The new product development process encompasses several stages, starting from idea generation to test marketing and product commercialization. It involves internal and external sources for idea generation, screening of ideas, concept development, and testing, followed by strategy analysis, actual product development, and market testing. Test marketing is conducted to evaluate consumer reactions in realistic conditions before the final launch, allowing for adjustments to the product and marketing strategies.

1. NEW PODUCT DEVELOPMENT
PROCESS

2. MEANING
 The process of finding out the possibility of producing a product
keeping in view the customer’s needs, and wants is product
development. It may include addition of a new product line,
elimination of an existing product or a product line and changes in
color, size, design, packing, price and discontinuation of
unprofitable items of product line.

3. PROCESS

5. IDEA GENERATION
 The first stage of the New Product Development is the idea
generation. Ideas come from everywhere, can be of any form, and
can be numerous. This stage involves creating a large pool of ideas
from various sources, which include:-
 Internal sources – many companies give incentives to their
employees to come up with workable ideas.
 SWOT analysis – Company may review its strength, weakness,
opportunities and threats and come up with a good feasible idea.
 Market research – Companies constantly reviews the changing
needs, wants, and trends in the market.
 Customers – Sometimes reviews and feedbacks from the customers
or even their ideas can help companies generate new product ideas.
 Competition – Competitors SWOT analysis can help the company
generate ideas.

6. SCREENING OF IDEAS
 Ideas can be many, but good ideas are few. This
second step of new product development
involves finding those good and feasible ideas
and discarding those which aren’t. Many
factors play a part here, these include –
 Company’s strength,
 Company’s weakness,
 Customer needs,
 Ongoing trends,
 Expected ROI,
 Affordability, etc.

7. CONCEPT DEVELOPMENT AND
TESTING
 A concept is a detailed strategy or blueprint version of the idea.
Basically, when an idea is developed in every aspect so as to make it
presentable, it is called a concept.
 The concept is now brought to the target market. Some selected
customers from the target group are chosen to test the concept.
Information is provided to them to help them visualize the product. It is
followed by questions from both sides. Business tries to know what the
customer feels of the concept. Does the product fulfill customer’s need
or want? Will they buy it when it’s actually launched?

8. BUSINESS STRATEGY ANALYSIS
AND DEVELOPMENT
 Now that the business has a finalized concept, it’s time for it to
analyze and decide the marketing and other business strategies that
will be used. Estimated product profitability is estimated, marketing
mix, and branding strategies are decided for the product.
 Other important analytics includes:-
 Competition of the product
 Costs involved
 Pricing strategies
 Breakeven point, etc.

9. PRODUCT
DEVELOPMENT
Once all the strategies are approved,
the product concept is transformed
into an actual tangible product. This
development stage of New Product
Development results in building up of
a prototype or a limited production
model. All the branding and other
strategies decided previously are
tested and applied in this stage.

10. TEST MARKETING
 Test marketing means to put the
product in the market for test
before it is introduced in the
market commercially.
 Test marketing is a research
technique in which the entire
product and marketing
programme is tried out for the
first time in smaller number of
well chosen and authentic sales
environment……. PHILIP
KOTLER

11. COMMERCIALISATION
 The product is ready, so should be the marketing strategies. The marketing
mix is now put to use. The final decisions are to be made. Markets are
decided for the product to launch in. This stage involves briefing different
departments about the duties and targets. Every minor and major decision
is made before the final introduction stage of the New Product
Development.

12. TEST MARKETING

13. MEANING
 Test marketing is an experiment conducted in a field
laboratory (the test market) comprising of actual stores and
real-life buying situations, without the buyers knowing they
are participating in an evaluation exercise. It simulates the
eventual market-mix to ascertain consumer reaction.
Depending on the quality and quantity of sales data required
for the final decision, test marketing may last from few weeks
to several months. OR
 An experimental procedure that provides an opportunity to
test a new product or new marketing plan under realistic
market conditions.

14. CONT……
 Through test marketing, a
marketer may ascertain the
success ratio of the new
product and the marketing
campaign and can design the
marketing mix ( viz. Product,
price, place, promotion) very
well before its launch.
 The test marketing of the
consumer goods and the
industrial goods vary.

15. TEST MARKETING FOR
CONSUMER GOODS
 Sales-Wave Research: Under this
test, the consumer is offered the
product, again and again, free of
cost. This is done to determine the
willingness of the customers to use
the product every time it is offered.
 Simulated Test Marketing: Under
this test, 30-40 customers are
selected and are invited to the store
where they can buy anything. The
new products are placed with the old
or competitor’s product and then
consumer’s preference is ascertained
through their selection of the
products.
In case, the new product is not
chosen by them, then the free
samples are given to the customers
and are inquired telephonically about
their product experience after some
weeks.

16. CONT….
 Controlled Test
Marketing: Under this test, the
company select certain stores in
different geographic areas and
ask them to keep its new product
into their stores in return for a
fee. The company controls the
shelf position, displays, point of
purchase promotions and pricing.
 Test Markets: Under this, the
firm chooses the representative
cities where the full-fledged
launch of the new product is
done starting from the promotion
campaign to the ultimate sales.
Once it is successful, the firm
goes for the national launch.

17. TEST MARKETING FOR
INDUSTRIAL GOODS
 Alpha Testing: The alpha testing
is done within the firm by test
engineers or employees who
check the marketing mix of a
new product and fix the issues
arising in any steps of launch.
 Beta Testing: The Beta Testing
is done with the customers where
they are asked to use the product
and give their feedback on its
usage. The other way to test the
business goods is to introduce it
to the trade shows and observe
the reaction of customers to it.
Also, these goods can be tested at
distributors and dealers
showrooms the attention of the
customers can be gained.

18. PROCESS OF TEST MARKETING
No. of cities
Selection of
cities
Duration Cost
Collecting
information
launch