Definition New Product Development Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.9-2
New-Product DevelopmentStrategies Strategies for Obtaining New Product Ideas Acquired Original Companies Products Acquired Product Patents Improvements Acquired Product Licenses Modifications New Brands
New Product DevelopmentProcess Marketing Business Strategy Analysis Concept Product Development Development and Testing Idea Test Screening Marketing Idea Commercialization Generation
New Product DevelopmentStrategy New Product Development Process: Stage 1: Idea Generation Internal idea sources: R&D External idea sources: Customers, competitors, distributors, suppliers
New Product Development ProcessStep 2. Idea Screening Many companies have systems for rating and screening ideas which estimate: Process to spot good ideas and drop poor ones as soon as possible. Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return Then, the idea is evaluated against a set of general company criteria.
New Product Development ProcessStep 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
New Product Development ProcessStep 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two Describes Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy
New Product Development ProcessStep 5. Business AnalysisStep 6. Product Development Business Analysis Review 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
New Product Development ProcessStep 7. Test MarketingTest Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings. Budget Levels Product Packaging Positioning Elements that May be Test Marketed by a Branding Company Advertising Pricing Distribution
New Product Development ProcessStep 7. Test Marketing Standard Controlled Test Market 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.
Where is a good test market?I. Factors to consider - Size - Demographics - Isolation from other cities - Media availability and cost - Retailer support 2. Popular cities - Big cities: Mumbai,Banguluru,Delhi,Kolkata - Small cities:Ranchi,Raipur,dehradun,e.t.c.
New Product Development ProcessStep 8. Commercialization Commercialization is the Introduction of the New Product into the Marketplace. To When? Where? Whom? How?
Causes of New Product Failures Overestimation of Market Size Product Design Problems Insignificant difference Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions No access to the market Bad timing To create successful new products, the company must: understand it’s customers, markets and competitors develop products that deliver superior value to customers.
Alternatives to Development: Acquire new Products Develop "me-too" products. Revive old products