1. New Product Development

2. Categories of New Product
New the world product
New Product lines
Additions to the existing product lines
Improvements or revision to existing products
Repositioning
Cost reductions

3. Causes of New Product Failures
Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced or Advertised
Costs of Product Development
Competitive Actions
To create successful new products, the company must:
understand it’s customers, markets and competitors
develop products that deliver superior value to customers.

4. New Product Development Process
Idea Generation and Screening
Concept Development and Testing
Marketing Strategy development
Business Analysis
Product Development
Test Marketing
Commercialization

5. New Product Development Process Step 1. Idea Generation
Systematic Search for New Product Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers

6. New Product Development Process
Idea generating techniques
Attribute Listing
Forced relationship
Need/problem identification
Brainstorming

7. New Product Development Process Step 2. Idea Screening
Process to spot good ideas and drop poor ones
Two types of errors
Go error
Drop error
Criteria
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return

8. New Product Development Process Step 3. Concept Development & Testing

9. New Product Development Process Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One

10. Concept development Concept 1 Concept 2 Concept 3 Category concept
Who
Why
when
Category concept
Product concept
Brand concept

11. Concept Testing Are the benefits clear? Does it solve a problem/need?
Does other products solve this need and satisfy the customers?
Is the price reasonable?
Would u definitely/definitely not/ probably /probably not buy this product?
Who would use this product and when and how often the product be used?

12. Marketing Strategy Statement Formulation
New Product Development Process Step 4. Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two - Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three - Long-Term:
Sales & Profit Goals
Marketing Mix Strategy

13. New Product Development Process Step 4. Marketing Strategy Development
The marketing strategy formulation takes place in three parts
The first part describes the size, structure and behavior of the target market, the planned product positioning and the sales, market share and profit goals sought in the first few years.
The second part outlines the product’s planned price, distribution strategy and marketing budget for the first year.
The third part describes the long run sales and profit goals and marketing mix strategy overtime.

14. New Product Development Process Step 5. Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
New Product Development Process Step 5. Business Analysis
Step 6. Product Development
If No, Eliminate
Product Concept
If Yes, Move to
Product Development

15. New Product Development Process Step 6. Product Development
Making of pilot models
Making prototypes
Running laboratory tests
Turning the concept into the workable product
Functional test
Consumer test

16. Full marketing campaign representative cities.
New Product Development Process Step 7. Test Marketing
Test Marketing
This CTR relates to the discussion on pp
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Test Marketing
Standard Test Markets. Under this approach, the company finds a small number of representative test cities, conducts a full marketing campaign in those cities, and then measures and evaluates performance. This provides a “real world” picture of how the product performs. But there are drawbacks. Standard testing is expensive, long, and tips competitors to company strategy.
Controlled Test Markets. This approach uses a research firm that has designated store placement space for their clients. Participating stores receive a fee. Some services like Scantrack (Nielsen) and BehaviorScan (IRI) offer computerized monitoring of individual consumer panels whose television viewing is cross-tabulated with store purchases. Controlled testing is quicker and less expensive than standard testing. Concerns revolve around representativeness of the test markets (small size) and tipping off competitors.
Simulated Test Markets. This approach creates a simulated shopping environment by the company or research firm. Consumers are exposed to promotions and then given money to shop with. Purchase patterns are observed and consumers are interviewed afterward by researchers. Simulated test marketing is inexpensive and quick. Representativeness and demand characteristics are concerns and this approach might be used as a pretest for a go-no go decision on further testing.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.

17. Commercialization
This is the final stage in the new development process.
After the successful test marketing of the product , the company is ready to introduce the product in its target markets.
This is called commercialization .
With commercialization product starts its introductory stage of product life cycle.