Developing, Testing and launching

new product.
 Company can add new products by
- Acquisition - New products.
 Company can buy other companies.
 Company can acquire selected patents from others.
 Company can buy license or franchise from others.
 Develop new products in it’s own laboratory.
 Contract with independent researcher or firm.
 New product means.
- Original product.
- Improved product.
- Modified product.
- New brands.
 Six categories of new product
- New to the world product.
- New product lines.
- Additions to existing product lines.
- Improvements in existing product lines.
- Repositioning.
- cost reduction.
 What are the main risks in developing new
product?
 What organizational structure are used in
managing new product development?
 How can stages of new product development
process be better managed?
 After product launch what factors affect the rate
of consumer adoption & new product diffusion?
Factors affecting new product development.

 Shortage of important new product ideas.

 Fragmented market.
 Social & governmental constraints.
 Costliness of new product development process.
 Capital shortage.
 Faster development time.
 Shorter product life cycle.
Effective organizational arrangement.

 Product managers.
 New product managers.
 New product committees.
 New product department.
 New product venture team.
Stages in new product development.

I. Idea generation –
a. Sources of new product ideas –
- Customer needs & wants, lead users.
- Scientists, designers & other employees.
- Competitors.
- Sales representatives & middle-men.
- Top management.
- Other sources like inventors, universities,
advertising agencies, research firms.
b. Idea generation techniques –
- Attribute listing.
- Forced relationship.
- Morphological analysis.
- Need & problem identification.
- Brain storming.
- Syntactic.
II. Idea screening –
To reduce the number of idea to an attractive,
practicable.
 Company should avoid two errors –
- Drop error. - Go error.
 Product idea rating devices.
III. Concept development & testing –

 Product idea – is a possible product that

company might offer to the market.
 Product concept – is an elaborated
version of idea expressed in meaningful
consumer terms.
 Product image – is a particular picture
that consumer acquire of an actual or
potential product.
 Concept development –
 Who is to use this product?
 What primary benefits should be built in the product?
 What is primary occasion for this product?

Concept testing –
 Are the benefits clear to you & believe able?
Communicability & Believe ability.
 Do you see this product as solving a problem or filling a
need for you?
Need level.
 Do other products currently meet this need & satisfy
you?
Gap level – Need gap score.
 Is the price reasonable in relation to the value?
Perceived value.
 Would you definitely, probably, probably not,
definitely not by the product?
Purchasing tension.
 Who would use this product & when & how often will
the product be used?
Usage target, purchase occasion, purchase
frequency.
IV. Marketing strategy development –
 The first part describes the size,
structure & behavior of the target market,
planned product positioning, the sales
market share & profit goals in first few
years.
 The second part outlines the product’s
price, distribution & marketing budget for
the first year.
 The third part describes the long run
sales & profit goals & marketing mix
strategies over time.
V. Business analysis –

 Estimating sales –
 Estimating first time sales.
 Estimating replacement sales.
 Estimating repeat sales.
Estimating cost & profit –
• Break even analysis.
• Risk analysis.
VI. Product development –

 Functional test –
Product performs safely & effectively.

 Consumer testing –
In home product placement test.
VII. Market testing –
 Consumer goods market testing -
Trial, first repeat, adoption, purchase
frequency.
 Sales wave research.
 Simulated test marketing.
 Control test marketing.
 Test markets –
 How many test cities?
 Which cities?
 Length of test.
 What information?
 What action to take?
 Business goods market testing –
 Product testing.
 Market testing.
Product use test.
Trade shows.
Distribution display rooms.
Control test marketing.
VIII. Commercialization –

 When ( timing )?
- First entry.
- Parallel entry.
- Late entry.
 Where ( geographical strategies )?
 To whom ( target market prospects )?
 How ( introductory market strategies )?
 Consumer adoption process.

I. Concept in innovation, diffusion & adoption –

 Innovation – refers to any goods, services or idea
that is perceived by someone as new.
 Diffusion – is a process as spread of new idea
from it’s source of invention or creation to it’s
ultimate adopters.
 Adoption – is the decision of an individual to
become a regular user of a product.

Stages – Awareness – interest – evaluation – trial

– adoption.
II. Individual differences in innovativeness –
 People differ markedly in their readiness
to try new products.
- Innovation – early adopters – early majority –
late majority – laggards.
 Role of personal influence.
III. Influence of personal characteristics on
rate of adoption –
 Characteristics of innovation affects rate
of adoption.
- Relative advantage. - Divisibility.
- Compatibility. - Communicability.
- Complexity.
IV. Influence of organization buyer
characteristics on the rate of adoption –

 Organization vary in their readiness to

adopt an innovation.