NEW PRODUCT DEVELOPMENT
Innovation is the name of the game
NEW PRODUCT DEVELOPMENT: The development of original
products, products improvement, products modification and new
brands through the firms own R&D efforts.
Failure rate : 80% of packaged consumer goods and 30% of industrial
goods
Survival rate : 40% products survive for more than five years
But companies must develop new products to survive
PROCESS OF NEW PRODUCT DEVELOPMENT
1: Idea Generation
2: Idea Screening : Screening new ideas in order to spot good
ideas and drop poor ones at initial stage.
3: Product Concept : A detailed version of the new product
idea stated in meaningful consumer terms
4: Concept Testing : Testing new product concepts with a group
of target consumers to find out if the
concepts have strong consumer appeal
5: Marketing Strategy Development: Designing an initial
marketing strategy for a new product
based on the product concept.
New Product Development --- contd.
6: Business Analysis: Review of the sales, costs and profit projection
for a new product to find out whether these
factors satisfy the company’s objectives
7: Product Development: Developing the product concept into a
physical product in order to ensure that the
product idea can be turned into a workable
product.
8: Test Marketing: The stage of new product development in which
the product and marketing program are tested
in more realistic market settings.
Standard Test Markets
Controlled Test Markets
Simulated Test Markets
9: Commercialization: Introducing a new product into the market
PRODUCT LIFE CYCLE STRATEGIES
The course of a product’s sale and profits over its lifetime.
Five stages (1) Product Development (2) Introduction
(3) Growth (4) Maturity
(5) Decline
Take off stage - between introduction and growth stages
PLC for (a) Style (b) Fashion and © Fads
Style may continue for generations
Fashion grows and declines slowly
Fads – fashions that enter quickly, are adopted with great zeal, peak
Early and decline very fast.
INTRODUCTION STAGE: The product is distributed and made
available for sale
Low sales, high costs, negative profit, innovator customers
GROWTH STAGE: The product’s sales start climbing quickly
Growing sales, increasing profits, early adopters, more competitors
MATURITY STAGE: Sales growth slows or levels off
Peak sales, high profits, middle majority customers, competitors phasing out
DECLINE STAGE: Product’s sales decline
Declining sales, profit and competitors
Revive the product, (at which stage?) relaunch with new features
or withdraw the product…..
QUIZZ - 24th June 2004
Please write TRUE or FALSE
1: Line Extension is introduction of additional items in a given
product category under the same brand name.
2: Service cannot be seen, tasted, felt, heard of smelled
before the purchase.
3: Labeling is an activity of designing and producing the container
or wrapper for a product.
4: Product assortment consists of all the product lines and items
different manufacturers offer for sale.
5: Service provider should never discuss concerns about service
quality with his employees.
