Transcript New Product Development (NPD) process

New Product Development
(NPD)
The 4 Elements of The Marketing
Mix
Marketing Mix
Product

Price
Place
Promotion
Defining “Product”
Anything that you can “sell”
Marketing applies to a broad
range of “products”
•
•
•
•
•
•
Physical product
Service
Events
People
Ideas
Places
Most “products” are combinations
of goods and service
Pure
good
Pure
service
Core ... Actual ... Augmented product
Successful firms . . .
• Fully understand the core
benefit sought by customers and
start with that concept
• Consider the enhanced product
including delivery, service and
complementary goods
The 8-Stage New Product
Development (NPD) Process
New Product Development
Key: Recognize when you are
in an NPD environment
New Product Development (NPD)
1. Idea Generation & 2. Idea Screening
• Generation: Firms are always on
the look-out
• Screening:
• Fit with manufacturing and
distribution expertise
• Feasibility
3. Concept Screening
• Prototype or storyboard
• Focus group: Would you be
interested in a service that . . .
• Approximation of willingness to pay
4. Marketing Strategy Development
and 5. Business Analysis
• Marketing strategy:
• Developing credible marketing
plans with positioning, target
and Marketing Mix
• Business analysis:
• Is there a high chance of a
good payoff?
6. Product Development
• E.g. battery life in iPod
7. Market Testing
• Some firms (“fashion goods”) don’t test
the market: Put it out there, see if
people buy it (the costs of this must be
small)
= “Market test by roll out”
• Simulated test market (dummy store)
new product is mixed in with familiars
• Test markets: Several cities let us
tweak the Marketing Mix … but rivals
may attempt disruption
8. Possible “roll-out” strategies
during “commercialization”
• By geography
• By market size
• By customer type
(business/consumer/government)
• By channel of distribution (Rx/OTC)
• By use (special occasion/every day)
• By benefit sought
The model for new product adoption
applies during “roll out”
Awareness
Interest
Trial
If we are not an
instant hit, do the
research
Repeat
Most New Products Fail?
• Consumer packaged goods fail most
often
• Brand extensions not sought by
consumer (“new” colors, flavors,
packaging)
• Products that attempt to meet a
need that few consumer have (e.g.
combination products)
Two forces for NPD
Consumer
needs
When the
two align,
you have a
winner!
Technological
advances
Big firms take a diversified
“Portfolio Approach”
Potential Payoff
New product to new markets
New product to existing markets
Add feature to existing product
Improve performance of existing product
Risk
Three keys to NPD
1. Recognize when you are in an NPD
situation
2. Understand that there’ll be many
ideas, and a few winners.
3. Tolerate a “portfolio” of products
A few (only a few) high risk products
And some no-brainers (with low
payoff)