Podcast
Questions and Answers
What is an essential reason for developing new products?
What is an essential reason for developing new products?
Which stage is NOT part of the new product development process?
Which stage is NOT part of the new product development process?
What is one of the internal factors influencing pricing decisions?
What is one of the internal factors influencing pricing decisions?
Which of the following is a source of new products through acquisition?
Which of the following is a source of new products through acquisition?
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What major challenge do companies face regarding product life-cycle strategies?
What major challenge do companies face regarding product life-cycle strategies?
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What is the primary starting point in target costing?
What is the primary starting point in target costing?
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Which internal factor is primarily responsible for setting prices in small companies?
Which internal factor is primarily responsible for setting prices in small companies?
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Which type of market is characterized by many competitors offering similar products?
Which type of market is characterized by many competitors offering similar products?
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What does the price elasticity of demand measure?
What does the price elasticity of demand measure?
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In large companies, who typically sets the prices?
In large companies, who typically sets the prices?
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What is the focus of customer-centered new product development?
What is the focus of customer-centered new product development?
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What occurs during the business analysis stage of the new product development process?
What occurs during the business analysis stage of the new product development process?
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Which stage involves developing a product concept into a physical product?
Which stage involves developing a product concept into a physical product?
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What is a key reason for using alternative test markets?
What is a key reason for using alternative test markets?
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When commercializing a new product, which consideration is NOT typically addressed?
When commercializing a new product, which consideration is NOT typically addressed?
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What is the primary goal of the test marketing stage?
What is the primary goal of the test marketing stage?
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Which of the following best defines systematic new product development?
Which of the following best defines systematic new product development?
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In the new product development process, which stage requires a large investment and involves introducing a new product to the market?
In the new product development process, which stage requires a large investment and involves introducing a new product to the market?
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What primarily determines customer value-based pricing?
What primarily determines customer value-based pricing?
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Which pricing strategy aims to provide the right mix of quality and service at a fair price?
Which pricing strategy aims to provide the right mix of quality and service at a fair price?
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What is a factor that does NOT affect pricing decisions?
What is a factor that does NOT affect pricing decisions?
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What type of pricing strategy involves setting prices based on competitors’ strategies?
What type of pricing strategy involves setting prices based on competitors’ strategies?
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In a competitive market, what must a company assess to understand its pricing position?
In a competitive market, what must a company assess to understand its pricing position?
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What is generally considered an internal factor in pricing decisions?
What is generally considered an internal factor in pricing decisions?
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Which option describes value-added pricing?
Which option describes value-added pricing?
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Which of the following is NOT a common objective for pricing strategy?
Which of the following is NOT a common objective for pricing strategy?
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What is the primary goal of the idea screening stage in new product development?
What is the primary goal of the idea screening stage in new product development?
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Which of the following factors contributes to the high failure rates of new products?
Which of the following factors contributes to the high failure rates of new products?
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Which sources can be used for idea generation in the new product development process?
Which sources can be used for idea generation in the new product development process?
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What happens during the concept development phase of new product development?
What happens during the concept development phase of new product development?
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What is a crucial criterion for the idea screening process?
What is a crucial criterion for the idea screening process?
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What is the primary focus of the marketing strategy development stage?
What is the primary focus of the marketing strategy development stage?
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In concept testing, what is the primary target for feedback?
In concept testing, what is the primary target for feedback?
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Which of the following new product development stages focuses on systematic idea generation?
Which of the following new product development stages focuses on systematic idea generation?
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Study Notes
Why New Products?
- Companies develop new products to replace aging ones
-
Two Major Challenges:
- Developing new products to replace aging ones
- Implementing life-cycle strategies - Adapt to changing tastes, technologies, and competition
- Importance is based on:
- Company growth
- Remaining competitive
- Keeping up with technological change
- Changing consumer tastes
- Following market trends
- 3M Company is an example - 60,000 employees and 60,000 products; 200-300 new products every year
New Product Development: Definition
- NPD: Development of original products, product improvements, modifications, and new brands
- Two Sources of New Products:
- Acquisition: company, patent, license
- New product development
- Expensive and risky with high failure rates: 60% for new consumer packaged products, 66% for new product concepts never launched
- Possible reasons for failure:
- Market size was overestimated
- Actual product was not designed as well as it should have been
- Incorrectly positioned in the market
- Priced too high
- Advertised poorly
- Costs of NPD were higher than expected
- Competitors fought harder than expected
- The challenge is to overcome the high rate of new product failure
Major Stages in New Product Development
-
Stage 1: Idea Generation - systematic search for new product ideas
- Internal sources: brainstorming, employees from all departments, R & D
- External sources: customers, competitors, distributors, suppliers, and others
- Crowdsourcing: inviting broad communities of people into the new product innovation process
-
Stage 2: Idea Screening - Identify good ideas and drop poor ones, avoid spending money on developing them
- Criteria Used:
- Is it real? - real need and desire for the product
- Can we win? - Competitive advantage; resources
- Is it worth doing? - Fit company’s growth strategy; sufficient profit potential
- Criteria Used:
-
Stage 3: Concept Development and Testing - Create a detailed version of the idea stated in meaningful consumer terms
- Concept testing - Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
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Stage 4: Marketing Strategy Development - Design an initial marketing strategy for a new product based on the product concept.
- First statement describes the target market, product positioning, sales, market share, and profit goals for the first few years.
- Sensitivity analysis
Stage 5: Business Analysis
- Review of the sales, costs, and profit projections for a new product to determine if they will satisfy company objectives
Stage 6: Product Development
- Developing the product concept into a physical product, ensuring it can be done
- Requires large investment
- Building a prototype
- Testing for safety, durability, and acceptability
Stage 7: Test Marketing
- Testing the product and marketing program in realistic market settings
- The amount of test marketing needed varies with each new product
- Gives the marketer an experience with marketing a product before full introduction
- Testing takes time, and costs can be high
- Alternatives to standard test markets:
- Controlled test markets
- Simulated test markets
- Reasons for using alternative test markets:
- Reducing costs
- Speeding up the process
Stage 8: Commercialization
- Introducing a new product into the market
- Large investment required
- Considerations for launching a new product:
- When to launch
- Where to launch - Single location, region, national market, or international market
Customer-Centered New Product Development
- Focus on finding new ways to solve customer problems and create more customer-satisfying experiences
Team-Based New Product Development
- Various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness
Systematic New Product Development
- Innovation management systems collect, review, evaluate, and manage new product ideas.
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Description
This quiz explores the importance of new product development (NPD) within companies, especially focusing on the challenges and reasons for developing new products. It highlights the role of companies like 3M in innovating and adapting to market trends and consumer preferences. Test your knowledge on the processes, challenges, and outcomes related to NPD.
