This document outlines the new product development process, which includes market research, concept testing, prototype development, market testing, and product launch. It emphasizes that new product development is critical for long-term business success since about a third of revenue comes from products introduced in the last 5 years. The key steps are identifying market opportunities through research, developing product concepts, testing prototypes with customers, launching the product, and using marketing strategies. Market research helps understand customer needs and competition.

1. New Product Innovation

2. Agenda
 Product Development
 Market Research
 Concept Testing
 Prototype Development
 Market Testing
 Product Launch
 Discussion

3. Why New Products?
 New product development is critical to long-
term success
 Approximately one-third of the revenue a
business generates is coming from products
they did not sell five years ago
 Changing environment creates new demands
and needs

4. Product Development
 Must be alert to quickly develop opportunities
 Focus on markets or product categories
consistent with organization’s objectives,
resources, capabilities and strengths
 Securing a competitive advantage

5. Industrial New Product Ideas
 Company sources other than R&D 36.2%
 Analysis of the competition 27.0%
 Research & Development 24.3%
 Product users 15.8%
 Supplier suggestions 12.5%
 Product user research 10.5%
 Published information 7.9%

6. New Products
 A way of getting new and keeping old
customers
 Effective way of obtaining a competitive
advantage
 Source of growth and excitement

7. New Product Categories
 New to the world products
 New product lines
 Product line extensions
 Improvements and revisions to existing
products
 Repositionings
 Cost reductions

8. Product Development Process
Product
Launch
Test
Marketing
Prototype
Development
Concept
Testing
Market research
and
Opportunity scan

9. Marketing
 Very important to product development success
 Key to successful marketing is imaginative,
effective, creative communication
 Find a need and fill it.
 Mutually beneficial exchange relationships
 Non-profit organizations have sometimes difficult
task

10. Marketing Strategies
 Increase the number of customers
 Increase the average transaction
 Increase the frequency of repurchase

11. Marketing Concepts
 Consumer orientation
 Customer service orientation
 Profit orientation
 Society

12. Marketing Mix
Price Placement
Product Promotion

13. Market Research
 Who is my target audience?
 Are there enough members of this target group to
make the business worthwhile?
 How large is the potential market and how much of
that potential market can I capture?
 Who is my competition and what would make
someone choose my product over their current?

14. Market Opportunity and Threats
Societal Focus Economic Realities
•GNP
•Population Shifts
•Disposable Income
•Values
•Discretionary Income
•Attitudes
•Competition
•Trends
Technological
Development
•Advance in Legal & Regulatory
technology Condition
•Market receptiveness •Laws
to technology •Regulations

15. Market Placement
Identify target markets
 Size and growth potential
 Ability and ease of reaching segment
 Good fit with organizational objectives
 Greatest revenue generation with least investment

16. Market Placement
Determine opportunity
 Segment size
 Annual usage potential
 Anticipated annual growth rate
 Margin
 Value in use
Evaluate competition
 Strengths/Limitations
 Implications

17. Market Research – Pricing Strategies
 Goal is to achieve a target profit
 Can you hold a product’s manufacturing costs
down to less than 25% of its perceived value?
 Estimating manufacturing costs
 Obtain price quotes from several suppliers

18. Concept Testing
Determine
 Critical success factors
 Financial objectives
 Marketing mix strategies
 Product, Pricing, Promotion, Placement
 Marketing plan initiatives
 Activity, Budget, Timing

19. Prototype and Test Marketing
Survey end-users
 Do you prefer this product over your current
product?
 Does this product meet the need you thought it
would?
 Does the way the product works provide an
important benefit?

20. Promotion and Product Launch
 Publicity
 Trade journals
 Conferences
 Personal selling
 Word of mouth

21. Reasons For New Product Failures
 Poor marketing research
 Technical problems
 Insufficient marketing effort
 Bad timing

22. Marketing Plan
Audit
 Challenge and refine assumptions from current
plan
 Evaluate success for input into next year’s plan
 Revise plan for new year incorporating
marketplace learnings, marketing insights and
current plan successes

23. Summary
 New product development drives growth
 Market research is critical to the success of a
new product launch
 Market research is a continuous process as
customer needs, your business and the
environment changes