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We first need to ask ourselves, what is a product? A product is simply an item or service that brings value to the customer in exchange for a price. You may find it odd that a “service” can be considered a product, but it is. A service can be a utility providing electricity to its customers. It can be an insurance policy that you purchase for your car, or the lawn service that keeps your company’s green spaces looking nice. Services can also be developed and sold similar to “hard” products. While services can be considered a product, marketing services is different from marketing a hard product. Further, think about apps that are developed for your smartphone. Are these a product or a service? Sometimes the line can be blurry.

It is appropriate to consider that products can originate from a variety of sources. Perhaps your R&D group has developed a new smart widget. It is most likely now the engineering department’s mission to determine how to commercialize it and manufacture it in a cost-effective manner.

The marketing group will need to determine the channels necessary to distribute the widget, how to develop a sales and marketing strategy, and determine estimates for pricing, profit, breakeven point, etc. Essentially, there are many moving parts to successfully launching a product. Where do products come from? Figure 1.2 shows some (but not all) of the points whereby ideas for new products are generated.

Figure 1.2 Types of optimization models.