New Product Development

Ways to Obtain New Products

• Acquisition means buying a whole company, a patent, or a license to produce someone else's product
• New product development involves original products, product improvements, product modifications, and new brands developed from the firm's own research and development

New Product Development Process

• Consists of: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization

Idea Generation

• Idea generation refers to systematically searching for new product ideas
• Internal sources are the company's own formal research and development, management and staff, and intrapreneurial programs
• External sources are sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms
• Crowdsourcing involves inviting broad communities of people into the new product innovation process

Idea Screening

• Involves identifying good ideas and dropping poor ideas
• R-W-W screening framework is used to identify if the idea is real, can we win, and is it worth doing

Concept Development and Testing

• Product idea refers to an idea for a possible product that the company can see itself offering to the market
• Product concept refers to a detailed version of the idea stated in meaningful consumer terms
• Product image refers to the way consumers perceive an actual or potential product.
• Concept testing means testing new product concepts with groups of target consumers.

Marketing Strategy Development

• Is designing an initial marketing strategy for a new product based on the product concept
• Marketing strategy statement consists of a target market description, value proposition planned, and sales, market-share, and marketing mix

Business Analysis

• Is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company's objectives

Product Development

• Product development refers to developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering

Test Marketing

• Test marketing refers to the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings
• Test Marketing is likely when new product has a large investment or the product has uncertainty about product or marketing program
• Test Marketing is unlikely when there is a simple line extension, copy of competitor product, has low costs or management has confidence

Commercialization

• Commercialization involves introducing a new product into the market
• Key decisions when commercializing include when to launch, where to launch, and a planned market rollout

Managing New Product Development

• Successful new product development should be customer centered, team based and systematic
• Customer-centered new product development focuses on finding new ways to solve customer problems and creating more customer-satisfying experiences
• Team-based new product development involves various company departments working closely together, overlapping the steps in the product development process to save time and increase effectiveness
• Systematic new product development utilises innovation management system. Key elements of which include creating an innovation-oriented company culture, yielding a large number of new product ideas.
• Innovation management system creates an innovation-oriented company culture and yields a large number of new product ideas
• New product development in turbulent times, companies may be tempted to reduce spending. This make may make a company less competitive.

Product Life-Cycle Strategies

• Consist of product development, introduction, growth, maturity and decline
• Product development has zero sales and increasing investment costs
• Introduction has slow sales and nonexistent profits
• Growth has rapid market acceptance and increasing profits
• Maturity has slow sales growth and profits level off or decline
• Decline has sales fall off and profits drop

Introduction Stage

• Characterized by slow sales growth, little or no profit, and high distribution and promotion expenses

Growth Stage

• Characterized by sales increasing, new competitors entering the market, profits increasing, economies of scale, consumer education, and lowering prices to attract more buyers

Maturity Stage

• Characterized by a slowdown in sales, many suppliers, substitute products, overcapacity leads to competition, and increased promotion and R&D to support sales and profits

Modification Strategies

• Modify the market
• Modify the product
• Modify the marketing mix

Decline Stage

• Firms must consider maintaining the product, harvesting the product, or dropping the product

Product Decisions and Social Responsibility

• Public policy and regulations regarding developing and dropping products, patents, quality, safety, and product warranties should be considered carefully

International Product and Service Marketing

• Involves determining what products and services to introduce in which countries
• Marketers must consider standardization versus customization, packaging and labeling, customs, values, and laws