New Product Development Process

Reasons for New Product Development:
There are several reasons for developing and introducing new product in market.  As consumer needs and wants change, so the company should develop new product for satisfying the customers’ need which would help them to create value for customers.   After the product reaches the maturity stage of product life-cycle (PLC), there comes a stage of declining, after which the company needs to develop new product. There may be a need to develop new product when there are several changes in the environment. Like now a days, CD’s are not being used by the music listeners instead they use internet for downloading the whole album, so now companies upload music albums on internet instead of selling CD’s.  New product is needed when there is a competition in any product category. Like in bakery products, Peek Freans Sooper was first launched, and then LU biscuits launched the same product in competition called LU Bakeri.  New product is needed when there is a change in technology. For example, previously keypad phones were famous but now every company has launched touch system phone because technology has changed.

New Product Development Process:
New product development process includes the complete process of bringing the new product in market. To create new products, the company must understand the customers’ needs or competitors’ products and then develop the new product to satisfy their customers with greater value. The steps include in the new product development process are following:    Idea generation Idea screening Concept development and testing
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product ideas. the idea generation stage. marketing managers or else used to analyze or consider all the ideas which were generated in the first stage. The company can buy competitor’s product in order to observe what kind of material or technology they used and then create ideas for new product which would be better than the competitor’s product. Like some ideas are suitable for the companies and some ideas are good for market. In this process the top management like general manager. A company creates many ideas in which some are wrong and some are right. here the task of 2 . Some companies have started ‘ entrepreneurial’ programs that support the employees to give new product ideas. The company can also get new ideas by customers through online blogs or feedbacks.     Marketing strategy development Business analysis Product development Test marketing Commercialization Idea Generation: Idea generation is the systematic search for new. The management uses to drop the poor ideas and identify the good ideas. Major sources of new product ideas include internal and external sources. Competitors are also the source of creating new ideas. Now the companies should encourage their employees for creating value for the customers by giving new ideas.  Internal Sources: The company creates new ideas by formal research and development.  External Sources: The company can also get benefits in generating new ideas through external sources. they can also tell company what to use to develop their product. Like suppliers and distributors can give new ideas to the company because they are closer to the customer and knows what customers need. Idea Screening: Idea screening is the second stage of product development process.

Can we win? Means does the product offers a sustainable competitive advantage? Does the company have the potential or have the resources to make the product successful? Finally. the proposed customer value proposition (benefit company promises to deliver) target market and competitions. Concept Development and Testing: The idea that management consider as an attractive one must be further development into the product concept. R-W-W Screening Frame Work: The R-W-W screening frame work asks three basic but very important questions. Product image: Is about how the consumer perceives an actual product will be. There are 3 most important things to consider in concept development are: 1. It markets some rough estimates of market size product price. First. This write up or format of new product idea must describes the product or service. 3. 2. and development cost and time. is it real? Means is there a real need or desire for the product and will customer buy it? Is there a clear product concept or will product satisfy the market? Second question is. Product idea: Is an idea for a possible product a company can think itself offering to market. is it worth doing? Means does the product set the company’s growth strategy? Does it offer sufficient profit potential? All companies should be able to answer yes to all the three questions of RW-W at this stage before going to the next stage of product development process.management is to consider those ideas which are good for the companies and also good for the market or consumers. Many companies requires from their executives to write up new product ideas in standard format that can be reviewed by new product committee. Product concept: It is conversion of idea into a detailed version that it must be stated in a meaningful consumer terms. 3 .

the car will automatically switch to petrol from battery means it start consuming petrol. hoteling or visiting friends and family. shopping. While the car is running on petrol its battery will begins to charge.  Concept 4: A car for those who don’t want to burn petrol or gas or who don’t want to go to gas station to fuel their car. If someone wants to run it more than 60km/h.  Concept 3: Environmental friendly car for those people who are environmentally conscious and want to reduce pollution. go to cinema. The concept may be presented symbolically or practically. The product concepts for this car:  Concept 1: An affordably priced midsize car design to use around the town or city for like.  Concept 2: Car of sporty shape which would like by youngster. Concept Testing: Concept testing involves testing new product with some target consumers. singles and couples.Concept development:  New hybrid car concept: An electric car which needs about 11 to 12 hour to charge the battery and can run about 3 to 4 hours continuously at 60Km/h. Firms while testing its concept use to ask few questions to consumers like: Q#1: Do you understand the concept of our hybrid car? Q#2: What are the major benefits of the hybrid car compared with conventional car? Q#3: What improvements in car features would you suggest? Q#4: For what uses or reasons would you prefer a hybrid car? Q#5: What would be reasonable price to charge for the car? Q#6: Who would be involved in your decision to buy such a car? 4 . Mostly firms use to test its new product concept with consumers before making it to actual new product.

Target market 2. Profit goals 1. Target market: The companies do segmentation and choose a target market for their product. Their target market was younger generation. The 1st part describes 1. a hybrid car whose name is ‘Prius’ is introduced in the market. E. Value proposition 3. Sales and market share 4. After the 1st year the company may aim to sell 50. fun to drive and it does not aim to affect the environment.g.000 cars and have a loss of $10 million but not more than that. 3. Customers will create a value about the car that it is affordable. Value proposition: a very important factor in the marketing strategy development is to create a value about the product in customer’s mind. This step is necessary for the development of the product as it analyses every single aspect of the market. the car company decides to sell 25. 5 . middle and upper class people and people who are conscious about environment and seeking type of car that does bot pollute the environment much. At first year the company will surely not earn profit but it has to make an effective strategy to have a loss of a certain amount but not more than that.000 cars and earn a profit of $million. Marketing Strategy Development After testing the new concept the next step is to make an effective marketing strategy to introduce the product in the market. 2. Sales and market share: company aims that how much sales it have to make in order to earn revenue. E. It decides which target market is suitable for our market.g. Basically the marketing strategy includes three parts.The answers of consumers to such questions are very important and will help company to decide which concept is strong.

mostly which people are buying the car and are they satisfied from the car. at what rate it will sell the car to its dealers and offer them off-price? 2. 3. Distribution: The distribution channel should be very effective of the product. How much market share the product will occupy e. 2nd Part describes 1. In order to do this the product quality should improve over the years to retain the market share. Company may offer various offers to the distributors.4. Some budget would also be needed to conduct a marketing research to find out the consumers perceptions about the car. E.g. Advertising and website will be focusing on the features of the car. E.g. Distributors play a very vital role in the sales of the product. a company has a marketing budget of $50 million. It will be divided between the media campaign and local event marketing which will introduce in the market.g. E. Then it set some price according the features of products and accessories with it. Planned long-run sales: Product long run sales are set that how many cars would be selling in the coming years by analyzing the response of people about the product. what will be the price of car. So a company focuses on profit goals and should set some profit goals that they should achieve in the future. 6 . the distributors will get 5% off on every car if he sells more than 10 cars in a month.g. the hybrid car occupies a 3% of the auto market share. Planned price: Company examines the product and cost of producing it. Marketing Budget: Effective marketing is a necessary element of the sales of a product. Profit goals: a product should make profit otherwise it is of no use. Such type of offers motivates the dealers and they try to sell as many cars as possible. 3rd Part describes: 1. To do an effective marketing of a product company should set a budget.

the company chooses usually one of the three test markets. the company launches the product on a large scale.2. 3. These are:   Standard test markets Controlled test markets 7 . and profit projections to find out whether they satisfy the company’s objectives. For test marketing. costs. So the marketing budget would be increased every year. If the new product fails again. Test Marketing Test marketing means to introduce a new product in the small market at a small scale. Budget on marketing research may be decreased every year. the company finds out reason for the failure. But if the product is copy of competitor’s product or the management is confident enough for launching the product. risks are higher or management is not sure about the product that whether it would be successful or not. Product Development Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments. If the product gets successful. In order to have profit the product price may be increased after the 1 st year of launching of the product. develops the product with necessary changes and again tests it. if product fails. the company rejects it. Business Analysis Business analysis involves a review of the sales. Profit Goals: After the product is introduced in the market the company should make profits. The company uses test marketing when introducing the new product costs high. Marketing mix strategy: Marketing of the product will carry on making maximum people aware of the product. the company does no test market.

scanners are placed at the cashier counter. The consumers are selected. 8 . the company monitors the audits of stores to which they have supplied the product or conduct surveys. To check the results. Simulated test markets: In simulated test markets. To check whether the product is being purchased or liked by the customers. These consumers are then again interviewed or contacted by the phone after a week or two to ask them whether they are going to buy that new product again or not. the companies test the new product in simulated shopping environment. Controlled test markets usually costs less than standard test markets and it can be completed much more quickly than the standard test markets. Standard test markets are very costly and they take a long time. The company selects the stores at their desired geographic locations and the research firm then delivers the products to the respective stores. a research firm manages a panel of stores who agreed to carry the new products. interviewed and then observed their buying behaviors. the company selects a small number of representative cities and conducts a full marketing campaign in these cities. due to which the competitors have an opportunity to launch the same product on a low price to attract customers. Controlled test markets: In controlled test markets. the company can keep the new product out of competitors view. Simulated test markets are fast and inexpensive and they can be run quickly to assess the new product and in this way. Simulated test markets Standard test markets: In standard test markets.

the launch is delayed. in single location. If so.Commercialization: The final step in product development process is commercialization. This step involves more money for advertising. sales promotion. Then it decides where to launch it. national market or international market. The company first decides when to launch the product for which they have to observe that if the new product launch will affect the sales of the other products. 9 . where the company launches its final product in the market on a large scale.