Companies must differentiate their products to stand out from competitors. Through new product development, companies can identify market opportunities such as gaps between consumer needs and what existing products provide. Some methods for finding opportunities include perceptual mapping, benefit analysis, and identifying unsolved consumer problems. Once opportunities are identified, companies generate and screen product ideas before testing concepts with consumers and developing products. If concept and market testing are successful, companies will commercialize the new product full scale.

1. No company can win if its
products and offerings resemble
every other product and offering.
Companies must pursue relevant
positioning and differentiation.
As part of the strategic brand
management process, each
company and offering must
represent a distinctive big idea in
the mind of the target market.
Kotler on MarketingKotler on Marketing

2. NEW PRODUCT DEVELOPMENT :
Identifying market opportunities
NPD begins with assessing opportunities in the market.
Several methods can be used to uncover significant
product opportunities.
a. Perceptual Mapping : This method relies on
consumer perceptions of brands currently available
in a product category.

3.  Through an assessment of consumer choice
criteria and the preference for brands currently
marketed, a firm can identify the gaps in the
markets,
 These gaps represent areas of opportunities for
new brands,

4. b. Benefit analysis : One important influence on
consumer behaviour and choice is the pursuit of
benefits provided by purchase and use of a brand,
 A benefit analysis tries to identify the key benefits
sought by consumers and the extent to which
existing brands are providing those benefits.

5.  In cases where current brands are failing to
provide the benefits sought or are only partially
satisfying consumer desires an opportunity exists
for a new brand.

6.  Benefit analysis differs from perceptual mapping
in the sense that a new product development from
benefit analysis is are improvement over existing
brands, whereas one developed from perceptual
mapping tries to assume a unique and different
competitive position to provide different benefit
altogether.

7. c. Problem Solution : In some cases a firm may
discover that no brand currently available
addresses a particular problem experience by
consumers until the development of the new
products which solves the consumers problems.

8. Idea Generation
 After the market opportunity is identified, a firm
then tries to generate ideas for new products that
are consistent with the opportunity identified.
 New Product ideas can come from customers,
R&D, employees, competitors, channel members,
top management, consultants, ad agencies etc.

9. Ideas Screening : After ideas with potential are
identified, there are general criteria that are used to
judge new product possibilities.
a. Does the New Product have a well-defined and
obtainable market segment? Competitive
activities should be carefully considered here.

10. b. Can the firm use existing production facilities to
make the product? The financial burden of new
capital investment may reduce the feasibility of
some new products.
c. Can existing distribution channels be used for the
New Product?

11. d. Is the firm’s sales staff qualified and large
enough to handle a new product? Retaining or
adding to the staff may need to be considered.
e. Does the new product fit the company image?
Products that differ from the company image
may need to be marketed under a different brand
name to ensure a consistent public image.

12. DROP ERROR - Company dismisses an
otherwise good idea.
GO ERROR - Company permits a poor idea to
move into development and
commercialisation

13. Concept Development & Testing
A product idea is a possible product that the
company might offer to the market.
A product concept is an elaborated version of the
idea expressed in meaningful consumer terms.
A product image is the particular picture that
consumers acquire of an actual or potential product.

14. Product concepts are tested with an appropriate
group of target consumers, then getting those
consumers reactions.
 Rapid Prototyping – design products on computer
– then produce plastic models of each.
 Virtual Reality – they use computers and sensory
devices to simulate reality.

15.  Consumer Driven Engineering : is an
engineering effort that attaches high importance
to incorporating customer preferences in the
final design.

16. Marketing Strategy Development :
The marketing strategy plan consists of three parts :
The first part describes
1. The target market size, structure and behaviour,
the planned product positioning, and the sales,
market share, and profit goals in the first few
years.

17. 2. The second part of the marketing strategy
outlines the product’s planned price,
distribution strategy and marketing budget for
the first year.
3. The third part of the marketing strategy plan
describes the long – run sales and profit goals
and marketing – mix strategy over time.

18. Business Analysis
Evaluates the proposal’s business attractiveness by
preparing sales, cost and profit projections to
determine whether it satisfies the company’s
objectives.
a) Estimating total sales
 One time purchased product
 Infrequently purchased product
 Frequently purchased product
b) Estimating Costs & Profits
 Break even analysis
Risk analysis

19. Product Development
The firm develops prototype in an effort to
confirm its feasibility in physical terms.
 It is necessary at this stage to ensure that
production and marketing departments are
working in close harmony.

20.  The marketing responsibility is to communicate
immediately any reaction that would suggest
that the nature of the prototype should be altered,
or that whole project should be seriously called
into question.

21.  At the end of the product development stage, the
firm faces a critical decision whether to go ahead
and market the new product or to “cut its
losses” by abandoning a project which appears to
have an unlikely chance of success.

22.  The ‘go’ decision involves the risk of the
product failure, while on the other hand the
decision to abort requires the firm to write off
large expenditure and perhaps years of time spent
in development.

23. Functional Tests are conducted under laboratory
and field conditions to make sure that the product
performs safely and effectively.
a. Alpha testing
b. Beta testing

24. Consumer Tests can take a variety of forms from
bringing consumers into a laboratory to giving
them samples to use in their homes, free trials, test
drives etc.
a. Sales wave research
b. Simulated test marketing
c. Controlled test marketing

25. Business Goods Testing
- Alpha testing
- Beta testing
Test Marketing – Just as the prototype must
correspond exactly to the final product, so it is vital
that the ‘test market’ chosen for partial launch of the
final product is highly representative of the total
market.

26.  Test marketing objective are :
 To predict the efficacy of the proposed
marketing strategy (refine if needed)
 To predict the effect of strategy in terms of
market penetration.

27.  The usual procedure for test marketing is to
select an easily identifiable sector of the market
which represents the total market in miniature and
then to launch a product in the same way as a total
market launch would be expected to take place, thus
testing the feasibility of the full marketing
programme.

28. Commercialisation : If test marketing has fine
tuned the appropriate marketing strategy, and the
firm has sufficient confidence and knowledge, it
should launch and commercialise the product on a
full scale basis.

29.  While development costs to the stage of a test
market are high, the financial loss of launching a
product ‘full – scale’ which is a subsequent failure
are always considerably higher.
‘When’, ‘Where’, and ‘Whom’