and one of the most absorbing and challenging of the biggest gambles in the business world.parts of their job is to conceive anid guide the engineering There is no need for this to be so, however. While aof newart d improved products for the future. certain element of risk will never be removed from business

Indicating the magnitude of commercial product operations, it is quite possible to increase the chances ofdevelopment work, abotut 2 1/2 billion dollars were spent success for new products. This requires a new approachin 1952 for enginieering research performed in laboratories to product planning anid sometimes an alteration in theowned and operated by private inidustry. The average organiizational structure of the company. This is a day of"R and D" expenditure for a single engineer was as high tight competition, growing markets, and the need toas $22,000.1 shift from government research to commercial products.But despite the dollar expeniditure anid enginieering A logical method for analyzing and supervising the

skill that goes into the development of new products, marketing of products thus becomes a necessary part ofthe incideice of their failure is shockinigly high. Too nmodern busitness management.many products are developed to satisfy the desires, urges, MARETDEVELoPMENT-A DEFINITIONaind hunches of people withini the company, rather thanto meet the specific nieeds of the market externial to the The excessively high rate of failure of new products iscompany. Products grow, out of the desire to tinker, or not due principally to lack of good engineerin'g, insufficientbecause aln engineer sees a purely technical challenge. investment capital, or lack of sales promotion. Products

Recently studies have been miade to deterinine the fate usually fail because there is insufficient demand for thea.of products that have been brought lovin1gly inlto existenlce, Sin1ce a product wvithout a market is doomned to econsom

failure, it would seem wise to develop the product and i-tsPIresented alt the Western} Electronlic;s Showl and CovIlentionl, associated marclket simultanleously. To support and gude

San Francisco, Calif., August 24-26, 1955.t Technical Marketing Associates, Inc., Conlcord, Mass. the logical processes of product devrelopment there should"Sc:ientific Research anld 1)evelopmenet in American Industry 2

Bur. of LatboSr Statistics, U. S. I)ept. of LXabor, BJull. No. 1148; 2 'Planlning Products for Profit," New Enlgland Council, Bat

16B Ehrenfried: Market Development 9

be market development, an orderly evaluation of market markets are set forth. If the marketing engineers can findrequirements and the enlightened planning of products. no long-range future for the defined product, furtherMarket development comprises an important portion investigation can cease, and effort devoted to more

of the greater and inclusive function of marketing. Mar- promising ideas. If the preliminary marketing evaluationketing is generally defined as all operations which affect is favorable, specific applications for the product arethe transfer of goods from their source to the ultimate defined and the performance specifications required byconsumer. That phase of marketing which pertains to the such applications drawn up. Technical marketing peopleanalysis of markets and resultant planning of new and im- must be sufficiently astute engineers to insure that productproved products is defined here as market development. specifications are realistic and can be achieved with the

It is an interesting point that engineers who expressed present state of the art.gross mistrust of "marketing" per se, have been sympa- In general, the presence of a market development groupthetic toward "market development." Term seems to con- will allow a greater number of potential ideas to bevey spirit of logically developing concept of market, in explored. The odds for finding good ideas will be increased,same fashion as concept of product grows. and only truly superior projects can be expected to pass

this analytical screening. After a favorable evaluation ofTHE INTERWORKING OF PRODUCT DEVELOPMENT market needs, the product is ready for research and

AND MARKET DEVELOPMENT development, following the flow chart of Fig. 1. Here is

Risk of marketing new products can be greatly lessened the expensive phase of new product cost, and it is manda-by coordinating product development and market devel- tory that a thorough study of product possibilities precedeopment as shown in Fig. 1. Both aspects of program re- this engineering investment.quireahighlevel of engineering imagination and experience. The task of research and development is to produce a

specific product to meet defined market needs. If certainrequirements prove to be unrealistic, the product develop-

I FUL;-SCALE I ment group should check with marketing engineers tosee what share of the potential market will be lost by

LARGE-SCALE modification of the defined product. Prototype models are

IENGINEERING AND DESIGN 1 INTRODUCTORY PROMOTION finally produced, and then tturned over to themarketI PROVEMENT ILOT development group for product testing.

PRODUCTION The first contact of the infant product with the outside

|RESEARCH AND DEVELOPMENT+ -l PRODUCT TESTING market is in the product-testing phase. At this stage, theprototype equipment is submitted to carefully selected

EVALUATION OF MARKETNEEDS users for their test and detailed evaluation. This importantEVALUATION OF I oTECHNICAL POSSIBILITIES step is often omitted. The most common reason given is

OUTSIDE CONCEPTION OF NEWPRODUCTthat "secrecy" about the new product will be broken.

IDEAS CONCEPTION OF NEPROD

OUCT This is

afalse fear in the realm of industrial merchandising,

where new products are designed for long-term usefulness,PRODUCT DEVELOPMENT NAREET DEVELOPMENT not for short-term novelty. If a product stands a good

Fig. 1-Interworking of product development and market develop- chance of solving a difficult problem, most companiesment functions. will be happy to test the prototype system or component.

After product testing, prototypes are returned to productConception of the new product or the product improve- development for engineering and design improvement.

ment may originate within either the product development Full reports of tests should accompany the prototypes andor the market development group, or may come from guide the design of preproduction models. Human engi-sources outside of the company. Such product ideas are neerig and appearance aspects of design can now bconsidered jointly by product development and market given careful consideration based upoIl the reporteddevelopment groups and, after being deemed worthy of methods and conditions of equipment use.thorough evaluation, proceed up the ladder shown here. Following a pilot production run, introductory pro-

In launching a product study, it is advisable first for motion of the new product is next undertaken by theIn aunhin arodct tud, i isadvsabe frstformarket development group. It is interesting to note thatengineers in product development to evaluate the technical the dgloductgrot introduced to regularPossibilities of the proposed innovation. Here the basic ae fledglig product iS not introduced through regularscienee of the idea is explored, and the potentialities and daeveslohment people heandgof initial sales by marketlimitations are clearly defined. sented by the manager of marketing research group.With the rough technical outline of the product drawn,

the market development group can next evaluate themarke needforuch aprodut. Posibleappliatio St"Marestin8gn, BusiOnless aNnd Co0mmereial Research in Industr"market needs for such a product. Possible applications Studies in Business Policy, No. 72, National Industrial Board, Inc.,Are proposed, and the size and characteristics of potential New York; 1955.

10 IRE TRANSACTIONS-ENGINEERING MANAGEMENT JanIt may seem strange for a marketing research department to electrical machinery and professional and scientific instru-

be charged with responsibility for launching the sale of new mentproducts, particularly when the marketing research analysts s invest a large share of their sales dollar (nearlyactually work in the capacity of salesmen. The reasons for this 7 per cent) in commercial research and development work.arrangement are simple. The company's products are very often But how much is spent by industrial firms to verifyextremely technical. Salesmen may not be nearly so familiar d gide inwith the characteristics and uses of some new products as the an dustrial research programs? The shockingmarketing research department, which perhaps has worked very fact is shown in Fig. 3. The 7 per cent of sales volumeclosely with the technical laboratories during their development. devoted to product development is supported by onlyThe company feels, therefore, that the marketing research de- 0.09 per cent for market development!" With almost 1o0partment should use its knowledge to aid in the difficult job ofintroducing such new products. The procedure, furthermore, times as much spent for product development as marketkeeps the marketing department keenly aware of its own abili- development, it is apparent that the balanced and coopera.ties to analyze the needs of the market and to direct others in tive plan shown in Fig. I cannot be, and is not being, usedsatisfying them.tiepashwinFg1cantb,adinobig,ud

by American industry. Market development is truely theIf introductory promotion proves that there is a pro- neglected companion of product development and the

fitable market for the product, then large-scale production high rate of failure of new products is felt to be a directcan commence and the usual sales effort undertaken. It result.is important to note that the costly steps of stockingcomponent parts, making up tools and dies, and the in-auguration of expensive sales promotion are not under-taken until the product has clearly proven its worth. Theprocedure outlined in Fig. 1 is a methodical one, clearlydesigned to take unnecessary risk out of product manage-ment.

EXPENDITURES FOR PRODuCT DEVELOPMENT AND PRODUCT MARKETMARKET DEVELOPMENT DEVELOPMENT DEVELOPMENT

(.7% of sales (.09% of sales volume)The related roles of product development and market volume)development, as have just been set forth, are seldomfollowed. Most technical firms sadly neglect the entiremarket development phase of new product planning.Ideas go directly from a technical evaluation into research Iand development, and then immediately into sales. Thisfact is remarkably apparent from the reported expendi- Fig. 3-Relative expenditures for product development and markettures of industrial firms on product development and development of electrical equipment and instrumentation.market development activities.

MARKET DEVELOPMENT AND ENGINEERING MANAGEMENT15 The entire field of marketing, of which market develop-

AVERAGE ment is a part, is a young field, yet unexplored and far fromPERCENTAGE fully exploited. The use of scientific marketing methods inSPONSORSHIP

/-> the field of consumer buying has far exceeded such use byo I0 _ f/_- industrial management. In a way, this is paradoxical.

V- S3.2S f GOVT. Scientific sales planning is being used in a field where XoAn//*.S buying motivations are often whim, fancy, and impuls.

The notable success of consumer marketing efforts km5 - - - depended on the size of the consumer "universe," and the

wondrous beauties of large statistical samples.Industrial purchases, on the other hand, stem from

specific and definable needs. The process of industrialELECTRICAL PROFESSIONAL AIRCRAFT MACHINERY CREMICALI selling is, in a sense, one of problem solving. The problmMACHINERY ANO SCIENTIFIC Cn,,,e welEMIadChsLeeINOSTRUENTIFSC Inon.eleci) is well known and undoubtedly has been carefully analyI^.htohoI.g,.p,c, The roots of the problem usually go several monthsl

Fig. 2-Per cent of sales dollar spent on industrial research and years into the past, thus making the technical problem adevelopment (includes both company-sponsored and government- highly predictable one. Furthermore, the problem isponsored projects).normally one that is shared throughout the indu*Lallowing methods of extrapolation to be used to extNIn Fig. 2, the per cent of the sales dollar spent on product sales.

industrial research and development is indicated forseveral fields.' With the exception of the aircraft industry, 4Crisp, R. D "Company Practices in Marketing Reseaiwhich is largely government-supported, producers of American Management Association, New York; 1953.

1966 Ehrenfried: Market Development 11

There are these two strong reasons why engineering ductory promotion of new products can be handledmanagement can make successful use of market develop- effectively as part of marketing operations. After thement: product has become established it can then be made the

. The predictable andanalyticnatureofindustrialresponsibility of sales, advertising, and publicity managers.t

eThe This transition can be made smoothly because the managermarkets, of marketing operations will undoubtedly have many

2. The familiarity of the engineer wilth the mathematicalocaintoseth coerinofals dvtsntechniques needed to analyze and understand the . . dt

potential market. and publicity groups during the introductory program.MARKET DEVELOPMENT FOR EXISTING PRODUCTS

There are also reasons why enigineering management hasnot subscribed to market developmnent. One is that Product devaelopment and market development areengineers tend to feel that a successfully engineered most often associated with the creation of new productsproduct will automatically be a successful commercial and new markets. The improvemenit of existing productsproduct. Another feeling is that anyone who has not lived and the extension of seemingly stabilized markets are alsothrough the growth and development of the product cannot important funietionis which cani be performed by thepossibly contribute to the application and marketing of marketing team.the product. Such product design engineers, who insist Competitive equipment can be ai-ialyzed and pereetntagethat they must direct the marketing of their products, share of the market can be calculated. The effectivenesshave been likened humorously to the highly skillful of sales and advertising operations can be studied, andmanufacturer of footballs who demands that he sit on optimum channels of distribution, advertising media,the bench and direct the Notre Dame team in the hanidling pricing structure, etc. can be recommended. New areas ofof his product.5 the market can be explored through modern survey

techniques.In short, as products are evolved and improved by

continuous product development, so are markets extendedPRSIENT and strengthened by an unending market development

program. As the needs of consumers shift, the market--~--------- -- developmenit group is able to predict product obsolescenice,

_warn against promotional waste in a shrinking market,VICE-PRESIDENT. VICE-PRESIDENT. VICE-PRESIDENT, and advise oni the new products that are cerain to result

MARKETING ENGINEERING PRODUCTIONfrom market evolution.

r-~~----- TYPICAL MIIETHODS OF ARKET DEVELOPMENT

I | d ! |To achieve a wide range of marketing objectives, certainMARKETING SALES ADVERTISING PARLICITYfo m ltcnq e arMARKETING MANAGER MANAGER MANAGER formal research techiiques are being developed, tested,OPERATIONS L and proven. In this section, typical methods are shown to

> -> illustrate the basically quanititative approach that isINTRODUCTORY IMPROVED MARKETING PROMOTIONOF being used. Some projects are of atn Operations Research

DRMTOF PREGENT PRODUCTS ESTARLISNESOF NEW PRonucs5OFDPRESENTCPROOUCT5 PRODUCTLINE nature, and their methods should appeal particularlyto

Fig. 4-A logical organization of marketing functions within corn- engineering management.pany management. Industry Classification

In order to be effective, marketing functions must beThe formal analysis of mnarkets is possible oinly if

consumers (inidividuals or firms) canl be classified accordingplaced properly in the business organization. Fig. 4 shows to the types of products which they produce. With such aone logical form which the small to medium-sized engi- classificationi system1 manufacturers can be identifiedneering business operation can take. Directly beneath the numerically. Those firms that produce similar productspresident are the usual functions of engineering and pro- and share the same market needs anid characteristics canduction. The head of marketing should be on an equal thus be grouped together.level with engineering and production, and should be able One such organizational framework is the Standardto carry his recommendations directly to top management. Industrial Classification system, comnly abbreviatedTisis esential if marketing judgment is to be objective, SIC. Typical portions of this i odustry breakdown areand marketing recommendations unfettbered. shown in Fig. 5. The Major Group 36 is shown subdivided

Included in the broad category of marketing are sales, into 3-digit Groups, and then further subdivided intotadvertising, publicity, and such marketing operations as 4-digit Industries. As technlical markets become moremarket development. As indicated in Fig. 4, the intro-

6Standard Industrial Classification Mfanuals, Vo1s. I and LI,'P. Hilton, "Why nine out of ten new products fail," Sales Mlanl- U. S. Government Printinlg Office, Washington, D. C.; 1945 and

V'QflZnt, vol. 61, pp. 37-39; Novrember, 1948. 1949.

12 IRE IRANSACTIONS-ENGINEERING MANAGEMENT January

Maior Group 36 - ELECTRICAL MACHINERY, Group No. Industry No.EQUIPMENT, AND SUPPLIES _____--_--__

Group No. Industry No. 366 COMMUNICATION EqUIPMENT ANDRELATED PRODUCTS

361 ELECTRICAL GENERATING, TRANS- 3661 Radios, radio and television equip.MISSION, DISTRIBUTION AND INDUS- ment (except radio tubes), radarTRIAL APPARATUS and related detection apparatus,

and phonographs3611 Wiring devices and supplies 3662 Radio tubes

3612 Carbon and graphite products for 3663 Phonograph recordsuse in the electrical industry

3664 Telephone and telegraph equipment3613 Instruments for indicating, measur-

ing, and recording electrical quan- 3669 Communication equipment, not else-tities and characteristics where classified

3614 Motors, generators, and motor-generator sets Major Group 38 - PROFESSIONAL, SCIENTIFIC, AN')

CONTROLLING INSTRUMENTS; PHOTOGRAPHIC3615 Power and distribution transformers AND OPTICAL GOODS; WATCHES AND CLOCKS

3616 Switchgear, switchboard apparatus, Group No.and industrial controls 381 LABORATORY, SCIENTIFIC, AND

ENGINEERING INSTRUMENTS (EX-362 ELECTRICAL APPLIANCES CEPT SURGICAL, MEDICAL, AND

DENTAL)363 INSULATED WIRE AND CABLE

382 MECHANICAL MEASURING AND CON-364 ELECTRICAL EQUIPMENT FOR MO- TROLLING INSTRUMENTS

TOR VEHICLES, AIRCRAFT, ANDRAILWAY LOCOMOTIVES AND CARS 383 OPTICALINSTRUMENTSAND LENSES

365 ELECTRIC LAMPS 386 PHOTOGRAPHIC EQUIPMENT ANDSUPPLIES

Fig. 5-Examples of the standard industrial classification (SIC) system.

complex and more highly specialized, the SIC categories One formal method for such a market study is shown incan be further subdivided. Some segments of industry Fig. 6. Here a mail questionnaire is circulated to a broadhave already been broken down into 7-digit SIC sub- market sample which includes all industries that coulddivisions. possibly have use for the particular product. Such ques-

It is remarkable how helpful such a numerical break- tionnaires, properly prepared and circulated, have broughtdown of industry can be in the quantitative analysis of as high as a 90 per cent return. The questionnaire canmarkets. A recent paper on this subject7 describes the gather information on the types and ages of equipment ause of SIC classifications for basic market analysis, companiy now has, the purchases which a company con-determination of sales potentials, location of sales terri- templates in the future, and the name of the individualtories, acquiring sales prospects, defining the sales and within the company who will make the buying decisions.advertising message, measuring sales effectiveness, and By analysis of gathered information, sales forecasts aredetermining desired product specifications. made anid sales prospects are listed by name according to

sales territories. The methods of representation, andDetermining Market Needs location and size of sales offices are theni examined to se

A market development operation which should be if these are consistent with the indicated demand. Theperformed periodically is that of taking a fresh industry- specifie companies who are planninig to buy are thenwide look at the market needs for products. In such a approached and sold. Those companies haviing lukewamstudy, it is important that the outlook not be limited by interest can be followed up more economically by directpast patterns of sales. The markets for products shift mail or telephone calls.continually. The distribution program that canl recognizenew product uses and shift quickly to meet these changing Sates Projectionneeds can steadily extend its marketinlg horizonls, A technique well known to the engineer is extrapolation,

wherein the characteristics of a segment of a uniiverse sIC

7N. R. Kidder anId F. E. Hummel, "HIow to find, classify, contact well known and, by assuming homogeneity, these charao"your true market potenltial," Sales Magnagelment, JUlY, 1955. teristics canl be attributed and extended to the entiF

1956 Ehrenfried: Market Development 13

PAOJECTIO &SAW11/Ii'"WNOMAITIN PROF/It F MQOt/1 UN7TIVFRS

S'AMAIFMARWTMARKEr

ej @jj e j<j SURVEYS 'ihhi4

EEEU-8--'.DI(E * OF PAST JSErrIA,~ SALES CLSALES

"%,SZt -iE----------v-\\--------SALEP0(10WU INQUIRIES D1C IDU$TFCAm RESWLTATIV FPIOSMWI5S W7 *'PS1

'R4 7 ~ ew-'{ ATAL htM AO*Sl SI8w 4w FtA&vT AND_ALVIERTISING CMA#ACTIIISTIC Af PA4I7f

Fig. 6-Method for taking a fresh industry-wide look at market Aneeds. Fig. 7-Sales projeetion from known sample market to entire

industrial universe.universe. In any statistical sampling operation, extra-polation is essential and can be used for such purposes as plants reached by each important magazine in the field,sales projection in the manner shown in Fig. 7. plotted again against SIC industrial classification. BothThe sample information may be obtained from any product and media profiles cani be plotted for individualS

number of sources. If it is desired to project the present rather than plants, if desired.pattern of sales, the sample can be found in company A form of magazine effectiveness study must be madesales records. The sample may also be made up of inquiries to determine how influential the different magazines arereceived from publicity and advertising. The selected on buyinig decision. A price tag must also be associatedsample must be analyzed to determine its particular with each magazine, defining the dollar cost to reach eachattributes. The SIC system of classification is ofteln interested plant or interested individual.helpful when demand must be broken down into industrialproduct categories.

After the sample has been analyzed to determine what I PRODWCT MrD/A m AMrC/I/NMfO1/oZi C/C/taAT/ON P201/ 15 P21/I ,fS,.characteristics cause it to have need for the product, all AC RAIN/A/1CIZ/NJACOS,of the firms sharing these characteristics are considered \ANDpotential purchasers of the product and are approached C \through an intensive sales campaign. Again such marketing ORM.ACHINis efficient because it is carefully and methodically focused, EiiTi _and a minimum time is wasted on people who do not share u 7 ijj_the specific characteristics of product purchasers. of i l5iA/SCAQDAdvertising Media Selection I OPTIMUM AOVEQTSIG

L_l lI H\+u6Zk SCHEOULE FOR PRODUCl'X"Analytical marketing methods have been evolved to sIC WDUSSIAL +\ MAEGAtNES

answer such elusive questions as the selection of advertising Slmedia. This is basically an Operations Research type ofproblem wherein a sales message must be conveyed to a Fig. -Analytical methSod of advertising media selection based onmaximum number of interested persons at a minimum cost.Such a proven method of media selection8 is shown in

Fig. 8. It is first necessary to develop a "profile" for At this point, the analysis of Fig. 8 is straight-forwardProduct X, indicating the number of plants needing this mathematics. It is a problem in determining what profile,product versus the SIC industrial classification of these or combination of profiles, gives maximum coverage (orplants. Next, circulation profiles are made of the number of correlation) of the profile market, allowing for assigned

weighting factors of cost and effectiveness. Such a com-'N. R. Kidder, "The cost effectiveness approach in industrial putation can be performed on hand-operated calculators,

Fpace buying," Jour. Marketing, American Marketing Association, but is particularly well suited to high-speed digitalhicl4go, Illinois, pp. 338-345; April, 1955; also Industrial Marketing,

Vol.40 pp 50-51- May, 1955. computing technuques. Plans are now under way for."A Heprt on Technical Marketing," Technical Marketinig Asso- programming this problem of media selection on high-ilates, Inc., Concord, Mass.; August, 1955.W. P. Champlain, Jr., "How Manufacturers of Electronic Equip- speed computing machines. The circulation profiles for

mflent Determine Potential Markets for New Products," B.Sc. thesis, the media in a number of industrial fields will be stored inShool of Industrial Management, M.I.T., Cambridge, Mass.;

the equipment memory. It will only remain to developW. B. Martz, "A Survey of Reasons Behind the Introduction of profiles for specific products; the machine can then pre-

New Industrial Products," M.S. thesis, School of Industrial Man-siyenment, M.I.T., Cambridge, Mass.; May, 1954. scribe an optimun advertisiag schedule.

14 IRE TRANSACTIONS-ENGINEERING MANAGEMEN7T JanuarpA SUCCESSFUL EXAMPLE companies who were ready to buy and the names of the

specific individuals who would make the buying decisionsThe results of a particular market development project Active sales leads were followed up by personal sales cialls;are shown in Fig. 9. The situation was unique in that it lukewarm leads .reeived phc soradire cailln

invovedtwoindstral rodcts A nd ,ta rlukewarm leads received phone calls or direct mailingsinvolved two industrial products, A and B, that are The advertising message and selection of media wasproduced by the same manufacturer and handled through revised to match the newly defined markets and theiridentical sales channels. The previous sales histories of particular buying motivations.

two products were also known and, when analyzed in In twelve months, Product A's share of industry salesterms of their share of industry sales, proved to be re- was raised from about 15 per cent to 20 per cent, an increasemarkably alike. of 34 per cent over its previous position. As might beexpected, it was determined that a large portion of saleswere to industries and companies that were not previougly_____ _ _ _ _ _ _ _ _ _ _ promoted actively. Furthermore, sales costs were foundto be lower since buying interest was clearly located, and

D._ _ _ _ - _ _ _ _ _ D,,d.,t waste sales calls were greatly reduced. As Fig. 9 shows, the2_% sales position of Product B continued to fade.'RARE OF CNLsoIRNDUTRY ,___ CONCL-SION

SALES 1 _ > _ + _ _ 4 _ +t z __ The conclusions of this paper are simple.LMARKETING Po-d,et "AOh p out

10 WORK ON PROOUCT "A-' 1. The development of products cannot be divor dlll__ iIBEGAN HERE _ from the development of markets to go with the products.,% _ _ l l l l _2. Too much engineering time and money is wasted

every year on products designed without adequate under-eL l _ _ l llstandingof market needs.IeC,019,1192 , 53 -19BO 3. The losses from neglect of market development can

Fig. 9-Effect of technical marketing research and modern marketing far exceed the costs of market development.practices. Sales of Product A boosted 34 per cent. Sales of com- 4. By subjecting industrial markets to the same orderlypanion Product B, handled by traditional sales methods, continuedto fall off. Products A and B are similar industrial capital goods, methods of analysis used in product development, en-produced by the same manufacturer and handled through identical neering management can greatly improve the chances Ofsales channels.success of new products.

5. Market development deserves a much greater ex-In early 1953, a comprehensive market development penditure than it now receives. An engineering firm, intentprogram was undertaken on Product A. Product B con- upon a strong and growing commercial sales future, cantinued to be handled by traditional sales methods. An justify spending one-tenth of its research and developmentindustry-wide survey was made of the market needs for allocation on market development.Product A. An analysis of survey returns was made and 6. The field of market development is new and largelynew markets were located. unexplored. Yet the yield from efforts in this field, theThe sales organization was revised to match the potential competitive advantage that stands to be gained, basmarket. Salesmen were provided with extensive lists of already proved to be high.