Marketing Mix (product): New Product Development

Group 4

Jomo Kenyatta University of Agriculture and Technology

School of Computing and Information Technology

Department of Information Technology

Bsc. Business Computing

Bridget Mutemi

Due 16th October 2023

Group members:

ALEX MUTUA SCT222-0133/2021

CHARITY GICHOHI SCT222-0290/2022
JOY MUTANU SCT222-0307/2022
WILSON GITHU SCT222-0322/2022
ELYNE CHEROTICH SCT222-0336/2022
SEAN AMUTAVY SCT222-0352/2022
AUSTINE OTIENO SCT222-0530/2022
RAHAB CHEPCHIRCHIR SCT222- 0741/2022
STAGES IN NEW PRODUCT DEVELOPMENT.........................................................................3

1. Idea Generation....................................................................................................................3

2. Idea Screening......................................................................................................................3

3. Concept Development and Testing......................................................................................3

4. Business Analysis.................................................................................................................3

5. Product Development...........................................................................................................4

6. Market Testing.....................................................................................................................4

7. Commercialization...............................................................................................................4

8. Launch and Post-Launch Review.........................................................................................4

9. Ongoing Evaluation and Improvement:...............................................................................5

Characteristics of stages in product life cycle..............................................................................5

1. introduction:.........................................................................................................................5

2. growth:..................................................................................................................................5

3. maturity:...............................................................................................................................6

4. decline:.................................................................................................................................6

Objectives of new product development......................................................................................6

Strategies of new product development.......................................................................................7

The Adoption and Diffusion............................................................................................................9

1. Innovators:............................................................................................................................9

2. Early Adopters:.....................................................................................................................9

3. Early Majority:...................................................................................................................10

4. Late Majority:.....................................................................................................................10

5. Laggards:............................................................................................................................10

Factors Influencing Adoption:...................................................................................................11

1. Relative Advantage:...........................................................................................................11

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 2. Compatibility:....................................................................................................................11

3. Complexity or Simplicity:.................................................................................................11

4. Trialability:........................................................................................................................11

5. Observability:....................................................................................................................12

6. Social Influence and Norms:.............................................................................................12

7. Risk Perception:................................................................................................................12

8. Communication Channels:................................................................................................12

9. Marketing Efforts and Promotion:....................................................................................12

10. Economic Factors:............................................................................................................12

Strategies for Promoting Adoption and Diffusion:....................................................................13

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STAGES IN NEW PRODUCT DEVELOPMENT.

1. Idea Generation
This stage involves brainstorming and gathering potential ideas for new products or services.

Ideas can come from various sources, including customers, employees, market research, and
competitive analysis.

The goal is to generate a pool of creative and innovative concepts.

2. Idea Screening
In this stage, the generated ideas are evaluated and filtered based on specific criteria.

The criteria may include alignment with the company's strategic goals, feasibility, market
potential, and profitability.

Ideas that don't meet the criteria are eliminated, and promising concepts move forward.

3. Concept Development and Testing

Selected ideas are further developed into detailed product concepts or proposals.

These concepts are presented in a tangible form, such as prototypes or mock-ups.

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 Concept testing involves getting feedback from a target audience to assess their level of
interest and gather insights for improvements.

4. Business Analysis
A comprehensive business analysis is conducted to assess the viability of the product concept.

This analysis includes estimating costs, pricing strategies, sales projections, market size, and
potential competition.

The goal is to determine whether the product can generate a profitable return on investment.

5. Product Development
If the business analysis is favorable, the product development stage begins.

This phase involves designing, engineering, and manufacturing the product.

Prototyping and testing are essential to ensure the product meets quality standards.

6. Market Testing
Before a full-scale launch, a small-scale market test is often conducted.

The product is introduced to a limited market or a specific target audience to gauge its
acceptance and collect real-world data.

Feedback from the test helps fine-tune marketing strategies and product features.

7. Commercialization
Once market testing is successful, the product is ready for commercialization.

This involves planning and executing marketing strategies, establishing distribution channels,
and launching the product to a broader market.

Sales, distribution, and promotion efforts are at their peak during this stage.
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 8. Launch and Post-Launch Review
The product is officially launched on the market, and efforts are made to create awareness and
drive sales.

After the launch, continuous monitoring and review are critical.

Adjustments may be made based on feedback and market performance.

9. Ongoing Evaluation and Improvement:

After the product is on the market, it's important to continually evaluate its performance.

Customer feedback, sales data, and market trends are analyzed to make improvements or
adaptations.

This stage may also involve product extensions, updates, or even discontinuation if necessary.

Characteristics of stages in product life cycle

1. introduction:
Low Sales: During the introductory stage, sales are typically low as the product is new to the
market, and customer awareness is limited.

High Costs: Costs are high due to initial product development, marketing, and distribution
expenses.

Slow Growth: Growth is slow as the product is still gaining acceptance and market share.

Limited Competition: Competition may be limited, with few direct competitors.

2. growth:
Rapid Sales Growth: Sales start to increase significantly as more customers adopt the product.

Market Expansion: The product begins to penetrate new market segments and regions.

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 Profitability Improves: As sales volume increases, economies of scale lead to lower
production costs, improving profitability.

Increasing Competition: As the market grows, more competitors enter, driving innovation and
price competition.

3. maturity:
Peak Sales: Sales reach their peak during the maturity stage, with the market becoming
saturated.

Steady Competition: Intense competition prevails, and companies focus on market share
retention and differentiation.

Price Pressure: Competition may lead to price wars, resulting in reduced profit margins.

Product Diversification: Companies may introduce product variations and extensions to

maintain customer interest.

4. decline:
Sales Decline: Sales start to decline as the market becomes saturated, and consumer
preferences shift.

Profit Erosion: Profitability decreases due to lower sales and increased marketing efforts to
retain a diminishing customer base.

Consolidation: Many competitors exit the market, leaving only the strongest players.
Product Phase-Out: Companies may consider discontinuing the product or offering it to a niche
market.

Ultimately, understanding the product life cycle helps companies make informed decisions about
product development, marketing, pricing, and resource allocation throughout the product's
lifespan.

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Objectives of new product development

1. Profit Generation: One of the primary objectives of NPD is to create products that can
generate revenue and profit for the company. This might involve developing products with high
profit margins or products that can capture a significant market share.

2. Market Expansion: NPD can be used to enter new markets or market segments. Companies
may aim to expand their customer base by introducing products tailored to different customer
needs or demographics.

3. Competitive Advantage: Developing innovative and unique products can provide a

competitive edge. The objective here is to create products that differentiate the company from its
competitors.

4. Customer Satisfaction: Improving customer satisfaction and loyalty is a key objective. NPD
can focus on addressing customer pain points, improving user experience, and delivering
products that meet or exceed customer expectations.

5. Brand Enhancement: NPD can be used to enhance the company's brand image. Launching
innovative and high-quality products can boost the brand's reputation and equity.

6.Technological Leadership: For technology-driven companies, the objective might be to

maintain or establish technological leadership in their industry by introducing cutting-edge
products.

Strategies of new product development

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1. Market Research: Extensive market research is crucial to understanding customer needs,
preferences, and trends. This research informs the development of products that are likely to
succeed in the market.

2. Cross-Functional Teams: NPD often involves cross-functional teams comprising members

from various departments (e.g., R&D, marketing, design). Collaboration among these teams is
essential for a successful product development process.

3. Prototype Development: Creating prototypes and conducting testing helps refine product
concepts and ensures that the final product meets quality and performance standards.

4. Agile Development: Agile methodologies can be employed to allow for flexibility and quick
adaptation to changing market conditions and customer feedback during the development
process.

5. Cost Management: Controlling costs is critical for profitability. Strategies may include finding
cost-effective manufacturing methods, materials, and supply chain optimizations.

6. Marketing and Promotion: A well-defined marketing and promotion strategy is crucial for
product launch and market penetration. It should include advertising, PR, social media, and other
promotional efforts.

7.Distribution Planning: Determining how the product will reach customers is vital. Effective
distribution strategies ensure that the product is available where and when customers want it.

8. Product Lifecycle Management: Planning for the entire product lifecycle, from introduction to
decline, helps in making informed decisions about product updates, extensions, or
discontinuation.

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9. Quality Assurance: Ensuring the product meets high-quality standards is a fundamental
strategy. Quality assurance processes should be in place throughout development and
manufacturing.

10. Intellectual Property Protection**: Depending on the industry, protecting intellectual

property through patents, trademarks, or copyrights may be a strategic consideration.

11. Continuous Improvement: Post-launch, collecting customer feedback and data on product
performance helps in making continuous improvements and updates to the product.

Effective NPD requires a balanced approach that aligns objectives with the right strategies. It
also requires adaptability, as the market and competitive landscape can change over time.
Successful NPD is often an iterative process that involves learning from both successes and
failures to drive innovation and growth.

The Adoption and Diffusion

The adoption and diffusion of a new product refers to the process by which individuals or
organizations learn about, accept, and eventually integrate a new product or innovation into their
daily lives or operations. This process is typically described using Everett Rogers' Diffusion of
Innovations theory, which outlines how different groups of people adopt new products or ideas
over time. Here are the key stages and concepts related to the adoption and diffusion of a new
product:

1. Innovators:
Innovators are the first individuals or organizations to adopt a new product. They are often
risk-takers and technology enthusiasts.

Innovators play a crucial role in spreading awareness of innovation and serve as opinion
leaders in their respective communities.

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 2. Early Adopters:
Early adopters are the second group to adopt a new product, typically after innovators but
before the majority.

They are well-connected in their social networks and have a higher degree of influence on
others' adoption decisions.

Early adopters are often motivated by a desire to gain a competitive advantage or to be seen as
progressive.

3. Early Majority:
The early majority represents the largest adopter group. They are more cautious and deliberate
in their adoption decisions.

They tend to adopt a new product once it has been proven by the innovators and early adopters.

Pragmatism and a desire to see real-world benefits drive their decisions.

4. Late Majority:
The late majority group adopts a new product after the early majority has embraced it.

They are often skeptical of innovation and adopt primarily out of necessity or pressure from the
majority.

Late majority adopters may have concerns about cost, complexity, or potential risks.

5. Laggards:
Laggards are the last to adopt a new product, often resisting change and clinging to traditional
ways of doing things.

They may adopt only when there are no alternatives or when the old way becomes obsolete.

Laggards tend to be risk-averse and conservative in their attitudes.

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Factors Influencing Adoption:

The adoption of a new product or innovation in marketing is influenced by various factors that
can affect how quickly and to what extent consumers or businesses adopt and integrate the new
offering into their routines. Here are some key factors influencing adoption in marketing:

1. Relative Advantage:
This refers to the perceived superiority of the new product or innovation over existing
alternatives. Consumers are more likely to adopt if they believe the new offering offers
significant advantages in terms of performance, quality, or benefits.

2. Compatibility:
The degree to which the new product or innovation fits with existing needs, values,
experiences, and behavior of the target audience. If it aligns well with existing practices,
adoption is more likely.

3. Complexity or Simplicity:
The ease with which consumers can understand and use the new product. Products that are easy
to use and integrate into existing routines are more likely to be adopted quickly.

4. Trialability:
The ability for consumers to try the product before making a commitment. Products that offer
trial periods or samples often have higher adoption rates.

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 5. Observability:
The degree to which the results and benefits of using the product are visible and can be easily
observed by others. Products with clear, tangible benefits are more likely to be adopted.

6. Social Influence and Norms:

The impact of social networks, peer groups, and societal norms on adoption. Consumers are
influenced by the opinions and behaviors of others in their social circles.

7. Risk Perception:
The perceived level of risk associated with adopting the new product. High perceived risks,
such as financial or performance risks, may slow down adoption.

8. Communication Channels:
The availability and effectiveness of channels through which information about the new
product is communicated to the target audience. Effective marketing communication can
influence adoption rates.

9. Marketing Efforts and Promotion:

The strategies and efforts employed by marketers to promote the new product. Effective
marketing campaigns, including advertising, promotions, and endorsements, can positively
impact adoption.

10. Economic Factors:

The affordability and cost-effectiveness of the new product compared to alternatives. Pricing
strategies and cost considerations can influence adoption rates.

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Strategies for Promoting Adoption and Diffusion:
Targeted Marketing: Tailor marketing efforts to address the concerns and motivations of
different adopter groups.

Word-of-Mouth and Social Proof: Leverage positive reviews and recommendations from early
adopters to influence others.

Offer Trials and Demonstrations: Allow potential customers to experience the product firsthand.

Education and Training: Provide resources and training to help customers understand and use the
product effectively.

Pricing and Incentives: Consider pricing strategies, discounts, or incentives to encourage

adoption.

Solve Adoption Barriers: Address common barriers such as complexity, compatibility issues, or
concerns about risk.

Maintain Product Quality: Ensure the product consistently delivers its promises to maintain
customer satisfaction.

Feedback and Improvement: Continuously gather feedback from users to make improvements
and updates.

Understanding the adoption and diffusion process is essential for businesses to effectively
introduce new products to the market and manage their growth. It helps companies tailor their
strategies to different customer segments and accelerate the acceptance of innovative products.

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