New product development (NDP) NDP is a process which designed to develop, test and consider the viability of products which are new to the market in order to ensure the Growth or survival of the organisation.
New Product Importance Company . . . Societal . . . Sales Revenue Create jobs Replace “fading products” Increase standard of living Spread Risk Increase competition Innovate or Die
Categories of New Products Creates New Market with Radically New Product or Product Line. Enters Existing But Not Previously Targeted Market with New-Product or Product Line. Stays in Existing and Previously Targeted Market by Enhancing Existing Product or Product Line.
The New-Product PLANNING 1. IDEAGENERATION PROCESS 2. IDEA 3. Concept 4. BUSINESS SCREENING Development & ANALYSIS Testing 5. PRODUCT DEVELOPMENT 6. TEST 7. COMMERCIALIZATION MARKETING
Step 1. Idea Generation: An ongoing search for product ideas to be consistent with target market needs and the organization’s goals Sources of Product Ideas sources Internal Customers Competitors Distributors SuppliersProduct idea Principle: Set the climate for innovation
Step 2. Idea Screening Process to spot good ideas and drop poor ones. Criteria- Market Size, Product Price, Development Time & Costs, Manufacturing Costs & Rate of Return.
Step 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One
Step 4. Business Analysis Step 5. Product Development Business AnalysisReview of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If No, Eliminate Product Concept If Yes, Move to Product Development
Step 6. Test Marketing Standard Test Market Controlled Test Market Full marketing campaign A few stores that have in a small number of agreed to carry new representative cities. products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers.
Step7.Commercialization Stage Offer the product with commitments of full scale resources and effort Decisions: Timing -When? Seasonal influences?) Geographical strategy -Where? Weather? Target markets Marketing mix strategies (4p’s)
Causes of New Product Failures Overestimation of Market Size. Product Design Problems. Product Incorrectly Positioned, Priced or Advertised. Costs of Product Development. Competitive Actions.