GOOD

MORNING
New product development
Introduction
In market the product is the most tangible
and important single component of the
marketing programme. The development
of new product means to find out whether
the new concept can b implemented in
practical or not from technical and
commercial point of view.
 DEFINITION
“ A new product is a product that opens up
an entirely new market,replaces an
existing product,or significantly broadens
the market for an existing product”.
ARCH PATON
 Challenges in New-Product
Development

A company can add new products

through acquisition or develoment.
The acquisition route can take
three forms:-

1) It can acquire patents from other

companies.

2) It can buy a license or franchise from other

company.
3) The company can buy other companies.
 The development route can take
two forms:-
• The company can develop new products
in its own town laboratories.

• It can contract with independent researchers

or new product development firms to develop
specific new products.
 Six Categories of New Product
1) New -to-the –world products:- new
products that create an entirely new market.

2) New product lines:- new products that

allow a company to enter an established
market for the first time.

3) Additions to existing product

lines:- new products that supplement
established product lines (package sizes,
flavour etc).
4) Improvements and revisions of
existing products:- new products that
provide improved performance or greater
perceived value and replace existing products.

5) Repositionings:- existing products that are

targeted to new markets or market segments.

6)Cost reductions: new products that provide

similar performance at lower cost.
 poor
High cost
design

Ignoring
market Reasons for Wrong
research failure of new price
products

Ineffective Competit-
advertising ors
 Several factors which hinder
new product development:-
 Shortage of important ideas in
certain areas:- there may be few ways left
to improve some basic products.
 Fragmented markets:- companies have
to aim their new products at smaller market
segments,means lower sales and profits for
each product.
 Capital shortages:- some companies
with good ideas can’t raise the funds needed to
research and launch them.
 Shorter product life cycles:- when a
new product is successful,rivals are quick to copy
it.
 Cost of development:- a company
typically has to generate many ideas to find just
one worthy of development,& faces high
manufacturing, marketing cost.
 Social &governmental constraints:-
new products have to satisfy consumer safety
and environmental concerns.
NEW PRODUCT
DEVELOPMENT
PROCESS
 Idea generation REJECT D
Screening of new
REJECT
ideas
Product concept
R
REJECT
development&testing
Business analysis REJECT O
Product
REJECT
designing&developm
ent
P
REJECT
Product testing
YES
Future YES commercialization MODIFY THE
plans NO PRODUCT?
 1) Idea generation
The new product development process
starts with the search for ideas. New
product ideas can come from interacting
with others and using creativity
generating techniques.
 Interacting with others
Ideas for new products can come from many
sources like.
competitio
customer scientists rs
s

Top
employees management
 2) Idea screening
After receving a number of ideas good or
bad from the first stage ,the next step is to
screen& evaluate the ideas which is useful
for the company. The process of screening
is critical evaluation of product ideas. The
purpose of screening is to drop the poor
ideas which is in incompitable with the
company objectives.
 customer satisfaction

Goodwill Profit
Company’s
objectives

Market share Increase sales

In screening ideas,the company must avoid
two types of errors:-
1. DROP ERROR:-when the company dismisses
an otherwise good ideas.
2. GO-ERROR:-When the company permits a
poor idea to move into development&
commercialization.
FAILURE
 ABSOLUTE PRODUCT FAILURE.
 PARTIAL PRODUCT FAILURE.
 RELATIVE PRODUCT FAILURE.
 3) Concept Development &Testing

Concept development:- In this

concept to measure the
need,targets,purchase frequencyof the
consumers, the gap level between new
product&existing productin market.
Concept testing:-its presenting the
product concept to appropriate target
consumers and getting their reactions
.
 4) Marketing Strategy

If the concept testing is successful,the

next step is to develop a preliminary
marketing strategy plan for the
introduction of the new.
The plan consists of three parts.
FIRST PART:- it describes the target
market’s size,structure and behavior ;product
positioning ,expected sales &profits.
Second part:- In this part outlines the
planned price, distribution strategy and
marketing budget.

Third part:- In the last part long run

sales & profit goals& marketing mix
strategy over time.
 5)Business Analysis

In this step efforts are made to establish

whether the new product will b suitable or
not? In business analysis following three
types of estimate are made:-
Business analysis

Estimating Estimating Estimating

future sales future cost future profits
1)Estimating future sales:- For
business analysis, first we estimate future
sales of the product.
2)Estimating future costs :- different
elements of the costs are analysed, it helps
measuring the profitability of a product.
3)Estimating future profits:- it is also
considered whether these profits will
provide desired rate of return on capital
invested or not. If not,the idea is dropped.
 6) Product Designing &
Development
In this stage,the company to develop
product proto type so as to ascertain
whether the company has the necessary
technology available or procure the
technology to manufacture product which
staisfy the consumes ,business needs.
There are two types testing:-
1) Alpha testing:- test within the firm.
2) Beta testing:-test with customer.
 7) Test Marketing

Test marketing provides important

clues,weakness about the product. In this
stage where the entire product and
marketing programme is tried out for the
first time in a small number of well
chosen and sales environment.
 Market testing
Consumers goods sales wave research.
Simulated test.
Controlled tests.
Test markets.
Business goods
Alpha &beta testing.
Display at trade shows.
Distributors display room test.
 8) Commercialisation
If the product is found to be suitable as a result of
analysis &study of the result of test marketing ,it
is ready to be launched in the market.
In commercializing a new product,ceratin decisions
are vry crucial.
A) When timing of market entry
• First entry
• Parallel entry
• Late entry.
B) Where geographic strategy
Single locality
A region
National market
International market
A launching of a new product,there many
activites are to b coordinated,management can
use network-planning techniques.
 CONCLUSION

Therefore,efforts must be made to

develop a unique,superior product
marketed at a reasonable price in an
effective manner.