New Product Development: Stages and Idea Generation

Stages in New Product Development

• The stages in new product development are idea generation, idea screening, concept development and testing, development of marketing strategy, business analysis, product development, test marketing, and commercialization

New Product Options

• One option is whether to make or buy, choosing between development or acquisition, such as acquiring a company, patent, or license.
• New products can be new-to-the-world or incremental innovations.

Idea Generation

• Methods include conducting marketing research to understand consumer needs and wants, R&D, inviting employee suggestions, brainstorming ideas for new products
• Additional methods for idea generation are inviting suggestions from consumers, searching various markets, soliciting feedback from dealers or suppliers, and studying competitors' new products.

Idea screening

• Idea screening involves the potential for a "DROP error," which is dropping a good idea, as well as the potential for a "GO error," which is allowing a bad idea to proceed.

Concept Development and Testing

• Product ideas evolve into product concepts during the development and testing phase
• A product idea is a prospective product concept the company envisions offering to the market
• A product concept is a detailed version of an idea articulated in meaningful consumer terms
• A product image is how consumers perceive an actual or potential product.
• Concepts include an instant breakfast drink for adults who want a quick, nutritious breakfast without preparation: An instant breakfast drink for adults who want a quick nutritious breakfast without preparations
• Other concepts include a tasty snack for children to drink as a midday refreshment and a health supplement for older adults to drink at night before they go to bed.
• Concept testing involves testing new-product concepts with target consumers to gauge the attractiveness of each concept and select the best one.
• Testing can be physical or symbolic and may involve physical or rapid prototyping.
• Consumers are presented with an elaborated version of the concept.
• One concept presented is a powerful mixture added to milk to make an instant breakfast that gives the person all the day's needed nutrition along with good taste and high convenience.
  • The product comes in 3 flavors: vanilla, chocolate and strawberry
  • The product would come in individual packs of 250g and 500g at Rs. 30 and Rs 58 for the packs respectively.
• Outcomes include communicability, need level, gap level, perceived value, purchase intention, purchase occasions, and purchase frequency.

Perceptual Map: Product Positioning

• Cornflakes and cold milk are quick and inexpensive
• Instant breakfast is quick and inexpensive
• Idli/dosa/upma are slow and inexpensive
• Bread and toast, butter and eggs are slow and expensive

Development of Marketing Strategy

• Key elements include product, price, promotion, and place
• Marketing strategy development involves formulating the initial marketing strategy for introducing the product to the market.
• A marketing strategy statement has three parts:
  • Part 1 describes the target market and the planned product positioning, sales, market share, and profit goals.
  • Part 2 outlines the price, distribution, and budget
  • Part 3 details long-term sales, profit goals, and the marketing mix strategy
• The target market for an instant breakfast drink is families with children receptive to a new, convenient, nutritious, and inexpensive breakfast.
  • The company's brand will be positioned at the higher-price, higher-quality end of this category.
  • The company aims to achieve 10% of the market with a profit of Rs. 10 million in its first year.
  • In the second year, the target is 15% market share with a planned profit of Rs. 90 million.

Business Analysis

• Business analysis includes reviewing sales, costs, and profit projections to determine if they meet the company’s objectives.
• The key considerations are Sales, Costs, and Profits.

Product Development

• Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments.
• Creation and testing involves prototypes and customer testing.

Market Testing

• Testing involves the new product being introduced on a small scale in a very small market.
• The company can then introduce it on a large scale if successful.
• Companies should find the reasons for failure, if unsuccessful.

Commercialization

• Involves consideration of when, where, to whom, and how to launch the new product.