Transcript Product development

Chapter 9
New Product
Development
Competition in our global marketplace
makes it essential for firms to
continuously offer new products to
attract consumers.
However, successful new-product
introductions are becoming more
and more difficult. Problems
include the high costs of R&D and
competition for retailer shelf space.
New Product Failure
Many new products fail because of
meager competitive advantages,
overestimation of market size, poor
product positioning, poor marketing
mix, or bad timing.
New product development
refers to:
original products,
product improvements,
product modifications,
and new brands developed
from the firm’s own research
and development.
New Product Development
Stages of the new product development process:
1- Idea Generation
5- Business Analysis
2- Idea Screening
6-Product
Development
3-Concept Development
4- Strategy
Development
7-Test Marketing
8-Commercialization
1- Idea Generation
Idea generation is the systematic search
for new-product ideas.
Marketers use a variety of sources to
come up with ideas that provide strong
customer
benefits
and
that
are
compatible with the company mission.
These ideas can come from customers,
salespeople, service providers, etc.
Research is often conducted to come up
with new product ideas.
Sources of Idea Generation
1- Internal Idea Sources: here the
company finds new ideas through formal
research and development. Or it can pick
the brains of employees—from executives to
scientists, engineers, and manufacturing
staff to salespeople.
2- External Idea Sources: good new-product
ideas can also emerge from sources such as
distributors, suppliers or even competitors.
Perhaps the most important source of newproduct ideas is customers themselves.
2- Idea Screening
The first idea-reducing stage is idea
screening, which helps spot good ideas
and drop poor ones as soon as possible.
In screening, ideas are expanded into
more complete product concepts. When
screening, marketers and researchers
examine the chances that the product
concept might achieve technical and
commercial success.
3- Concept development and testing
In concept development, several descriptions
of the product are generated to find out how
attractive each concept is to customers. From
these concepts, the best one is chosen.
A product idea is an idea for a possible product
that the company can see itself offering to the
market.
A product concept is a detailed version of the
idea stated in meaningful consumer terms.
A product image is the way consumers perceive
an actual or potential product.
Concept testing
Concept testing refers to
testing new-product concepts
with
groups
of
target
consumers
4-Marketing strategy development
Marketing strategy development is designing an initial
marketing strategy for introducing a product to the
market.
The marketing strategy statement consists of three
parts.
1. A description of the target market; the planned
value proposition; and the sales, market share, and
profit goals for the first few years.
2. Outline of the product’s planned price,
distribution, and marketing budget for the first year.
3. Description of the planned long-run sales, profit
goals, and marketing mix strategy.
5- Business analysis
Business analysis involves a review of
the sales, costs, and profit projections
for a new product to find out whether
they satisfy the company’s objectives.
A business analysis is conducted to find
out if a product can be profitable. Issues
here include potential demand and
required firm resources for successful
development.
6- Product development
In product development, R&D or
engineering develops the product
concept into a physical product.
The product development step
calls for a large jump in investment.
7-Test Marketing
Test marketing is the stage at
which the product and marketing
program are introduced into
realistic market settings.
8- Commercialization
Commercialization is introducing
the new product into the market.
Decisions
must
be
made
concerning: timing, where to launch
the new product, and how to
implement the market rollout.
Product life cycle
Product Life Cycle is the way
products go through stages
from development to death.
The cycle has five distinct
stages:
1) Product development begins when
the company finds and develops a
new-product idea.
2) Introduction is a period of slow sales
growth as the product is introduced in
the market. Profits are nonexistent in
this stage because of the heavy
expenses of product introduction.
3) Growth is a period of rapid market
acceptance and increasing profits.
4) Maturity is a period of
slowdown in sales growth
because the product has
achieved acceptance by most
potential buyers. Profits level
off or decline because of
increased marketing outlays to
defend the product against
competition.
5) Decline is the period when
sales fall off and profits drop.
Product and Service Decisions
1- PRODUCT ATTRIBUTES
2- BRANDING
3- PACKAGING
4- LABELING
5- SUPPORT SERVICES
1- Product attributes
Developing a product involves
defining its attributes such as:
A. Quality
B. Features
C. Style & Design
Product
Quality
has
two
dimensions: level and consistency.
The
quality
level
means
performance quality or the ability of
a product to perform its functions.
Quality conformance means quality
consistency, freedom from defects,
and consistency in delivering a
targeted level of performance.
Product Features are a competitive
tool for differentiating the company’s
product from competitors’ products.
The company should periodically
survey buyers who have used the
product and ask these questions:
How do you like the product? Which
specific features of the product do
you like most? Which features could
we add to improve the product?
Product Style and Design is
another way to add customer
value.
Style describes the appearance
of a product. Design contributes
to a product’s usefulness as well
as to its looks.
2- Branding
A brand is a name, term, sign, symbol, or
design, or a combination of these, that
identifies the maker or seller of a product or
service.
Benefits of Brand names:
A.--help consumers identify products that
might benefit them.
B.--say something about product quality
and consistency.
C.--become the basis on which a whole
story can be built about a product.
D.--provide legal protection for unique
product features.
E.--help the seller to segment markets.
3- Packaging
A package is the covering or
container for a product, but it is also
a lot more.
Packaging protects the product. It
makes it easy for consumers to
handle and store the product.
Packaging also plays an important
role
in
communicating
brand
personality.
4-Labeling
Labels
identify
the
product
or
brand,
describe attributes, and
provide promotion.
5-Support services
Companies must continually
assess the value of current
services to obtain ideas for new
ones. They also need to develop
a package of services to satisfy
customers and provide profit to
the company.