New Product Development

Categories of New
Products
New-to-the-World
New-to-the-World
New
New Product
Product Lines
Lines
Product
Product Line
Line Additions
Additions
Improvements
Improvements or
or Revisions
Revisions
Repositioned
Repositioned Products
Products
Lower-Priced
Lower-Priced Products
Products
2

The New-Product
Development Process
Explains the
steps in
the new-product
development
process

New Product Success

Factors
Long-term
Long-term commitment
commitment
Company-specific
Company-specific approach
approach
Capitalize
Capitalize on
on experience
experience
Establish
Establish an
an environment
environment

Exhibit 11.1
New-Product Development Process

New-Product Strategy is
a plan that links the new-product development
process with the objectives of the marketing
department, the business unit, and the corporation.

Idea Generation
Customers
Employees
Distributors
Vendors
Sources of
New-Product
Ideas

Competitors
R&D
Consultants

Approaches for New Product

Development
The process of getting a group to think

The process of getting a group to think

Brainstormi
Brainstormi of umlimited ways to vary a product or
of umlimited ways to vary a product or
ng
ng
solve
solveaaproblem.
problem.
The
Theobjective
objectiveof
offocus
focusgroup
groupinterviews
interviews
isisto
tostimulate
stimulateinsightful
insightfulcomments
comments
through
throughgroup
groupinteraction.
interaction.

Focus
Focus
Group
Group

Screening is
the first filter in the product development
process, which eliminates ideas that are
inconsistent with the organizations newproduct strategy or are inappropriate for
some other reason.

A Concept Test is
a test to evaluate a new-product idea,
usually before any prototype has been
created. Often successful for line
2
extensions
9 .

Business Analysis
Demand
Consideratio
Consideratio
ns
ns in
in
Business
Business
Analysis
Analysis
Stage
Stage

Cost
Sales
Profitability

10

Development

Creation of prototype

Sketch marketing strategy

Packaging, branding,
labeling

Promotion, price, and

distribution strategy

Manufacturing feasibility

11

Simultaneous Product
Development
A new team-oriented approach to newproduct development where all relevant
functional areas and outside suppliers
participate in the development process.

12

Test Marketing
Test
Test
Marketing
Marketing

13

The limited introduction of a

product and a marketing
program to determine the
reactions of potential customers
in a market situation.

Costs of Test Marketing

Often take 1 year or more
Can cost over $1 million
Exposes new product to
competitors
Competitors can jam
testing programs with
their own promotions

14

Alternatives to
Test Marketing
Single-source research using
supermarket scanner data
Simulated (laboratory) market
testing
Online test marketing

15

Commercialization
Ordering
Ordering Materials
Materials
Production
Production
Inventory
Inventory Buildup
Buildup
Distribution
Distribution Shipments
Shipments
Sales
Sales Force
Force Training
Training
Trade
Trade Announcements
Announcements
Customer
Customer Advertising
Advertising
16

New-Product
Success Factors
Listening to
customers
Strong leadership
Producing the best
product
Vision of future
market
Getting every aspect
right
17

Commitment to newproduct development

Project-based team
approach

Why New Products Fail

No discernible benefits
Poor match between features and customer desires
Overestimation of market size
Incorrect positioning
Price too high or too low
Inadequate distribution
Poor promotion
Inferior product

18

Global Issues in
New-Product Development
Discuss global
issues in newproduct
development

19

Global Marketing
Questions
Develop product for potential
worldwide distribution
Modify for unique market
requirements
Design products to meet
regulations and key market
requirements

20

The Spread of New Products

Explain the
diffusion process
through
which new
products are
adopted

21

Diffusion

Diffusion
Diffusion

22

The process by which the adoption of

an innovation spreads.

Categories
ofof
Adopters
Categories
Adopters
Innovators
Innovators
Early
Early Adopters
Adopters
Early
Early Majority
Majority
Late
Late Majority
Majority
Laggards
Laggards
23

Product Characteristics and

the Rate of Adoption
Complexity
Complexity
Compatibility
Compatibility
Relative
Relative Advantage
Advantage
Observability
Observability
Trialability
Trialability

24

Marketing Implications of the

Adoption Process
Word
Word of
of Mouth
Mouth
Communication
Communication
Aids
Aids the
the
Diffusion
Diffusion Process
Process

Direct
Direct from
from
Marketer
Marketer
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