In theory, product development is determined by offering the right goods at the right time, at the right price, in the right quantities, in the right place. Referring to the process of evolving new products, it is closely associated with market development. It focuses on the future product line, on products that should be added or deleted, on the impact of products on price, promotion, warranty, and service, and on the development of criteria to evaluate product performance. By assessing new or modified products that can be added by acquisition and internal development, product development becomes the lifeblood of a business. Decisions in this area determine the products to be produced and stocked, as well as details concerning their appearance, form, size, package, quantities, the timing of production, price lines, and anticipated market segments. The product selected for analysis is Apple’s iPod. It is one of the most recent and truly innovative products entering the market. The product was launched on 23 October 2001. The development of the product was headed by Jon Rubenstein, Tony Fadell, Michael Dhuey, Jonathan Ive. In seven years, the product line of iPod has increased and included iPod classic, iPod touch, iPod nano (video player) and iPod shuffle. In order to meet diverse customers’ needs and desires, Apple develops iPod mini and iPod photo.
In the case of iPod, product development combines the company’s function of analyzing, classifying, and organizing information into commercially feasible new products and the marketer’s function of assessing unsatisfied wants and needs and identifying profitable market opportunities. iPod was based on an old-fashioned idea of media players. In order to create a new product, a portable media player, Apple compromised among the engineering, production, marketing, and accounting departments. For example, the high specifications stressed by engineering may push costs above market acceptance.
This product shows that effective product development adopts a critical but positive posture. Thus, product development refers to the conversion of ideas into successfully marketed products. It combines technical and marketing competence and is concerned with strategies of the programmed introduction of new products to markets as replacements for decaying ones. Since it carries out an important mission directed at corporate growth and advancement, product development should report to top management. The first generation of iPods came to the market in 2001, the second on 17 July 2002, the third on 28 April 2003, the fourth on June 2005, the fifth on October 2005 and the sixth on September 2007. These dates are important because they show that Apple innovates each year, trying to meet customers’ needs and new demands. The iPod weighs less than two CDs but fits 10,000 songs into a customer’s pocket. The iPod may be little more than a storage device, but it has revolutionized the way people listen to music and has become a cultural icon at the same time. The idea is to establish effective management in brand companies by developing a series of profit centres in which product executives assume responsibility for the total marketing effort for a line. This approach grows out of the inability of one executive to master the intricacies and details of marketing several dozens or hundreds of products. At Apple, product managers are expected to develop product ideas, nurture their brands, compete effectively within and outside the company, prepare budgets, work with marketing-research and advertising agencies, influence salespeople, wholesalers, and retailers, and generate sales, profits, and larger market shares. They must understand and represent markets, customers, and consumers.
For iPod, product diversification is horizontal. Product-diversification programs are related to marketing objectives. The maintenance of profits and sales positions requires changes in product-and-service mixes — sometimes drastic changes. A company’s product line, therefore, is far from stable, even in a five- or ten-year period. The life cycle of products dictates changes, and products in developmental phases must have sufficient market capability to overcome the loss of those in stages of decline. Philips describes: “Apple’s iPod shuffle is a pretty straightforward device, so it stands to reason that the recent shuffle update contained not a single twist or turn. Apple knocked $30 off the price of the 1GB shuffle, which now sells for $49 while rolling out a $69 model that doubles the capacity to 2GB.” This strategy shows that multiproduct firms like Apple must have a mix that is growing in total potential and profits. Although product change is rapid and inevitable, products must solve problems for sellers long enough to justify the risks of research, development, and commercialization. Product obsolescence is an activity that shortens the company’s payback period. The strategy is to make consumers dissatisfied with products before their “functional utility” disappears. For example, an objective of the women’s clothing or automobile industry is the creation of planned product obsolescence.
In sum, the success of the Apple iPod is caused by careful analysis of consumers needs and wants and market analysis. Product obsolescence is often attacked on the grounds that it results in a glaring waste of resources – consumers would be better off if fewer products were produced and were used longer, and the resources saved redirected to other more beneficial activities. This situation is multidimensional, and no simple, definitive answer is possible. Any position taken will depend first on the perspective adopted – micro or macro.