New Product Development
Every company must develop new products. New product development shapes the company’s future. Improved or replacement products must be created to maintain or build sales. Customers want new products and competitors will do their best to supply them. Companies that fail to develop new products are putting themselves at great risk.
New product development requires senior management to define business domains, product categories and specific criteria. Senior management must decide how much to budget for new product development. New product development undergoes eight stages: (i) Idea generation (ii) Idea screening (iii) Concept development and Testing (iv) Marketing strategy development (v) Business analysis (vi) Product development (vii) Market Testing (viii) Commercialisation.
I) Idea Generation: The new product development process starts with the search of ideas. New product ideas can come from interacting with various groups and from using creative generating techniques.
Ideas for new products can come from customers, scientists, competitors, employees, channel members and top management.
Several creative techniques can be used for generating ideas for new products. These techniques include:
a) Attribute listing: List the attributes of an object and then modify each attribute.
b) Forced listing: List several ideas and consider each one in relation to each other one.
II) Idea Screening: A company should motivate its employees through rewards to reward to submit their new ideas. Ideas should be written down and reviewed each week by an idea committee. The company then sorts the proposed ideas into three groups: Promising ideas, marginal ideas and rejects. The promising ideas then move into a full scale screening process. The purpose of screening is to drop poor ideas as early as possible. The rational is that product development cost rise substantially with each successive development stage.
III) Attractive Development and Testing: Attractive ideas must be refined into testable product concepts. A product idea is a possible product the company might offer to the market. A product concept is an elaborated version of the idea expressed in meaningful consumer terms. Each concept represents a category concept that defines the product’s competition.
Next, the product concept has to be turned into brand concept.
Concept testing involves presenting the product concept to appropriate target customers and getting their reactions. The concept can be presented physically or symbolically. The more the tested, concept resembles the final product or experience, the more dependable concept testing is.
IV) Marketing Strategy: Following a successful concept test, the new product manager will develop a primarily marketing strategy plan for introducing the new product into the market. The plan consists of three parts. The first part describes the target market size, structure and behaviour, the planned product positioning : and the sales market share and profit goals sought in the first few years.
The second part outlines the planned price, distribution strategy are marketing budget for the first year.
The third part of the marketing- strategy plan describe the long run sales and profit goals and marketing mix strategy over time.