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Product Development Chapter 7

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29 views16 pages

Product Development Chapter 7

Uploaded by

toqeersardar899
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Product Development Process

Part 1
Product Development
New Product Development
 New product developments means the development of original product,

product improvement, product modification and introduction of new


brands through firm’s own product development efforts .
 Most of the new products fails in the market such as in America 90%

of new products fails in the market and cause lose of 20 to 30 billion


every year.
 For example Dane Food (Dog Food) failed in Pakistan but very popular

in USA and UK.


The New Product Development Process
The New Product Development Process
 There are eight steps in the new product development process

1. Idea Generation
2. Idea Screening
3. Concept Development and Testing
4. Marketing Strategy Development
5. Business Analysis
6. Product Development
7. Testing Market
8. Commercialization
The New Product Development Process
1. Idea Generation
 New product development starts with idea generation. Idea
generation is the systematic search for new product idea, i.e. IBM
held innovation jam which is online suggestion box for new
products.
 There are two sources for idea generation, which are following
i. Internal Idea Source

ii. External Idea Source


The New Product Development Process
1. Idea Generation (Continue)
i. Internal Idea Source
 Ideas through company internal Research and Development Center,
employees such as scientist, engineers, staff and even top management. For
example Samsung use (VIP) value innovation program center within the
organization for new idea of products.

ii. External Idea Source


 Ideas through distributers and suppliers. Distributers are close to
customers and market, they can give us information about consumer
problems. Competitors are also source of new product idea.
The New Product Development Process
2. Idea Screening
 Screening new product idea in order to spot the good ideas and
drop poor ones as soon as possible.
 One marketing expert proposes an R-W-W ( Real, Win, Worth it)
method. The idea of new product should answer three questions.
First is it real? Is there is real need and desire. Second is, can we
win? Does product offer competitive advantages. Third is, Is it
worth doing? Does it offer sufficient profit.
The New Product Development Process
3. Concept Development and Testing
An attractive idea must be developed into product concept.
Product concept
 A detailed version of the new product idea stated in meaningful
consumer terms i.e. concept of battery powered electrical car
Concept Testing
 Testing new product concept with the group of target consumer to find
out the concept have strong consumer appeal.
 Both product concept and concept testing done on a paper or a system at
this stage
New Product Development Process
Part 2
The New Product Development Process
4. Marketing Strategy Development
 Designing an initial marketing strategy for new product based on the
product concept.
 There are three steps in marketing strategy, suppose we take the
concept of battery powered electrical car.
Step1: Describe the target market, value proposition, market share and
profit goals.

Step 2: Product planned price, distribution, and budget for first year

Step3: Planned long run sales, profits goals and marketing mix strategy.
The New Product Development Process
5. Business Analysis
 A review of sales – costs and profit projection for new product to

find out whether it satisfy company’s objective. If cost is more than


benefits then reject the product development

6. Product Development
 Developing the product concept into physical product in order to

ensure product idea can be turned into market offering. Only one or
few models should be developed to test in the organization.
The New Product Development Process
7. Test Marketing
 The stage in which product and marketing program are tested in realistic
market setting, i.e. KFC test for three years for its product Kentucky
Grilled Chicken. Three approaches can be used for testing.
i. Standard Test Market: Company find small representative cities. Conduct
full marketing campaign, consumer and distribution survey.

ii. Controlled Test Market: Company use control panel stores. Use scanner to
check customer behavior for new product. Less costly then Standard Test
Market

iii. Simulated Test Market: Create artificial market to check new product
response.
The New Product Development Process
8. Commercialization
 Last step in new product development process, in which we
introduce new product into the market.
 Companies spend millions of dollars on advertising and sales
promotion. For example when Unilever introduced Sunsilk Hair Care
line spend almost 200 million $ only in USA.
Principles of Marketing
Lecture No 8
Product Development and Life Cycle
Product Life Cycle (PLC)
Product Life Cycle
 Product life cycle is the course of product’s sales and profit over
its life time.
 After product development product start with introduction in the
market for the purpose of sale. The demand of the product
gradually increase in the market and its reach to it maximum, from
where it start to decline. It is effective life span of a product.
 There are usually four but we will discuss five stages of PLC.
Product Life Cycle (PLC)
Stages of Product Life Cycle
1. Product Development Begin
 Product is under development. During product development sales are
zero and company cost is mount.
2. Introduction
 Period of slow sales growth as product is new in the market. Profit is
less because of heavy advertising and promotion expense.
3. Growth
 Growth is a period of rapid market acceptance and increasing profit.
Product Life Cycle (PLC)
4. Maturity
 Stage where slowdown in sales growth of product as it reach
at peak. Product accept by potential buyers.
5. Decline
 Last stage of product life cycle. It is a period when sales of
product fall off and profit drop.

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