New Product Development

Defining Product
A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Product Line
A product line is a group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range.

Product Mix
The product mix is the number of product lines offered by a company.

Services
Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.

Most products are combinations of goods and service

Pure good

Pure service

Core ... Actual ... Augmented product

New Product Development

What is a New Product?
New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Repositioned products Cost reduction products

New Product Development

Successful new products:
Offer a strong relative advantage Reflect better understanding of customer needs, and beat the competition to market Exhibit higher performance-to-cost ratios and higher contribution margins Are launched with larger budgets Have stronger top management support

Reasons for New Product Failures

Bad Timing Too Little Market Attractiveness

Poor Execution of the Marketing Mix: Name, Price, Promotion, and Distribution
No Access to Buyers Insignificant Point of Difference

Poor Product Quality

Insensitivity to Customer Needs on Critical Factors

The Stage New Product Development (NPD) Process

New Product Development (NPD)

1. Idea Generation
Firms are always on the look-out

2. Idea Screening
The object is to eliminate unsound concepts prior to devoting resources to them.

3. Concept Development and Testing

Develop the marketing and engineering details and test the concept by asking a sample of prospective customers what they think of the idea

4. Marketing Strategy Development

Developing credible marketing plans with positioning, target and Marketing Mix

5. Business Analysis
Estimate likely selling price based upon competition and customer feedback Estimate profitability and break-even point

6. Product Development
At this stage the prototype is produced. The prototype will clearly run through all the desired tests, and presented to a selection of people made up of the target market segment to see if changes need to be made.

7. Market Testing
Test marketing means testing the product within a specific area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed modified before national launch.

8. commercialization
Launch the product Produce and place advertisement and other promotions Fill the distribution pipeline with product

commercialization
These include: timing of the launch, how the product will be launched, where the product will be launched, will there be a national roll out or will it be region by region?

Two forces for NPD

Consumer needs

Technological advances