New Product

Development

Session 13
SUBHADIP ROY
Who should ultimately design the product?
The customer, of course.
- Kotler
 Six categories of new products
1. New-to-the-world products
2. New product lines
3. Additions to existing product lines
4. Improvements and revisions of
existing products
6. Repositioning
7. Cost reductions
Major Stages in New-Product
Development
Idea Generation

Company Employees

Customers

Competitors

Distributors

Suppliers
 Idea Screening

• Spot good ideas and drop poor ones.

• Develop system to estimate: market size,
product price, development time and
costs, manufacturing costs, and rate of
return.
• Evaluate these findings against set of
company criteria for new products.
• DROP Error and GO Error
 Concept Development
and Testing

• Product Idea: idea for a possible

product that the company can see
itself offering.
• Product Concept: detailed version of
the idea stated in meaningful
consumer terms.
• Product Image: the way consumers
perceive an actual or potential
product.
 Marketing Strategy
Development
Part One Describes:
The Target Market
Planned Product Positioning
Sales, Market Share, & Profit Goals

Part Two Outlines the First-Year’s:

Product’s Planned Price
Distribution
Marketing Budget

Part Three Describes Long-Run:

Sales & Profit Goals
Marketing Mix Strategy
 Business Analysis

• Involves a review of the sales, costs, and

profit projections to assess fit with company
objectives.

• If yes, move to the product development

phase.
 Product Development

• Develop concept into physical product

• Calls for large jump in investment
• Prototypes are made
• Prototype must have correct physical
features and convey psychological
characteristics
 Test Marketing

• Market Testing
– Consumer-Goods Market Testing
• Seeks to estimate four variables
– Trial
– First repeat
– Adoption
– Purchase frequency
• Sales wave research
• Simulated Test Marketing
 Test Marketing

• Controlled Test Marketing

• Test Markets
– How many test cities?
– Which cities?
– Length of test?
– What information?
– What action to take?
– Business-Goods Market Testing
Test Marketing
 Commercialization

– When (Timing)
1. First entry
2. Parallel entry
3. Late entry
– Where (Geographic Strategy)
– To Whom (Target-Market Prospects)
– How (Introductory Market Strategy)
• Critical path scheduling (CPS)
 Challenges in New-Product
Development
• Why do new products fail?
– A high-level executive pushes a favorite idea
through in spite of negative research findings.
– The idea is good, but the market size is
overestimated.
– The product is not well designed.
– The product is incorrectly positioned in the
market, not advertised effectively, or overpriced.
– The product fails to gain sufficient distribution
coverage or support.
– Development costs are higher than expected.
– Competitors fight back harder than expected.
Thank You, Class