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According to Arch Paton, A new product is a product that opens up an entirely new market, replaces an insisting product or significantly, broadens the market for an existing products.

MEANING:10%New to the world 20%New Product Lines 26%addition to existing product Lines 26% improvements 11%Repositioning

30%New to org.
New Product Line cost New repositionin greduction Product Line 7% 20% 11% New to the world product 10% modification Addtion to 26% existing product lines 26% New to the world Addtion to existing product lines product modification repositioning cost reduction

70%Changes within 7%Cost Reduction existing product lines

BOOZ & ALLEN has identified six categories of new products: New to the world New product lines Addition to existing product lines Improvements & revisions of existing products Repositioning Cost reductions

Factors contributing to new product development

Changing customer preferences Technological changes Government policy

New product development process:Idea generation.(is the idea worth considering?) Screening of New Ideas Product Concept Development & Testing Business analysis Product Development Test Marketing Commercialization

Idea Generation
The new product planning process starts with generation of ideas. New product ideas usually generate with the reorganization of consumer needs. An alert market can get some ideas from the customers for possible new products to perceive those needs, which are so far unexpressed.

Sources of new product ideas

Internal Sources External Sources

Internal Sources
Research and Development Deptt. Manufacturing People Sales People Top Management


External Sources
Secondary Sources Customers Competitors Resellers Foreign Markets Investors Animation Films


Screening of New Ideas

After receiving a number of ideas good or bad from the first stage, the next step in the new product development process is to screen & evaluate them. There are two widely accepted methods for screening the ideas:Check list method Idea rating method


Check list method

Product very good good fair poor very poor characteristics 1.Sales volume 2.Type & no. of competitors 3.Technical opportunity 4.Patent protection 5.Raw material requirements 6.Available manufacturing capacity 7.Potential profitability 8. Similarity to existing business 9.Effect on present products Total 13

Idea Rating method

A(r.w) B(s.r) C(A x B) x .140 1.Companys goodwill 0.20 x .180 2.Research & dev. 0.20 x .140 3.Marketing 0.20 x .90 0.015 4.Personnel .90 x 5.Finance 0.10 6. Production x .45 0.05 x .35 7. Purchasing & Supply 0.05 .30 x 8.Public Policy 0.05 Total .750 1.00

Area of performance

Product Concept Development & Testing

A product concept is a detailed version of the idea stated in meaningful consumer terms.
During this stage of product concept development & testing, the marketer must incorporate the consumer meaning into their product ideas:To measure the need level of the consumer.

To measure the consumer targets & purchase frequency To measure the gap level between the new product & existing products in the market. To measure the perceived values.

Marketing Strategy Development

If the concept testing is successful, the next stage is to develop a preliminary marketing strategy plan for the introducing of the new product. The marketing strategy development consists of three parts: Target market size,structure & behavior,product positioning, & the expected sales, profits.
Planned price,distribution strategy & marketing budget Long run sales & profit goals & marketing mix strategy product in the target market.


Business Analysis
Business analysis may be defined as an evaluation of product idea in depth with a view to demand analysis, cost analysis & profitability analysis.  the management mainly performs the following acts:Identifying the product characteristics Production capability Production facilities Estimating cost of production Estimating profits & sales Programme for new product development

Product development
During business analysis,if the product is found to be economically feasible, it enters the next stage if product development where the new product idea is converted into a product. The product development includes the following steps: Engineering Research Developing Models Consumers Preference Testing Developing Marketing Mix

Test Marketing

Test marketing provides important clues about the product,product weakness &deficiencies and also provides an opportunity to understand the working & relative importance of the product components of the marketing mix



If the product is found to be suitable as a result of analysis & study of the result of test marketing with or without the modification, it is ready to be launched in the market.

After test marketing, if sales is satisfactory to be excellent then the company will go to launch the product.