Product Development: (New Product)
What is a new product:
That opens up an entirely new market
That replaces an existing product
That broadens the market of an existing product.
When an old product can be new:
Introduced into a new market
Packaged in different way
Different marketing approach is used
Mix variable is changed.
Degree of newness:
Unquestionably new product
Partially new product
Major product change
Minor product change
Sources for new products:
Internal product development
Why so many new products fail:
1). Overestimated market size.
2). Poorly designed product.
3). Poorly priced, placed, promoted or positioned.
4). Result based on poor market research findings.
5). The costs of producing the product may have been higher than expected.
6). Sometimes competitors fight back harder than expected.
5 product characteristics affecting rate of adoption for new product:
Relative advantage i.e. new technology making it superior
Compatible with values and experience of potential consumers
Ease of understand and use
Communicability of results of using product.
Product Development Process
1. Idea generation
which is the systematic search for new product ideas rather than haphazard?
a. Internal sources (R&D)
b. External sources (customers, competitors, distributors, suppliers)
2. Idea screening
Evaluation against criteria to spot good ideas and drop poor
3. Concept development and testing
Product concept is a detailed version of the new-product idea stated in meaningful consumer terms.
Concept testing involves testing the concepts with a group of target consumers to find out if the concepts have strong
4. Marketing strategy development
A marketing strategy statement should be produced. This is a statement of the planned strategy for a new product that
outlines the target market, positioning, market mix and market share, long term sales, profit goals and marketing budget for
the first few years.
5. Business analysis Review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s
6. Product development
Developing the product concept into a physical product in order to ensure that the product idea can be turned into a
7. Test marketing
The basic purpose is to test the product itself in real markets.
Introducing a new product into the market.
Stages of Product Life Cycle (PLC)
Exceptions are Fad, Style, and Fashions.
Strategies change with change in stage of PLC.
Product life cycle- Characteristics, objectives and strategies: [very nice table]
Introduction Growth Maturity Decline
Sales Low Rapidly rising Peak sales Declining sales
Cost High per customer Average cost per Low cost per Low cost per
customer customer customer
Profit Negative Rising High profit Declining profit