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A product that opens up entirely new into a market New to the world A product that adapts or replaces an existing product. A product that significantly broadens the market for existing product. An old product introduced into a new market. An old product packaged and marketed in a different way.

New To The World

I pad
Google +

1. New to the world products, or really new products

Accounts for 10% of the new products.

Mahindra - Reva

Emami Fair & Handsome

New product lines

Mars Ice Cream

Mahindra Bikes

2. New to the firm, or new product lines.

Accounts for 20% of the new products.


Additions to the product line

Polaris Software

3. Additions to existing Product line

Accounts for 26% of the new products.

Tide Liquid Detergent

Coca Cola - Sprite

Product Improvement and replacement

Maruti 800 Maruti Alto

Maruti Wagon R

I Generation II Generation III Generation IV Generation -

1993- 1998 1998- 2003 2003- 2008 2008- Present

New Products Can be Used To

Increase market share by offering more choices and updating older products. Appeal to new segments. Diversify into new markets. Improvements and revisions of existing products.


Introduction of a new product or a version of a product into the segmented market

Put the Focus on the People, Not the Product --- Steve Jobs


The process by which a new product is introduced into the market for initial sale. It includes the engineering, market analysis, and the development of a communication strategy. A Product Launch is a marketing strategy consisting of a carefully planned and scheduled sequence of events with the goal to make a big happening out of the release and, of course make as much sales as possible in a short time span

Product Launch is the most intense part of the product cycle. It is the period where the product is announced to the outside world and the first order can be placed. Product launch is the orchestrated introduction of a new product (or version of a product) to the market; the events surrounding making the product available for purchase for the first time.

Why a product launch?

To show the people a compelling picture of how the product is going to make their life better How the product is going to fit into the life of the people To make the people aware of the benefits and usage of the new product and in what way the product is a better option in the market

To satisfy additional customer demand. Spotting an additional way of adding value to your existing portfolio, in a new or existing niche. As a means of diversifying, to either grow the business, or to protect future earnings as a cash cow, reaches end of life.

New Product Development Process

Marketing Strategy Development Concept Development and Testing Business Analysis Product Development

Idea Screening

Market Testing

Idea Generation



Factors That Limit New Product Development Shortage of effective ideas Fragmented markets Social and governmental constraints Cost of development Capital shortages Faster required development time Shorter product life cycles


Idea Generation: Creativity Techniques

Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind mapping

Opportunity Identification
Internal sources
Company employees at all levels

External sources
Customers Competitors Distributors Suppliers Outsourcing

P&G marketers spend at least 12 hours a month with consumers in their homes , watching how they wash dishes, clean floors and brush teethes and asking them about their habits and sources of frustration.

Toyota claims its employees submit 2 million ideas annually. Microsoft studied 13 to 24 years old and developed Net Gen to satisfy their instant messaging needs.

Lateral Mapping
Gas stations + food Cafeteria + Internet Cereal + snacking Candy + toy Audio + portable


Idea Screening
After the firm identifies potential products, it must screen them. In product screening , poor, unsuitable or otherwise unattractive ideas are weeded out from further actions. No Error can occur if company permits poor ideas to move into development and commercialization.

Does the product meet a need? Would it offer superior value? Can it be distinctively advertised? Does the company has necessary capital? Will the new product deliver the expected sales volume, sales growth and profit? Is there sufficient demand? Does it fit the firm s image?


Concept Development
Product idea
A product idea is a possible product the company might offer to the market. Eg:

A car manufacturer figures out how to design an fuel cell powered electric car that can go as fast as 110 km per hour and as far as 370 km before needing to be recharged. The manufacturer estimates that the electric car's operating costs will be about half those of a regular car.

Customers, do not buy a product idea; they buy a product concept

What is Product Concept? A detailed version of the new-product idea stated in meaningful consumer terms.

What product concepts can we create for the above mentioned electric car?

Concept 1. A moderately priced subcompact designed as a second family car to be used around town. The car is ideal for running errands and visiting friends. Concept 2. A medium-cost, sporty compact appealing to young people. Concept 3. An inexpensive subcompact 'green' car appealing to environmentally conscious people who want practical transportation and low pollution.

Concept Testing
Concept testing calls for testing new-product concepts with a group of target consumers. The concepts may be presented to consumers symbolically or physically.
Here, in words, is Concept 3: An efficient, fun-to-drive, fuel-cellpowered electric sub compact car that seats four. This high-tech wonder runs on hydrogen created from methanol fuel, providing practical and reliable transportation with almost no pollution. It goes up to 110 km per hour and, unlike ordinary batterypowered electric cars, never needs frequent recharging. It's priced, fully equipped, at $13000.

After being exposed to the concept, consumers may then be asked to react to it by answering the questions:
Do you understand the concept of an hydrogen cell electric car? Yes( ) No( ) Do you believe the claims about the car's performance? Yes( ) No( ) What are the main benefits of the electric car compared with a conventional car? What improvements in the car's features would you suggest? For what uses would you prefer an electric car to a conventional car? What would be a reasonable price to charge for the electric car? Who would be involved in your decision to buy such a car? Who would drive it? Would you buy such a car? Definitely( ) Probably( ) Probably not( ) Definitely not( )

Why Concept Testing?

The answers will help the company decide which concept has the strongest appeal. Product concept tests helps us to gauge customers' response as well as to identify aspects of the concept that are particularly liked or disliked by potential buyers. Feedback might suggest ways to refine the concept, thereby increasing its appeal to customers, Concept testing of prototypes can help avoid costly mistakes.

Examples of Concept Testing gone wrong

Click to play Video


Marketing Strategy Development

Suppose the car manufacturing company finds that Concept 3 for the fuel-cell-powered electric car tests best. The next step is to develop a marketing strategy for introducing this car to the market. The marketing strategy statement consists of three parts. I. The first part consists of:
1. Target market 2. product positioning 3. Sales,market share and profit goals

Target Market
Young Well-educated Moderate-to-high income individuals Couples or small families Environmentally responsible/ Socially Conscious

The car will he positioned as: More economical to operate More fun to drive Environmental Friendly: Less polluting than today's internal combustion engine cars Less restricting than battery powered electric cars which must be recharged regularly

Sales, market share and profit goals for the first few years
The company will aim to sell 100,000 cars in the first year, at a loss of not more than 10 million. In the second year, the company will aim for sales of 120,000 cars and a profit of $25million.

II. The second part of the marketing strategy statement outlines:

Product's planned price Distribution Marketing budget The fuel-cell-powered electric car will be offered in three colors and will have optional air-conditioning and power-drive features. It will sell at a retail price of $13,000 - with 15 per cent off the list price to dealers. Dealers who sell more than 10 ears per month will get an additional discount of 5 per cent on each car sold that month. An advertising budget of $8 million will be split fifty-fifty between national and local advertising. Advertising will emphasize the car's fun and low omissions. During the first year, $70,000 will be spent on marketing research to find out who is buying the car and to determine their satisfaction levels.

III. The third part of the marketing strategy statement describes:

Planned long-run sales Profit goals Marketing mix strategy The company intends to capture a 3 per cent long-run share of the total car market and realize an after-tax return on investment of 15 per cent. Product quality will start high and be improved over time. Price will be raised in the second and third years if competition permits.


Strategy low-cost point-to-point service does not offer :

a. b. c. d. Meals Assigned seats Interline baggage checking, or Premium classes of service

does not fly great distances midsize cities and secondary airports in large cities Result attract price-sensitive customers fast turnarounds keep planes flying longer hours provide frequent departures with fewer aircraft

Strategy Click to Play Video self-service young furniture buyers who want style at low cost serves customers who are happy to trade off service for cost designs its own low-cost, modular, ready-to-assemble furniture displays every product it sells in room-like settings Customers are expected to do their own pickup and delivery Ikea will even sell you a roof rack for your car that you can return for a refund on your next visit Extra Services In-store child care Extended hours Note: These services are uniquely aligned with the needs of its customers, who are young, not wealthy, likely to have children (but no nanny), and, because they work for a living, have a need to shop at odd hours.


Business Analysis

Business Analysis Estimating Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If No, Eliminate Product Concept

If Yes, Move to Product Development

Estimating Total Sales

It is sum of 1st time sales, replacement sales and repeat sales. Tasks Involved in Sales Estimation:  Estimating first time purchases of the new product.  Estimating replacement sale by estimating the number of units that failed in one year.  For a frequently purchased new products, the seller has to estimate repeat sales as well as first time sales.

Estimating Cost & Profits

Costs are estimated by R&D, Manufacturing, Marketing and Finance departments. They project cash flow statements for certain period of time say 5 years and evaluate that how much time it will take product to enter into pay back stage. Pay back stage is the stage when company started recovering all its investments.

Projected 5 Year Cash Flow Statement

From the projections we can conclude Maximum Investment Loss= $4.6 Million Pay Back Period is of 3.5 years. Now this goes with the management to decide whether to take risk of $4.6 million and a possible payback period of 3.5 years.


Product Development
Product development converts a product idea into a physical form and identifies a basic marketing strategy. It involves working prototype construction. Quality Function Deployment Customer Attributes Engineering Attributes

What is QFD
QFD stands for Quality Function Deployment. QFD is a set of methods used in translating customers needs and demands into working prototype. Its takes as input all the customer needs and demands and provides a technical output for engineers to build a prototype. Example customer wants powerful bike with good acceleration and engineers can turn the need into required horsepower. QFD is improved communication between Marketers, Engineers and Manufacturing People.

Product Development through Acquisition

Large companies will sometimes buy a small companies rather than develop their own new companies. Examples Recently Google acquired Motorola Mobility. PepsiCo purchased Tropicana Products.


Test Marketing
Launching a product in a small geographical area
A field experiment in realistic market setting Aims -To predict likely results of a national launch -To test the operational effectiveness of the marketing plan -To identify possible problems -To assess consumer reaction

Customers Test
Alpha Testing is testing the product within the organization to see how it performs in coordination with different application. Beta testing is testing with sample of consumers to bring them into lab or give them samples to use them at home.

Examples Of Customer Testing

P&G has on site labs such as diaper testing centre where dozens of mothers bring their babies to be studied. Yahoo, Google always comes with their beta products initially to be tested by users in real scenario and rectify the bugs reported meanwhile.

Market Testing
After management is satisfied with functional and psychological performance, the product is ready to be branded with a name, logo, and packaging and go into a market test. 3 Types of Major Market Testing are Sales Wave Research Simulated Test Marketing Controlled Test marketing

Sales Wave Research

Consumers who initially tried the product at no cost are reoffered it at slightly reduced prices than competitors one. Offer can be made 5 times. Company notes how many customers select it again and their reported level of satisfaction.

Simulated Test Marketing

30 or 40 qualified shoppers are asked about brand familiarity and preferences in particular product category and screened to them both well known TV commercials or print ads and advertisement of new product but is not singled out for attention. Consumers receives small amount of money and asked to purchase any item. Consumers are asked the reasons for their purchase and non purchase.

The company notes how many consumers buy the new brand and competing brands. This provides a measure of the ad s relative effectiveness against competing ads in stimulating trial. Those who did not buy the new brand are given a free sample. Some weeks later they are interviewed by phone to know about product s value in terms of satisfaction.

Problems of Test Marketing

The test phase might not be a true indicator Environment might change between the test and the national launch, like any natural calamity. Competition may disrupt the test marketing by engaging in exceptional marketing activity. Test marketing alerts competitors.

P&G Bleach V/S Clorox

P&G developed a prototype and entered into market to test their product which is a Bleach. Do you know What Clorox the Rival did? They gave every household in Portland, Maine, a free gallon of Clorox bleach- delivered to the front door And nobody in Portland, Maine, was going to need bleach for several months and moreover Clorox even gave consumers a $1 off coupon for the next gallon. Test Marketing thus subject to external factors.


Commercialization is the process of introducing a new product or production method into the market.

Commercialization process
The funnel. It is essential to look at many ideas to get products or businesses that can be sustained longterm It is a stage-wise process and each stage has its own goals and milestones It is vital to involve main stakeholders early, including customers

First entry-Firm enjoys first mover advantage can backfire if the product is not debugged Parallel entry-Firm might time its entry to coincide with the competitors entry the market may pay more attention when both the companies are advertising the new product Late entry-Firm might delay its launch until after the competitor has borne the cost of educating the market the firm can learn the size of the market and avoid flaws

Where(Geographic strategy)
Small companies select an attractive city and put on blitz campaign,entering one city at a time. Large companies introduce their product into a whole region and then move to the next Companies with national distribution networks,such as auto companies,launch new models nationally. With the web connecting the far-flung parts of the globe,companies are increasingly rolling out new products simultaneously across the globe.

To Whom(Target Market Prospects)

Early adopters Heavy users Opinion leaders AIM- To generate strong sales as soon as possible to attract further prospects


Management can use network planning techniques such as CRITICAL PATH SCHEDULINGwhich develops a master chart showing the simultaneous and sequential activities that must take place to estimate the completion time for the entire project.

Woodland: Are you a Woodlander?

identity has been adventure with shoes
Woodland was launched in the global market in 1992, and in 1994 it was introduced in India positioning was very different from other brands sporting images.They talked about adventure and nature through their retail presence

Nestle-Maggi its different

Nestle launched its noodles in indian market in early 1980 s,but it took several years to establish brand.It had targeted the convenience of working women. Nestle repositioned the brand towards the children using sales promotion and smart advertising. Taste bhi health bhi -Maggi Atta Noodles


Press Release Online marketing/Blogging/Social Media Television Ads Event Launches Publicity Campaigns Road Shows Bill Boards

Products or services launched through promotional events Launch of Tata Nano

Mostly Movies and Serials will be launched through trailers Launch of Robot Movie

Products or Services can be launched through Ad Campaigns Toyota Etios Launch

Launch of Hero Motors


Products launching through News Papers , Magazines Launch Of Maruti Swift

Product Launch promotion through Bill Booards Bill Board of Mc Donalds introducing Espresso

Caution: Dont Promote What You Cant Deliver

E-Bay made grandiose announcements about their entry into the Japanese market, well before they had a localized product ready to launch in Japan and failed. Nokia N8 promoted as another innovation but lags far behind than even first generation APPLE! And thus failed.

Product Launch Launch like Steve Jobs: 7 Ways to Build Your Next Product Launch iPhone Launch

1. Put the Focus on the People, Not the Product

Don t just talk about what your product does Show them a compelling picture of how it s going to make their life better. That s what gets people excited.

2. Get Opinion Leaders On-Board Early

Apple has a knack for getting bloggers and other opinion leaders on board before their product launches. They get everyone talking months before the product launches . They re talking about what it might do

3. Be Revolutionary
Do something none of your competitors have ever done before Paint a picture of the future that your customers want to live in

4. Turn Your Product Launch into an Event

They stage an entire event around it, going so far as to even close their online store, so that everyone knows something important is happening and they need to pay attention.

5. Take Pre-Orders
Apple almost always offers pre-ordering of their new products It s not uncommon for them to sell hundreds of thousands of units within a week of launch

6. Release a Product Your Customers Will Want to Show off

Don t underestimate the importance of your product s appearance. A professional design makes people want to talk about it online or offline, it can have a big impact on your product sales

7. Draw out the Suspense for As Long As You Can

The mystery will drive your customer base into a frenzy.