NEW PRODUCT DEVELOPMENT

Dr Nelia Eta Marima

nephiri67@gmail.com
0772206313/0719206316
Prerequisite of the module:

Entrepreneurs from the heart

 TOPIC ONE:
INTRODUCTION
“If you always do what you always did,
you will always get what you always
got.”
(A. Einstein).
 Booz Allen & Hamilton puts new
products into 6 classes;

 New to the world – new product, new market

 New product lines – new to the entering the
established market.
 Addition to existing product line – new to the
company to supplement established product line.
 Improvement in revision to existing product
 Cont.

• Improvement in revision to existing product

• New product that replace existing product

• Reposition – existing product targeting new market or

market segmentation.

• Cost reductions – new product that provides similar

performance at lower costs.
 Why come up with a new
product?
•Competition
•Maintain market position
•Consumer needs always change
•Technology
•Rules and regulation
Hindrances to New Product Development
(Discussion)
Why New product development can Fail
(Discussion)
 How do companies handle New
Product Development

1) Product manager/brand manager usually so busy

managing their product line giving little time to
new product and brand modification or extension.
-They also lack specific skills or knowledge needed
to develop unique new product.
2) New product managers (reporting to group
product managers) position new product
development however they tend to think in terms
of product modification and line extension limited
to their product market.
 Cont.

3) New product department mostly in large company – the

manager of the department has authority and access to
top managers.
- Major responsibility includes generating and screening
new ideas working with R&D department and carrying out
field testing and commercialization.
4) New product venture team – is a group brought together
from various operating department and charged with
developing specific product for the business.
---They are entrepreneurs relieved of their duties.
The eight stages of NPD Process

1 Idea generation – is it worth considering ,is the idea

compatible with the company objectives.

2 Screening - strategies and resources

3 Concept development and testing

 Cont.

4 Marketing strategy – can we find a cost effective

affordable marketing strategy.

5 Business analysis- will this business meet our profit

6 Product development – have we developed a

technically commercially sound product.
 Cont.

7 Market Testing- Comments from the Market.

8 Commercialization – are product sales meeting

expectations?
 Topic Two

Intellectual Property
Rights
 Intellectual Property Rights

Branches of IPRs
Copyright
• Artistic works
• Literary works
[computer software and data bases]
Related (neighbouring) rights
• Performers
• Phonogram producers
• Broadcasters
Industrial property
• Patents
• Industrial Designs
• Integrated Circuits & Layout Designs
• Trade Marks /Trade Names
• Trade Secrets
• Geographical indications
• Names, Uniforms and Badges, Flags, Coat of Arms
• Plant varieties protection
• Undisclosed information - such as test data ; sui generis
data bases.
 What is a Patent?
• A grant by the state or an authority acting on behalf of the
state of exclusive rights, for a limited period of time (20
years in ZW), in respect of a new, non-obvious and useful
invention, to an inventor thereof (Patents Act, Chapter
26:03).

• The exclusive rights are granted in exchange of disclosure of

the invention in a registrable patent specification.

• Registrable means new or non-obvious but useful in the

sense and purpose of the identified problem to be solved.
What is an Invention?
 Any new technical solution to a known problem in a
given industry - Article 27.1, TRIPS Agreement.

 The solution can be a process, a method, a device, a

machine, a compound, a composition, or
improvement thereof.
EXAMPLE: ROCKET SHUTTLE
 A rocket, for example has an average of 30 000
registered Patents including computer systems,
vertical take off system,(VTROL), fuel usage system,
earth support system.
Non-Patentable Inventions?
1. Contrary to public order and morality - Article 27.2, TRIPs
Agreement.
2. Diagnostic, therapeutic, and surgical methods for the
treatment of the human or animal body - Article 27.3, TRIPs
Agreement.
3. Plants and animals other than microorganisms and
essentially biological processes-Patents Act
Other subject matter excluded
4. - Discoveries
5. - Scientific theories and mathematical methods
6. - Schemes, rules or methods of doing business, playing
games.
Content of a Patent Specification
• - Front page (bibliographic data)
• - Abstract
- Title
- Section identifying the technical field of the
invention
- Background section
- Summary section
- Detailed description and drawings section
- Claims section
Patent specification sample
 The title should:
 Broadly describes the invention but
 Sufficiently indicates the subject matter of the
invention
 Helps the Patent Office classify the invention & assign
it to the proper group of patent examiners
 Avoids limiting language
 Is, preferably 5-7 words.
Technical field
 - Identifies the technical field to which the invention
relates.
Example:
 This invention relates to a foldable chair.
Background
 discloses to the public, the closest prior art applied against
the patent application during examination.

 In other systems, the background section merely provides

an introduction to the invention.
Summary
- draws from the claims in summarizing the
invention

– takes each independent claim in the patent application and turns it

into a descriptive paragraph

– This approach also guarantees that the precise words used in the
claims will be in the specification

– highlights important aspects of the invention in a manner that draws

from the claims.
Detailed description
• Also called the “disclosed embodiment of the
invention,” it: -

– Breathes life into the claims,

– Provides a sufficient disclosure of the invention that

an artisan of ordinary skill in the relevant field could
make & understand the invention,

– Demonstrates that the inventors were in mental

“possession” of the claimed invention,

– must be closely tied to the drawings.

Claims page
 Begins with a preamble to the invention.
 Defines the matter for which protection is sought
 Claims must be clear and concise &
 Claims should be supported by the invention`s description
 Number of claims should be reasonable
Abstract
• Briefly and accurately describes the invention.

• Abstracts are not typically reviewed for patentability

purposes
Patent Advantages ?
--protects
-- technological advances
- provide incentives to individuals by offering them
recognition for their creativity and material reward for
their marketable inventions.
- Encourage innovation, which assures that the quality of
human life is continuously enhanced.
- Patents disclose new information thus, become an
important source of unique information
 Provide : -
• Strong market position and competitive advantage

• Higher profit or returns on investment

• Additional income from licensing or assigning the

patent
• Access to technology through cross – licensing

• Access to new markets

 Diminished risk of infringement

 A powerful tool to take action against imitators and

free riders
 Positive image for your enterprise
Patent rights Acquisition
• Patent rights are not automatic and therefore need to be

• applied for, firstly, at the Zimbabwe Intellectual Property

Office.

• Then at the ARIPO, OAPI, EPO or EAPO or internationally

through the Patent Cooperation Treaty (PCT).

• The procedure for IP acquisition and maintenance include the: -

1. granting system or

2. registration system
Conclusion
• A patent is an exclusive right granted to an inventor to
prevent others from making, using, selling, offering for sale
or importing goods covered by the patent.

• Patent rights are acquired nationally, regionally or

internationally

• Patent rights are obtained for inventions through a

registration or granting system.
 TOPIC THREE

WE ARE MOVING ON
Searching for new product ideas

- The new product process starts from the

search for ideas. The search should not
be casual.
- Top management should define the
product and market to emphasize the
product strategy
- It should state the new product objectives
whether;
 Cont.

1) It is a high cash flow market share

2) A market share domination
3) Or some other objectives.

It should state how much effort should be devoted to

developing original products, modifying existing
product and coping competitor’s products.
Sources of New Product Ideas

1 Company staff and records

-Company personal and records often supply helpful
suggestions to new product ideas especially those
having to do with product line additions and product
improvement. Records
 Cont.

2 Customer Analysis
- It must be remembered as often as possible that the
customer comes first, that is someone often within
the company develop a product but the problem is
how to find the market customer and channels of
distribution.
 Cont.

- The marketing concept holds that customer’s needs

and wants are the logical place to start the search to
new product ideas.
 Cont

 Hippel has shown that the highest % of ideas for new

individual product originate with customer. Technical
companies can learn a great deal by studying a special
set of their customers lead users mainly those
customers who make the most part advanced use of
the company’s product and recognize needed
improvements ahead of their customers
 Cont.

- Companies can identify company’s needs and wants

through customer surveys, projective test focused
group discussion and suggestion and complaints
letters from customers.  
 Cont.

-Many of the best ideas come from asking customers to

describe their problems with current products.
 Cont.

3 Competitors
• Competitive products are a major source of ideas
• Because many product features can not be protected by
patent their replication (often with improvements) is
pursued aggressively by other firms in the industry.
• Other important sources of ideas are the advertising of
competitors, their direct mail efforts and their technical
literature and catalogue and their exhibits at trade shows.
 Cont.

 Trade fairs – competitors flow most to look for

information
 When in business keep an eye on your competitor
because they are also keeping an eye on you.
 The Japanese are masters of this competitive strategy
imitations and improvements rather than innovators.
 Cont

4 Government Agencies
-Published list of patents that are available for licensing
or sale.
- Research findings published by various state agencies
e.g. scientific, Agriculture research board.
 Cont.

5 Miscellaneous sources e.g. marketing research agencies,

industrial consultancies, patent attorneys, inventors and
universities and institute labs.
• NOTE: top management can be another major source of
new products however this is not always constructive as
an executive pushes through a petty idea without
thoroughly researching on the marketing size or interest
leading to major product failure.
 Cont

NOTE: top management can be another major source

of new products however this is not always
constructive as a new executive pushes through a
petty idea without thoroughly researching marketing
size or interest leading to major product failure.
 Idea generating techniques

Good ideas come out of inspiration, perspiration and

techniques. A number of (creativity) techniques can
help individuals and groups to generate better ideas.
 Cont.

1) Attribute listing
• -This technique call for listing the major
attributes of existing products and then
modifying each attribute in the search for an
improved product.
• -This capitalizes on the concept that any
future change in a product must involve one
or more of its current attribute.
 Cont.

 What is a product attribute?

-These are of three aspects;
1)Features
 Can be many things e.g. dimensions (size), sourcing
ingredients services, structures, esthetic
characteristics, manufacturing performance, trade
marks.
 Cont.

Trade mark
-It is a legal term meaning the same as brand. It
identifies one seller’s product and thus differentiates
it from products of other sellers.
 
 Cont.

2)Functions
- Is how products work e.g. a pen that sprays ink on a
paper?
- There are unlimited in variety but are not used as often
as benefits and features .
 Cont.

3) Benefit
- Can be many things e.g. uses sensory enjoyments,
known material for good well being and economic
gain. They can be direct e.g. having clean teeth from
using a toothpaste (Colgate) or indirect e.g. romance
following from clean teeth.
 Cont.

-Theoretically the three basic types of attributes occur

in sequence. A feature permits a certain function
which in turn leads to a benefit. A shampoo may
contain certain proteins (a feature) that coat the hair
during shampoo or washing (function) which leads to
more shine on the hair. (Benefit)
 Cont.

 2) Checklist
It uses all attributes evolved from dimensional
analysis.Itis one of today’s widely used idea
generating techniques.
-Checklist is based on 8 questions
 can it be adapted?
 Can it be modified?
 Can it be reversed ?
 Cont.

 Can it be combined with anything

 Can it be substituted
 Can it be minified (made smaller)
 Can it be rearranged in some ways
 Can it be magnified
 Cont.

-Checklist produce a multitude of potential new

product concepts however some of them worthless
and are therefore time consuming. -Checklist
technique is frequently used as an aiding problem
solving.
 Cont

Gap Analysis
---It’s a statistical technique which produces maps of the
market which are used to determine how various
products are perceived and how they are positioned
on the market map. Several levels of sophistication of
the technique are available and firms have a choice to
use simple forms or complicated versions. Gap maps
are made in three ways:
 Cont.

 Managers use known data to plot product on a map

to make a determinant gap map.
 A manager uses customer attribute rating (AR) to get
data from users from an AR perceptional.
 Cont.

 A manager uses overall similarities OS to get data

from users for an OS perceptual group map thus
determinant maps use our factors and our scores .
 Cont.

3) Forced relationship
- Here several objects are listed and each product is
considered in relation to every other object.
 Cont.

e.g. an office equipment manufacturer wanted to

design a new desk for executives. Several objects
were listed e.g. a desk, television set, clock, computer
and copying machine etc. The result was a fully
electronic desk with all the other objects fitted inside.
 Cont.

4) Morphological Analysis

 Morphological means structure and this method calls

for identifying the structure dimensions of a problem
and examining the relationships among them.
 Cont.

5) Need problem identification

 Starts with the consumer, consumers are

asked about their needs, problems and ideas e.g. can
be asked about their problem in using their product
or their category
 Cont.

 Marketing research interviews can be conducted for

customer responses about a product on whether that
is satisfied, slightly dissatisfied or completely
dissatisfied the respondents describe their problems
and complaints in their own ways
 Cont.

 The various products could be rated if their

seriousness incidence and cost of remedying to
determine which product improvements to make The
above technique can be used in reverse whereby
consumers receive a list of problems and tell which
products come to mind as having each problem.
 Cont.

6) Brain storming
 Technique developed by Alex Osborn for stimulating
group creativity. A group usually consists of 6 – 10
people and conducts sessions lasting for about an
hour. It is clearly stated at the beginning that the aim
is to get as many ideas as possible.
 Cont.

 The wilder the better and there is no evaluation done

on other members ideas.
 Osborn laid down four guidelines for brain storming
which are:
 Cont.

1 Criticism is ruled out. Negative comments on ideas

must be with held until later.
2 Free willing is welcomed and the wilder the better
with no restrictions what so ever.
 Cont.

3 Quantity is wanted so nothing is permitted to slow

down the session.
4 Combination and improvements are achieved when
each person’s suggestion is carried to another stage
of development or application by the next person.
 Cont.

Synectics
 This method was developed by William J.J Gordon
who felt that Osborns brainstorming session
produced solutions too quickly for a sufficient number
of perspectives had been developed
 Cont.

 Gordon decided to define the problem so broadly

that the group had no clear idea of what was
happening. The brainstorming sessions are longer
with minimum of three hours.
 Cont.

Gordon described five principles underlying the

synectics method.
1 Deferment – look first for view products rather than
solutions.
2 Autonomy of object – let the problem take on a life of
its own.
3 Use of the common place – take advantage of the
familiar as a spring board to the strange.
 Cont.

4 Involvement/ detachment – alternate bet entering

into the particulars of the problem and standing back
from them in order to see them as instances of
something universal.
5 Use of the metaphor – let apparently the irrelevant
accidental things suggest analogies that are sources
of new view products.
 Cont.

 Any company can attract good ideas by organizing

properly in motivating groups to submit ideas. Ideas
should be sent to an idea chairperson whose name
and phone number should be known and put in
written form and reviewed each one week by an idea
committee.
 Cont.

- The idea committee should sought ideas into three

groups – promising ideas, marginal ideas and rejects.
• Promising – brilliant
• Marginal – on the boarder live
• Each promising idea should be briefly researched by
the committee member who reports back. The
surviving promising ideas then move into a full scale
screening process.
 Topic Four

DO NOT PACK YOUR BAGS YET

 IDEA SCREENING

The purpose of screening is to reduce the number of

ideas to an attractive practicable few.
How does screening help?
1 We need a screen that helps us decide whether
technical resources, systems design and engineering
should be devoted to the project and if so, how
vigorously.
 Cont.

- Decision rests on
i) Can we do the job? That is the feasibility of technical
accomplishment.
ii) Do we want to do the job? Feasibility of commercial
accomplishment e.g. fridge with transparent door
and contains a DVD
 Cont.

2 Screening steps helps manage the :

 Cycling unacceptable but potentially worthwhile ideas
back into the ideation stage.
 Rank ordering the good ideas such that we have same
options on stand by when an ongoing project stops/is
cancelled.
 Recording the appraisals on the rejected ideas to
prevent reinventing the wheel.
 Cont.

3 The screening process encourages cross – functional

communication. It is a learning process particularly in
making managers more sensitive to how other
functions work. It flashes out all basic disagreements
about a project and sets them up for discussion.
These disagreements put the spot – light on pot
holes/ hurdles that the idea of the project is faced
with development and show where new people
would be needed/ recruited.
 Screening Error Types

In screening ideas, the company must avoid two types

of errors;
 A drop error – occurs when the company dismisses an
otherwise good idea. The easiest thing to do is to find
fault with the other peoples ideas. If a company
makes too many drop errors, its standards are too
conservative.
 Cont

A go error – occurs when the company permits a poor

idea to move/ grow into development and
commercialization.
Three types of product failure can occur :
 Cont.

1. Absolute product failure – uses money and its sales

do not cover variable costs.
2. Partial product failure – looses money but its sales
cover all variable costs and some of the fixed costs.
3. A relative product failure – yields a profit but one
that is less than the company’s normal target rate
of return.
 Cont.

Screening alternatives
Three schools of thought
A) Opinion Poll
Some organizations especially smaller ones and those not
being much into new product work prefer an opinion poll
where one / more people make a judgment on some
informal checklists Participants may have a printed list of
the evaluation products as memory joggers.time
consumingbut it gives more relible results.
 
 Cont.

Development Process 
• Some organizations have a development process that
is really none technical – it is limited to the existing
products simple variations are made on what is
already on the market knowing they can easily make
the item a bit unique and market it reasonably well.
The only issue is whether consumers will like it.
 Cont.

C) The scoring Model

The scoring model a mechanical arrangement of
checklist of factors with weights .The factors are
arranged in order of importance. Each factor will be
having a corresponding weight and the idea with the
highest points will be taken.
Concept development and testing

FIFTH TOPIC
 Cont.

-Attractive ideas must be refined into testable product

concept.
- We can distinguish between a product idea, product
concept and a product image.
 Cont.

Product idea

-Is any possible product that the company might offer

to the market.
 Cont.

Product concept

 It is an elaborated version of the idea expressed in

meaningful consumer terms.
 Cont.

Product image

 It is the particular picture that consumers acquire of

an actual or potential product.
 Cont.

Concept development
-Any product idea can be turned into several product
concepts e.g. if product developers determine that
they will produce a new candy bar, the answer to the
following might help them to formulate a more
specific concept from the general ideas.
 Cont.

 Who will buy the product – a candy bar may appeal as

a sweet a high energy snack or an emergency food for
diabetics.
 Cont.

Under what circumstances will the new product be

used?
 A candy bar can be offered to children as a reward or
used as a meal substitute or eaten by diabetics
offering from too much insulin.
 Cont.

Three category concepts

 Sweet
 High energy snack
 An emergency food
 Cont.

 The three category concepts sweet, high energy

snack and an emergency food, position the idea
within a category and determine what other
products, the product would be competing against.
 Cont.

• The category concept defines the product

competition. Once the category concept is chosen the
next task is to show where the candy bar would stand
in relation to other products for example sweet
contrasts in the product positioning map can be
utilized in communicating and promoting the concept
to the market (two dimensions of cost and hardness.)
 Cont.

-Next product concept has to be turned into a brand

concept. This is done through the brand positioning
map showing the current position of the three
existing brands of sweets.
 Cont

 The company needs to decide how much to charge

and how much sugar to add the new brand will gain
distinctiveness in the sugar low price position as
opposed to next to another brand name and fighting
for share of the market. This decision requires
researching the size of alternatives preference
segments in the market.
 Concept Testing

• -After a concept has been developed the next step is

to test it. Consumer reactions are obtained by using a
verbal description or a picture of the product and
asking for candidate’s opinion.
• -At this product the developers want to know how
they can improve the product idea and the best way
to find out is to ask the consumer
 Cont.

-The reliability of a concept test increases the more

concrete and physical the stimulus.
-Develop soft, high sugar level and low price.
-Consumers are asked to respond to these questions
about these concepts:
 Cont.

1) Are the benefits clear to you and believable – this

measure the concept communicability and
believability? If the scores are low the concept must
be refined or revised.
2)Do you see this product as solving a problem or filling
a need for you – this measures the need level the
stronger the need the higher the expected consumer
interest.
 Cont.

3)Do other product currently meet the need and satisfy you –
this measure the gap level between the new product and
the existing products the greater the gap the higher the
expected consumer interest. The need level can be
multiplied by the gap level to produce a need gap score.
The higher the need gap score the higher the expected
interest. A high need gap score means that the consumer
sees the product as filling a strong need and is not satisfied
with available alternatives.
 Cont.

4)Is the price reasonable to the value? - This measures

perceived value the higher the expected consumer
interest?
5)Would you (definitely, probably, probably not,
definitely not) buy the product – this measures
purchase intend and would expect it to be thigh for
consumers who answered the above three goals
positively.
 Cont.

6) Who would use this product and how often would it

be used – this provides a measure of user targets and
purchase frequency.
 Cont.

• From the answers received and summaries made the

marketer can judge whether the concept is a broad
enough and strong enough consumer appeal. The need
gap levels and purchase intend level can be checked
against the standards for the product category to see
whether the concept appears a winner, long short or a
looser. Concept development and testing methodology
applies to any idea e.g. electrical new machine tool or new
banking service or a new health plan.
MARKETING STRATEGY

TOPIC SIXTH
 Introduction

-There is need to plan the marketing strategies to be

used.
- There is need to have heavy marketing input as it will
guide the implementation of the plan.
- The launch plan is commonly known as the marketing
plan.
-Marketing plan is recognized as a plan for the full
business activity launch.
 Marketing Plan
Section 1: Executive Summary
 Complete your Executive Summary last, and, as the name
implies, this section merely summarizes each of the other
sections of your marketing plan.
 Your Executive Summary will be helpful in giving yourself
and other constituents (e.g., employees, advisors, etc.) an
overview of your plan.

112
Section 2: Target Customers
 This section describes the customers you are targeting. It
defines their demographic profile (e.g., age, gender),
psychographic profile (e.g., their interests) and their precise
wants and needs as they relate to the products and/or
services you offer.

113
 Being able to more clearly identify your target
customers will help you both pinpoint your
advertising (and get a higher return on investment)
and better “speak the language” of prospective
customers.

114
Section 3: Unique Selling Proposition (USP)
 Having a strong unique selling proposition (USP) is of
critical importance as it distinguishes your company
from competitors.

115
Section 4: Pricing & Positioning Strategy
 Your pricing and positioning strategy must be aligned.
For example, if you want your company to be known
as the premier brand in your industry, having too low
a price might dissuade customers from purchasing.

116
Section 5: Distribution Plan
 Your distribution plan details how customers will buy
from you. For example, will customers purchase
directly from you on your website? Will they buy from
distributors or other retailers? And so on.

117
Section 6: Your Offers
 Offers are special deals you put together to secure
more new customers and drive past customers back
to you.

118
 Offers may include free trials, money-back
guarantees, packages (e.g., combining different
products and/or services) and discount offers. While
your business doesn’t necessarily require offers, using
them will generally cause your customer base to grow
more rapidly.

119
Section 7: Marketing Materials
 Your marketing materials are the collateral you use to
promote your business to current and prospective
customers. Among others, they include your website,
print brochures, business cards, and catalogs.
 Identify which marketing materials you have
completed and which you need created or re-done in
this section of your plan.

120
Section 8: Promotions Strategy
 The promotions section is one of the most important
sections of your marketing plan and details how you
will reach new customers.
 There are numerous promotional tactics, such as
television ads, trade show marketing, press releases,
online advertising, and event marketing.

121
Section 9: Online Marketing Strategy
 Like it or not, most customers go online these days to
find and/or review new products and/or services to
purchase. As such, having the right online marketing
strategy can help you secure new customers and gain
competitive advantage.

122
The four key components to your online marketing
strategy are as follows:
 Keyword Strategy: identify what keywords you would
like to optimize your website for.
 Search Engine Optimization Strategy: document
updates you will make to your website so it shows up
more prominently for your top keywords.

123
 Paid Online Advertising Strategy: write down the
online advertising programs will you use to reach
target customers.
 Social Media Strategy: document how you will use
social media websites to attract customers.

124
Section 10: Financial Projections
 The final part of your marketing plan is to create
financial projections. In your projections, include all
the information documented in your marketing plan.
 For example, include the promotional expenses you
expect to incur and what your expected results will
be in terms of new customers, sales and profits.

125
 Relationship Marketing

-The marketing plan should create in the market place

the same tight cooperation that technical people will
use in the development.
-For a new product this has to be taught especially
when the chosen market segment has had no
previous connection with the firm.
 Cont.

- Relationships must be built through advertising,

delivery, involving the market in the selling process,
and through considering their reaction to everything
the organization do i.e. pricing, packaging and
branding.
-There should be a bond between the market and the
organization.
 Cont.

- There is need to follow their early use of the product

up to satisfaction.

-This process can be referred to as interactive

marketing.
 Marketing Strategies

1) Market concentration

An organization may choose:

a) a total market – the whole market
b)Market segmentation – divide the market and target
a specific segment.
 Cont.

c) Mass customization – is micro carried to extreme. It

is a policy that prepares the firm to offer
individualized new products to any person/firm in the
market at the time of purchase. It forces the
development of product process capability at the
time of purchase.
 Cot.

2) Leadership Posture

-There are four leadership posture choices market

leader, market follower, market challenger and a
nicher.
 Cont.

 Market leader – doesn’t have to be a pioneer, but

develops an innovation that will propel the firm into
leadership shortly.
 Market follower – may plan to improve on the
pioneer’s product very rapidly or move slowly or may
slash production costs and go for the price buyers.
 Cont.

 Market challenger – is usually new in the market and

will aggressively challenge for the leadership position.
The new product will be unique.
 A nicher – the firm is focusing on a small piece of the
market and may have a specially designed product or
simply one positioned for that segment.
 Cont.

 Market challenger – is usually new in the market and

will aggressively challenge for the leadership position.
The new product will be unique.
 A nicher – the firm is focusing on a small piece of the
market and may have a specially designed product or
simply one positioned for that segment.
 Cont.

3) Product/Market Matrix

- This is the traditional strategies market planning

matrix. The options are product improvement,
market penetration, new market department or
diversification.
 Cont.

4) Strategic integration
-A launch plan does not stand alone. It may have
specific goals set for it, but the organization wants
something else from it.
- There is need to decide, does the product stand alone
or it is on lead something else such as a bridge to
another market.
 Cont.

5) Speed of market entry

- Everyone today assumes the development phase is

being pushed as fast as it can be. A launch plan
should have a speed guideline decision from four
options;
 Cont.

i. No emphasis on space
ii. Pre launch speed to launch date
iii. Post launch speed to success
iv. Pre and post launch speed
 Cont.

6) Production Requirements

-It is important to make sure that all the necessary

materials are present to come up with the new
product.
 Cont.

- Sometimes it is disappointing to find out that the

accounting department holds on to millions of dollars
yet the production department shut down for want of
product parts, communication is important in
acquiring the parts for the product.
 Cont.

The strategic core of the launch

-The core strategy statement identifies the intended
customer segment (target market) positioning (how
our item is better than others are being used) and
what particular mix of marketing tools will be used to
carry the message.
 Cont.

- For example we must become teachers. Our new

product is a break through but it is complex. Either
we can explain what is and how it works or we are
dead. We are not sure we can do that, so we are
going to roll it out to our best customers first and stay
with them until we find out how.
 Cont.

 Internal Support

-Mini-plans involve groups within the organization,

and the act of creating them and implementing them
is called internal marketing.
 Cont.

. It starts with a scan of the full internal support system,

with a candidate look at every person or group whose
work is critical to success. Are they currently capable?
Can they be made capable? Where are the turf
restraints and bureaucratic bulwarks? (protection,
Safeguard)
 Cont.

 Technical
-The team doing the marketing is well prepared on to
work on technical product verification, technical
information for labels, packages, package inserts,
selling literature, and training of key personnel.
 
 Cont.

 Manufacturing
-Marketers are interested in products that meet
technical claims that meet quality standards, and that
are ready when shipment is to begin.
 Cont.

 Packaging
- It is very important especially when the new item will
be distributed through self – service environments,
when the product category is already established so
the new item will have to force. Its way in, and when
many strongly entrenched competitors sit next to the
next another on store shelves.
 Cont.

Packing can be divided into 3;

 Primary Packaging – is the material that first

envelopes the product and holds it perhaps a bottle
for pills or polyethylene bag for a computer CPU.
 Cont.

 Secondary Packaging – is outside of the primary

package. It may gather a group of primary packages
and holds them for transportation or display. It may
be a card box that holds the pill bottle.
 Tertiary Packaging – is the bulk that holds secondary
packages for shipment. The large box or the pallet
for example.
 Cont.

Various roles of Packaging

 Containment (hold for transporting),

 Protection (from the elements and the careless),
 Safety - from causing injury,
 Cont.

 Display – to attract attention,

 Information
 Persuade.
Sales Forecasting

TOPIC SEVEN
General approach to forecast sales for new products

Casual Forces Behaviour OUTPUT

Marketing 1 A-T-A-R 2
Program Awareness SALES
TRIAL FORECAST
Production Availability
Promotion
Price REPEAT
Distribution Purchases

3
 Cont.

-There are three general approaches used to forecast a

new product’s sales.
- The right – hand column shows the forecasts or
outputs of the forecasting system.
- The middle column state the key variables determining
how much will be sold.
 Cont.

-The behavior variables include awareness, trial,

availability and repeat.
- If potential customers go through the A-T-A-R
sequence, sales will follow.
-The left-hand column contains the two factors that
determine how many potential customers work their
way through the A-T-A-R sequence and the speed
with which they do so.
 Cont.

Estimating replacement sales

- To estimate replacement sales management has to
research the survival age distribution of its product. If
you buy something how long will it take you before
you buy another one e.g. bread – seven people daily.
 Cont.

- The usage rate and the distribution indicate when the

first replacement sales will take place.
- The actual timing of replacement will be influenced by
the customers economic outlook, cash flow and
product alternatives as well as a the company’s prizes
financing terms and sales effort.
 Cont.

Estimating repeat sales

- For frequently purchased new products the seller has
to estimate the repeat sales as well as the first time
sales, that is because the unit value of frequently
purchased products is low and repeat purchases take
place soon after the introduction.
 Cont.

- A high rate of repeat purchasing means that customers

are satisfied and sales are likely to stay thigh even if
all first time purchases have taken place.
- The seller should note the percentage of repeat
purchases that take place in each repeat class that is
those who buy once, twice, trice, etc.
 Cont.

- Some product and brands are bought for a few time

and dropped.
- It is important to estimate whether there repeat
purchase rate is likely to raise or fall and at what rate
with deeper repeat purchase classes.
Projected cash flows should include:

1)Development cost - there are divided into three;

 Product development cost of researching
developing and testing the physical product.
 Marketing research cost – will cover cost of fine
tuning assessing the market that is packing tasting, in
homes sample tasting home testing and testing
market.
 Cont.

 Manufacturing development cost – covers cost of

new equipment, renovating the plant, investing into
new inventory.
 Cont.

 Marketing cost – marketing mix you will incurred for

example promotion costs.

 Overheads – these are the shared expenses in a e.g.

company executive salaries, rent, light. Expenses you
could not stress to the product.
 TOPIC 7
PRODUCT DEVELOPMENT
Introduction
• From the beginning the product has been in the
process of being developed. Now that there is a
product brand image and the marketing strategies
have been established as well as the financial analysis
have been made. The product is ready to be
produced. However there is need to also establish the
entire product requirements before production
starts.
Product Protocol
• Some mats still use a relay system where one
department does its work passes the product concept
to the next department which does its work and so
on and so on. The leading product innovators do not
use the relay system they use some type of
concurrent system one in which all the players begin
doing as much as they can at any time as the project
runs alone.
 Technical process engineers procurement, marketing,
R & D, etc are all doing something. All these efforts
are risky and will never work well without something
that keeps the team together. Something that allows
them to make reasonable speculation that something
is the product protocol also known as product
requirements or product definition.
Contents of product protocol
1)Target market
2)Product positioning
3)Product attributes – three famous attributes;
benefits, features and function.
4)Competitive comparisons/ bench marking
 
5) Augmentation dimensions – the product itself is described
in attributes. Augmentations are the adds own e.g. new
level of service or better distributors support.
6) Timing – most new products must come out faster but
some need technical break through.
7) Marketing requirements – e.g. trade show schedule. Trade
channel, old form and new form soles force, the size of the
sales force and the training you give.
8)Financials – price level, discounts sales volume, sales
dollars, market share, profits, net present value.
9)Production – plans to be build. Do you need to
acquire any machinery – take into account the
volumes you would want to build – quality to be
achieved?
10)Regulatory requirements
11)Cooperate strategy requirements upper
management support should be obtained.
12) Key potholes – a list of things which management go
wrong.
Technical development stage
Characteristics required in today’s technical
development activity include:
1)Commitment to fair principles which are
I. focus
II. End user drive – need to constantly refer to our
customers to make sure we make what they want
always think of the customer e.g. Japanese start
with customers.
III. Productivity – you want to set out yourselves to be
productive – want to earn profit.
4 Quadriad – there are four things in the quadriad which
are: Speed – can finish when the new technical is
now available module must do what is aspect to do.
Quality, Cost – watch your prizes when doing work.
Value
2) A clear and accepted product innovation character ie
a document that charts the company direction. It
tells the new product group its goals and objectives
entails the group how it will pay the game.
3) Leadership – top management must select a group
leader and then stay out of the way. This will help the
project to be a success. If it’s the management
people might resist and the new product will not be
developed.
4) Culture - for new product a good culture brings
freedom. Egalitarianism – as humans people are
essentially equal) constructive environment there is
an absence of hidden agenda and there are open
statements of goals and objectives and forthright
appraisals.
5) Ownership - if a person takes whole or part
ownership in a project that person have “bought in.”
To get ownership by team members requires training
and empowerment and motivation.
 
Building the project team
 The team’s assignment, mission and charter must be
clearly understood by all members of the team.
 Select the team leaders – leaders must be general
managers.
Features associated with project leadership
 General management skills
 Green thumbs – make little things grow into big
things. Good leader should be a motivator.
 Blank page vision – lead without a map. Give answer
at the spot do not go and check.
 One man band – play all the instruments at least to
some extend. Crucial because – its crucial able to
integrated all the areas. So that anyone in the team is
able to take over in the absence of the other.
 Must have the “miss a meal” pains must be hungry
for success.
Product development
 The product brand image moves into research and
development or engineering to be developed into a
physical product. The R&D department will develop
one or more physical versions of the product concept.
The prototype has to satisfy the following criteria;
1)The consumer’s seed as embedding the key attributes
described in the product concept statement.
2)Prototype performs safely under normal use and
conditions.
3) Prototype can be produced for the budgeted
manufacturing cost. Development can take days, weeks/
months or years e.g if developing a flavor – do not need a
lot of time but if developing new drugs need more time
years.
The developers or scientists in addition to the required
functional characteristics must also know how to
communicate psychological aspects through physical
cues based on information supplied by marketers on
what attributes are sought consumers and how
consumers judge whether these attribute are
present.
This calls for knowledge of consumer richens to
different colors, sizes and other physical cues e.g.
yellow in mouth wash antiseptic – mouth wash, red –
refreshing image, green – cool image e.g. loamier –
expect something. Physical/strong not made up of
plastic, black car – doves
when designing consider the following-
 Design from outside – as if you were the user of the
products with customer’s use being central.
 Partner deeply with all relevance units of the firm.
 Partner widely with all stakeholders involved.
 Define product up front – product protocol and firm
prototype prior to ordering tooling and manufacturing
machinery.
Get physical fast – produce prototype as fast as you
can.
Surprise the user – built something in that the user
doesn’t expect deliver more than promised.
When prototypes are ready they must be put through
rigorous functional and consumer test.
 Functional tests are conducted under labs and field
conditions to make sure that the product performs
safely and effectively
 e.g. testing of new drugs take several years and
testing an animals and human beings to ensure that
the drug is affrications and that no dangerous side
effects come about. When at that stage of the
prototype, there is need to check the stability of your
product.
Consumer tests
There are two ways;
 Give samples to people
 Call them to your place tell them about the product –
let them test it.
Consumer tests draws on a variety of techniques which
include:
1)Simple rank order – where consumers are asked to rank the
products in order of preference. It is a simple method
though It does not reveal how intensely the consumer feels
about each item have whether the consumer likes any item
more than the other. Difficult to use where there are many
object
2) Paired Comparisons- is where a set of items are
presented to the consumer two at a time asking
which one is preferred in each pair. Give more
information in that people find it easy to state their
preference between items taken two at a time and
they allow the consumer to concentrate intensely on
the two items noting their differences and similarities.
3)Monadic Rating Method – asks the consumer to rate
his liking of each product on a scale. This method
yield more information than the other two. It is also
easy for respondents to use especially when there is a
large set of objects to evaluate.
 TOPIC EIGHT

MARKET TESTING
• After satisfactory function performance the product
is ready to be dressed up with the brand name,
packaging and preliminary marketing programme to
test it in more authentic consumer setting.
• The purpose of market testing is to learn how
consumers and dealers react to handling using and
repurchasing the actual product and how large the
market is.
 Not all companies choose the route of market testing
(Revlon prefers to use in store demonstrators for
their high prized exclusive range of products).
How much market testing to be done is influenced by;
 The investment cost and risk (through investment or
through risk products need to be market tested so as
not to make a mistake cost of test marketing is
insignificant compared to the project cost.
2) Time pressure and research cost (e.g if you are
introducing a brand for winter and there is no longer
time for testing – season almost on you or if you
know that competitors want to launch with less
testing to be number one on the market.
Consumer goods market testing
 This aims at estimating for variables trial, first repeat,
adoption and purchase frequency. In testing the
trade the company wants to learn how many and
what types of consumers will handle the product,
under what terms and with what shelf position
commitment.
Major consumer goods market testing methods
1 Sales wave research (Least cost) – consumers who
initially try the product at no cost are re-offered the
product or competitor’s product at slightly reduced
prizes. Offers can be 3-5 times (sales wave) with the
company noting how many consumers selected that
companies product again and their reported level of
satisfaction.
2 Simulated store technique – can find 30-40 customers
and invite them to a brief screening of some
television commercials. After the screening has been
done give the Consumers are given a small amount of
money and invited into a store to use the money to
buy any items or keep the money. The idea is for them
to buy the new product
 The company notes how many consumers buy the
new products and competing brands. The consumers
are reconvened and asked the reasons for their
purchases or non – purchases. Some weeks later they
are reinter viewed by phone to determine product
attitude, usage, satisfaction, and re purchase
intension and are offered an opportunity to
repurchase any products.
Advantages
 Measuring advertising effectiveness and trial rates (and
repeat rates if extended.)
 Speedy results
 Competitive security
 Results can usually be in cooperated into mathematical
models which have been found to give reasonably
accurate predictions of sales level, on the subsequent
launch of the product onto the market (market research
can or are usually engaged.
Disadvantages
It is expensive
Costs time, not being elaborate resembling the real
market position
3 Controlled test marketing (mini market testing) –
controlled panel of stores under the command of research
firms have agreed to carry new products for certain fee.
The company with the new products selects the stores in
geographical locations that it wants. The research firm
delivers the products to the participants and controls shelf
location, number of facings displays and point of purchase
promotions and prizing according to specified plans.
• Sales results can be audited both from shelf movement
and from consumer diaries. The company can also test
small scale advertising in local newspapers during the test.
Advantages
• It allows the company to test the impact of the in store
factors and limited advertising on consumers buying
behavior without involving consumers directly.
• The company does not have to use its own sales force give
trade allowances or buy distribution.
Disadvantages
 Method does not challenge the company to sale the
trade on carrying the new product.
 The technique also exposes the product to
competitors.
Test marketing – ultimate word test of new products.
Company usually works with an outside research firm to
locate a few representative test cities in which the
company’s sales force will try to sell the trade on carrying
the product and giving it good shelf exposure. The
company will put on full advertising and promotion
campaign (similar to the one that will be used in national
marketing) test marketing cost depends on numbers of
cities tested, duration of test and the amount of data the
company wants to collect.
Major decisions to make and setting up test markets.
1 How many test cities – 2-6 with an average of 4.
2 Which cities – no city is a perfect microcosm of the
nation as a whole some cities however typify
aggregate national or regional characteristics better
than others.
3 Length of test – the test can take a few months to
several years , the longer the product average
repurchase period the longer the test period
necessary to observe repeat purchase rates however
if competitors are rushing to the market cut down the
period.
4 What information – what type of information / data
do you expect to collect. Warehouse shipment data
(gross inventory buying), store audits – actual retail
sales. Customer panels – who is buying what. Trade
attitude – retail distribution and the effectiveness of
advertising, promotion and product of sale material.
Buyer surveys – concerns consumer attitudes, usage
and satisfaction.
5 What action to take – goal decision – one test markets
show through trial and through repurchase, through
trial low repurchase rate – means customers are not
satisfied and product should be redesigned or
dropped. Low trial through repurchase rate –
product is satisfying customers but more people have
to try it, ie, increase advertising and sales promotion.
Low trial lows repurchase rates – products should be
dropped, it’s a failure.
Benefits of test marketing
 Primary benefit is to yield a more reliable focus of
future sales. If product sales fall below target in the
test market the company must drop or modify the
product or the marketing programme. Pre setting of
alternative marketing plans other benefits of test
marketing;
 Discovery of product faults that escaped attention in
the product development stage e.g. Zim 1992 –
Mazda 22 was called for the engine head. 1991 –
condoms was recalled were defected so had to be
recalled. Its expensive to recall a product and you
also loose goodwill.
 Picking up of valuable clues to distribution level
problems, shelf live, packaging.
 Company may gain better insights into the behavior
of difficult market segment.
Problems associated with test marketing
• Obtaining a set of market that is reasonably representative
of country as a whole.
• Translating national media plans into local equivalence e.g.
Zim has one television channel – so if you wanted to test
market in Gweru only you bring it to the television whole
nation – and say visit it to Gweru. Its not easy to focus the
whole nation to a small area – its costly even some Gweru
people might miss the boat.
 Estimates based on this year’s competitive
environment might not be accurate in predicting
events next year competitive environment e.g. Zim-
most companies who published their figures – for
saying profits are not as high as expected from last
year.
 Extraneous and uncontrollable factors such as
economic conditions and whether.
Industrial goods market testing.
• New industrial goods under go extensive product testing
in the lab to measure performance liability design and
operating costs. Test marketing is not typically used for
industrial goods. Most common method is the product
use test. In this the company selects potential customers
and then gives them samples to use. Technical people
from the company then visit clients in their premises and
observe their products in use.
 The practice often exposes unanticipated problems of
safety and servicing and gives clues to the
manufacturer about customer training and servicing
requirements. After the test the customer is asked to
express purchase intend and other reactions.
 Second method is to introduce the new industrial
products at trade shows and trade fair. Trade shows
and fairs have large number of buyers. It runs for a
short period of time. Manufacturers can gauge
various features and terms.
 TOPIC NINE

COMMERCIALIZATION
From market testing the company goes and launching if
all is well the decision involves incurring of the largest
cost to date in the form of occurring manufacturing
plant and equipment and advertising and promotion.
In commercializing a new product market entry
timing can be critical.
Three choices:
• Entry – get first move advance ie, getting key distributors and
customers. The disadvantage is that you may offer the product
that is not fully debugged.
• Parallel entry – enter the market together with the competitor
and neutralize the competitor’s gain of first mover advantage.
• Late entry – the advantage is that it likes the competitor educate
the market, it let the competitor’s product reveal faults and you
can learn the size of the market from the competitor’s efforts.
 Timing decision involves additional considerations, if
the new product replaces the company’s older
product the company might delay the introduction
until the old products’ stock is drawn out. If the
product is thoroughly seasonal. It might hold back
the right season.
Where
• The company must decide whether to launch new product
in a single locality neglect several regions, the national or
international market – few companies have the
confidence4, capital and capacity to launch new products
into full national distribution they will develop a planned
market roll out over time. Small companies in particular
will select an attractive city and put on a blitz campaign to
enter the market they will enter other cities one at a time
large campaign will introduce their product into a whole
region and then move to the next region.
• In roll out marketing the company has to rate the
alternative markets for their attractiveness the
candidate market can be listed as rows and roll out
attractiveness criteria can be listed as columns. The
major rating criteria are market potential, company
local reputation, cost of filling the pipeline, quality of
research data in that area, influence of area on other
areas and competitive penetration. In this way the
company ranks the prime markets and develops a
geographical roll out plan.
To who (target – markets prospects)
• Within the roll out markets, the company must target its
distribution and promotion to the best prospect groups.
Presumably the company has already profiled the prime
prospects on the basis of earlier market testing. Prime prospect
it a new consumer product would ideally have the following
characteristics. They would be early adopters they would be
heavy users they would be opinion leaders and would talk
favorably about the product and they could be reached at a low
cost. Few groups have all of these characteristics. The company
can rate the various prospect groups on use. Characteristics
target to the best prospect group.
How (introductory market strategy)
 The company must develop an action plan for
introducing the new product into the roll out
markets. It must allocate the markets budget to the
marketing mix tools and schedule the various
activities.
 TOPIC 11

POST NEW PRODUCT DEVELOPMENT

Product Life Cycle
Customer buying process for new products
 Research suggests that customers go through five stages in
the process of adapting a new product or service. These
are :
1) Awareness- It is about creating awareness of your product is
in the market.  It is important that your company develops a
successful avenue for your consumers to become aware of
your product
 prospects come to know about a product but lack
sufficient information about it
 Create marketing material.
 Make the marketing materials easily accessible.
 if you are not AWARE of the product, you are never
going to BUY the product
2) Product Interest
 consumers are ready to learn more about your companies
product
 Your organization must guide the consumer through the
interest stage by providing easily accessible information on
your product.
 Among the methods used in the today's business landscape
include a website describing the product
 Once you are aware, you start searching for information.
3) Product Evaluation
 Consumers examine, compare and evaluate the product
 customers consider whether the product is beneficial
 Outline what separates your product from others, and
emphasize on strength.
4) Product Trial
 Customers need to test the product.
 Your company can provide your consumer with a free
trial or a proof of concept campaign.
5) Product Adoption
 The customer has been satisfied with the product
 This is the critical stage that businesses need to get
their consumers to
 When the customer is here, you need to make the
payment process simple, intuitive, and pain free.
Diffusion of innovation Model
 This model helps an entrepreneur to understand how
a buyer adopts and engages with new products or
technologies over time.
 Companies will use it when launching a new product
or service, adapting it or introducing an existing
product into a new market.
 It shows how the product can be adopted by five
different categories/customer types and how to
engage as a business with these types of people
Innovators – Represent a small percentage of the market that
is at the forefront of adopting new products.
 These people are often viewed as enthusiasts and are eager
to try new things, often without regard to price.
 While a good test ground for new products, marketers find
that Innovators often do not remain loyal as they continually
seek new products.
Early Adopters –
 They share Innovators’ enthusiasm for new products though
they tend to be more practical about their decisions.
 They also are eager to communicate their experiences with
the Early Majority (next group) and because of their
influence they are important to the future success of the
product (i.e., act as opinion leaders
Early Majority – This represents the beginning of entry
into the mass market.
 The Early Majority like new things but tend to wait
until they have received positive opinions for others
(i.e., early adopters) before purchasing.
 Adoption by the Early Majority is key if a new product
is to be profitable.
 On the other hand, many new products die quickly
because they are not accepted beyond early trials by
Innovators and Early Adopters and never reach mass
market status.
Late Majority –This group takes a wait-and-see
approach before trying something new. Marketers
are likely to see their highest profits once this group
starts to purchase.
 These are sceptics who are not keen on change and
will only adopt a new product or service if there is a
strong feeling of being left behind or missing out
Laggards – This is the last group to adopt something new and,
in fact, may only do so if they have no other choice.
 Depending on the market this group can be large though
because of their reluctance to accept new products
marketers are not inclined to direct much attention to them.
 Typically they prefer traditional communications and will
adopt new products when there are no alternatives