Steps in New Product Development Process
Idea Generation: New product development starts with Idea generation. Company typically has to generate many ideas in order to find a few good ones. The sources of new product ideas are born from customer needs & wants, scientists, competitors, sales representatives, dealers, agents, trade persons, top management etc…
Idea Screening: The purpose of idea screening is to create large no.of ideas. The first idea reducing stage is idea screening, which helps to spot good ideas and drop poor ones as soon as possible. Many companies require their executive to write up new products ideas on a standard form that can be required by a new product committee. The write up describes the product, the target market & the competition. It makes some rough estimates of market size, product price, development time & costs & rate of return. The committee then evaluate the idea against criteria. The committee asks questions as is the product truly useful to the consumer & society? Is it good for our particular company? Do we have the people skills & resources to make if succeeded? Is it easy to advertise & distribute? Many companies have well designed system for rating & screening new product ideas.
Concept Development & Testing: A detailed version of the new product idea stated in meaning full Consumer term.
Concept Testing: Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or physically.
After being exposed two concepts consumers may be asked to react to it by answering questions such as
Do you understand the concept?
What are the benefits?
What improvements in the features
What is the reasonable price?
Would you buy such type of Product?
Marketing Strategy: Suppose Toyota find new concept and tests are success. The next step is marketing strategy development designing an initial marketing strategy for introducing this car to the market. The marketing strategy statement consists of three parts. The first describes the target market, the planned product positioning & the sales, market share & profit goods for the first few years.
The second part of the marketing strategy statement out lines to product planned price, distribution & marketing budget for the 1st year.
The third part of the marketing strategy statement describes the planned for long term sales, profit, goals & marketing mix strategy.
Business Analysis: Once management has decided on its product concept & market strategy, it can evaluate the business attach fineness of the proposal.
It involves a review of the costs & profit projections for a new product to find out whether these factors satisfy the company Objectives. If they do the company can move to the product development.
To estimate sales, the company might look at the history of similar products & conduct surveys of market opinion. After preparing the sales forecast management can estimate to expected costs & profit for the product, including marketing, R&D, manufacturing, Accounting & finance costs.
Product Development: If the product concept passes the business test it moves in to product development. Here R&D or engineering develops the product concept in to physical product.
Developing the product concept in to a physical product in order to assure that the product idea can be turned in to a workable product.
Test Marketing: The stage of new product development in which the product & marketing programs are tested in more realistic marketing settings. Test marketing gives the marketer experience with marketing the product before going to the great expense of full introduction. It lets the company test the product & its entire marketing program, positioning strategy, advertising, distribution, pricing, branding & packaging & budgets levels.
When using test marketing consumer products companies usually choose one of three approaches.
Standard Test Markets: Using this test market, the company finds a small no.of representative test cities, consumer and distributor surveys & other measures to gauge product performance. The results are used to forecast national sales & profits discover potential product problems & fine time to marketing program.
Controlled Test Markets: Several research firms keep controlled panels of stores that have agreed to carry new products for a free controlled test marketing system.
Simulated Test Markets: Companies can also test new products in simulated shopping environment.
The company or research firm shows ads & promotions for a variety of products including the new product being tested to sample consumers. It gives consumers a small amount of money & invites them to a real & laboratory store where they may keep the money or use it to buy items. The researchers note how many consumers buy the new product & competing brands. The researches then ask consumers the reason for their purchase or non purchase some weeks later, they interview it consumers by phone its determine product attitudes, usage, satisfaction & repurchase intention.
If the results are very poor, the product might be dropped or substantially redesigned & retested.
Commercialisation: Test marketing gives management the information needed to make a final decision about whether to launch the new product. If the company goes ahead with commercialisation to introduce the new product in to the market, it will face high cost. The company will have to build or rent a manufacturing facility. It may have to spend lot of money for advertising sales promotion & other marketing program efforts in the first year.
The company launching a new product must first decide on introduction timing, next company must decide where to launch the new product in a single location, a region, national market or international market.
For Steps in New product development process chart please click here
Source: Books & Notes
Tags: Consumer Behaviour, Consumer Buying Bahviour, consumers market, Human Resource, Indian consumer, Management, Marketing Management, MBA Career, MBA Finance, MBA Management, MBA Marketing, MBA Notes, MBA Projects, New Product Development, Organisation, organisational Behaviour, PRODUCT, Steps in New Product Development Process
By: Management Duniya
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