New product development
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The document outlines the new product development process, which consists of 8 steps: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization. It also discusses causes of new product failures such as overestimating market size or having design/positioning problems. Additionally, it provides a diagram showing the product life cycle and how sales and profits change over time.
New product development
- 1. Copyright 1999 Prentice Hall 9-1 New Product Development
- 2. Copyright 1999 Prentice Hall 9-2 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.
- 3. Copyright 1999 Prentice Hall 9-3 New Product Development Process Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization
- 4. Copyright 1999 Prentice Hall 9-4 C U S T O M E R S C O M P E T I T O R S D I S T R I B U T O R S S U P P L I E R S New Product Development Process Step 1. Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally and From:
- 5. Copyright 1999 Prentice Hall 9-5 • Process to spot good ideas and drop poor ones as soon as possible. • Many companies have systems for rating and screening ideas which estimate: – Market Size – Product Price – Development Time & Costs – Manufacturing Costs – Rate of Return • Then, the idea is evaluated against a set of general company criteria. New Product Development Process Step 2. Idea Screening
- 6. Copyright 1999 Prentice Hall 9-6 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
- 7. Copyright 1999 Prentice Hall 9-7 New Product Development Process Step 4. Marketing Strategy Development Part Two Describes Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy Marketing Strategy Statement Formulation Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share
- 8. Copyright 1999 Prentice Hall 9-8 New Product Development Process Step 5. Business Analysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If Yes, Move to Product Development If No, Eliminate Product Concept
- 9. Copyright 1999 Prentice Hall 9-9 New Product Development Process Step 7. Test Marketing Standard Test Market Full marketing campaign in a small number of representative cities. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Controlled Test Market A few stores that have agreed to carry new products for a fee.
- 10. Copyright 1999 Prentice Hall 9-10 New Product Development Process Step 8. Commercialization When? Where? To Whom? How? Commercialization is the Introduction of the New Product into the Marketplace.
- 11. Copyright 1999 Prentice Hall 9-11 Product Life Cycle Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits Sales and Profits Over the Product’s Life From Introduction to Decline
Editor's Notes
- #4: New Product Development Process This CTR corresponds to Figure 9-1 on p. 275 and relates to the discussion on pp. 275-286.
- #10: Test Marketing This CTR relates to the discussion on pp. 282-284.
- #12: The Product Life-Cycle This CTR corresponds to Figure 9-2 on p. 288 and relates to the material on pp. 287-293. Instructor’s Note: This CTR can be used to overview the life cycle concept. Strategies appropriate for each stage are discussed on the following CTRs.