New Product Development

 

Significance of New Product Development

 

•       New Product development is one of the most important components of product policy and product management.  It is not enough if the existing product lines and products are appraised properly.  Products are positioned effectively and brand decisions are taken wisely.  A progressive firm must always consider new product development as a cardinal element of its product policy. 

 

Reasons of New Product Development

 

1. New Products become necessary for meeting the Changes in Demands.
2. New Products become necessary for Making New Profits.
3. To counter threats arising from environment.
4. To prevent sudden extinction.
5. To avoid economic stagnation.
6. To beat competition.

 

Idea Screening

 

•       The purpose of screening is to spot & drop poor ideas as early as possible.  The rationale is that product development costs rise substantially at each successive development stage.  When products reach later stages, management often feels that they have invested so much in developing the product that it should be launched to recoup some of the investment.  The real solution is to not let poor product ideas get this far.

 

Concept Development & Testing
 

•       Concept Development:- During this stage, the ‘idea on the paper’ is turned into a ‘product in hand’.  In other words, the idea is converted into a product that is producible and demonstrable.  This stage is also termed as ‘Technical Development’.  It is during this period that all developments of the product, from idea to final physical form, take place.

 

Concept Testing
 

•       Concept testing calls for testing for testing these concepts with an appropriate group of target consumers.  The concepts may be presented symbolically or physically.  At this stage, a word and/or picture description suffices, although the reliability of a concept test increases, the more concrete and physical the stimulus.  The consumers are presented with an elaborated version of each concept.  Then they are asked to react.  Based on the reactions, decisions are arrived at. 

Business Analysis
 

•       Once management develops the product concept and a marketing strategy, it can evaluate the business attractiveness of the proposal.  Management must review the sales, cost and profit projection to determine whether they satisfy the company’s objectives.  If they do, the product concept can move to the product development stage.  As new information comes in, there will be further revision of the business analysis.

 

Product Development

 

•       Three steps are involved in the product-development stage:  Prototype Development & Consumer Testing, Branding & Packaging.

 

Test Marketing

 

Test marketing is a form of risk control and ensures avoidance of costly business errors.  It is a controlled marketing experiment with minimum possible cost and risk; to decide the soundness and feasibility of full-fledged marketing of the product.  If the results received from the test marketing are positive and encouraging, the firm may go ahead with the commercial production and marketing of the new product.

 

Commercialisation

 

•       The following activities are usually undertaken during this stage:-

1. Completing final plans for production and marketing.
2. Initiating coordinated production and marketing.
3. Checking results at regular intervals.

 

•       During Commercialisation, the following questions are to be answered. 

1. When to launch new Product (Timing).
2. Where to launch the Product (Geographical Strategy).
3. To whom the product should be aimed at (Target Market).
4. How to launch the product (Introductory Market Strategy).

  

 

How to solve the Problems of New Product Failure?

 

1. By ensuring that there is adequate demand for the product.
2. By making a product that is acceptable to the society.
3. By selecting a product that would exactly fit into the existing market structure of a company.
4. By using continuous and efficient demand creation methods.
5. By selecting a product that should reflect the company’s image already created, especially with regard to quality and price.

 

Product Elimination

 

•       There are some products which cannot be improved or modified to suit the market.  Here, the profitable alternative would be to withdraw the product.  The process of withdrawal is technically known as “product Elimination”.

 

Thank You