NEW PRODUCT..?

'New products' can be:

Products that your business has never

made or sold before but have been
taken to market by others.

Product innovations created and

brought to the market for the first
time. They may be completely original
products, or existing products that you
have modified and improved.

New products are goods and services

that differ significantly in their
characteristics or intended uses from
products previously produced by the
firm
WHAT IS PRODUCT PLANNING
According to Johnson,
“Product Planning determines the
characteristics of product best
meeting the consumer’s numerous
desires, characteristics that add
stability, to products and incorporates
these characteristics into the finished
product.”
According to Karl H. Tietjing,
Product planning, “As the act of
making out and supervising the search
screening, develop and
commercialization of new products,
the modification of existing lives and
discontinuance of marginal or
unprofitable items”.
 PRODUCT DEVELOPMENT
Product development refers to the
creation of a new product which has
some utility; or up-gradation of the
existing product; or enhancement of
the production process, method or
system. In simple words, it is all about
bringing a change in the present goods
or services or the mode of production.
Creation and Innovation pave the
way for new inventions and
generation of a new product which
provides utility to the consumers.
Improvement of the existing
products is essential to upgrade
the old products and to attain
perfection.

Enhancement of the existing

production process, methods,
techniques and system helps in
the betterment of customer
experience. It is more cost-
efficient for the organization too.
TYPES OF NEW PRODUCTS

New-to-the-world
 products: These are essentially the new
products that didn’t exist in the world before. For example,
the launch of Uber app was a new-to-the-world product.
New-to-the-firm Products (new product lines): These are

new products that didn’t exist in the firm’s portfolio before.
These are not new to the world but are just new to the firm
and add a new product line to the existing portfolio. For
example, P&G’s first shampoo was a new-to-the-firm
product. 
Additions to existing product lines: These products are

supplements to the company’s established product lines. For
example, a new flavour for Colgate would be a product line
extension.
TYPES OF NEW PRODUCTS
 Improvements and revisions of existing Products: These are
the upgrades that replace current products and provide
improved performance and/or higher perceived value.
 Repositionings: Repositioning is changing the existing image
of the product in front of the existing target market (and
relaunching it) or taking this product to a new market with a
new image. For example, McDonald’s was launched in Japan
as Makudonarudo.
 Cost Reductions: These are the new products that provide
performance similar to the existing products but at a lower
cost to the company
WHAT IS NEW PRODUCT
DEVELOPMENT?
 New Product development typically refers to all of the stages
involved in bringing a product from concept or idea through
market release and beyond. In other words, product development
incorporates a product’s entire journey.
 A new product isn’t always about developing a new-to-the-world
product.
 In fact, according to Kotler, only 10% of all new products are truly
innovative and unique to the world. Upgrading existing products
and relaunching them as new products, adding new products to the
existing product mix, etc. are all essential practices for the
company as they operate in a dynamic business environment where
customer’s needs and tastes, technologies, and product life cycles
 are always changing.
NEW PRODUCT DEVELOPMENT
PROCESS
 Idea generation
 Idea Screening

 Concept Development and testing

 Marketing Strategy Development

 Business Analysis

 Product Development

 Market Testing

 Commercialization
NEW PRODUCT DEVELOPMENT
PROCESS
IDEA GENERATION
 Ideas form the spine of the new product development. They stem
from market opportunities and can be innumerable. This stage
involves creating a large pool of ideas from both internal and
external sources using numerous techniques.
New Product Ideas From Internal Sources
 Research and Development: R&D department is a formal
department of the business that includes experts with the sole
responsibility to conduct market research and analysis and
generate new ideas.
 Employees: Employees are the ones who work closely with the
product and the customers. According to research, almost 45% of
all new product ideas come from the employees.
IDEA GENERATION
New Product Ideas From External Sources
Customers: Customers are the most important sources to get new product
development ideas. Their needs, wants, and desires form the base of the market
opportunity, and most of the time they know what they want. Surveys, customer
forums are excellent sources of new product development ideas.
Channels Of Distribution: Since distributers work closely with the customers,
they understand better what the customer actually demands. They often give
ideas for new product possibilities and can also help the company with market
information like new concepts, techniques, technology, and materials. 
Competitors: Competitor analysis is a great way to analyse how the market rate
the existing players and what’s missing in the market. This information is further
used to develop new products.
Others: Other idea generation sources include consultants, communities,
government agencies, market research firms, commercial laboratories, etc. 
IDEA SCREENING
 While the purpose of idea generation is to create a large pool of ideas,
this stage involves evaluating the pool and drop as many ideas as
possible from consideration. This is done by determining and
evaluating the ideas’ –
 Compatibility: Compatibility of the idea(s) with the overall business
objectives.
 Relevance: Relevance of the ideas based on the current and predicted
business environment and the organisation’s goals.
 Assumptions: Validity of the assumptions the idea is based on.
 Constraints: Internal and external constraints that hinder the growth
of the idea into reality.
 Feasibility: Feasibility of the idea according to the resources available.
 Value: The idea’s predicted return on investment.
 Risks: Internal or external risks that may hinder the idea’s progress.
 CONCEPT DEVELOPMENT AND TESTING
Before you start with the New Product Development process, building a
detailed version of the idea and the user stories should be given priority.
 This value proposition evaluation is the first step towards concept
development and testing.
At the very least, it ensures that you discover problems in your approach
sooner and can course-correct earlier. That saves you from piling up
technical debts.
 CONCEPT DEVELOPMENT AND
TESTING
 The easy-to-follow concept development steps include:
1. Quantifying Gain/Pain Ratio
You need to create an insightful picture of the product from the
user’s perspective. This can be achieved by calculating the
gain/pain ratio, where:
Gain = Benefits of the product for the customer. What is in it for
them?
Pain = The efforts made by the customer to understand and use the
product.
 CONCEPT DEVELOPMENT AND
TESTING
2. Conducting a Competitor Analysis
Knowing about existing market players is a critical strategic step to
consider. When you understand the competition, it becomes
easier to infer:
 Where the competitor lacks

 Where is the scope for improvement

 Existing white space in the market

3. Enlisting the Major Product Features

The user stories you involve in the New Product Development
software project will make or break your business. When
creating a list of such features, it is imperative to know:
How is it an innovative feature, and how is it going to solve a
problem?
 CONCEPT DEVELOPMENT AND TESTING
4. Create a Value Proposition Chart
Even when you are convinced with the wisdom & the utility of your
idea, being able to state it clearly to the end-user, in their context, is
quite a different story altogether. You have to give a clear picture of
what the new product is capable of doing.
This clean & presentable fashion can be best represented in the form of
a value proposition chart. The format of which should include:
CONCEPT DEVELOPMENT AND TESTING
Concept Testing
Once the concept is developed, it is tested using several methods and
processes like –
 Concept-test surveys: The planned target audience is asked to
answer some product-related questions. These answers are further
analysed to test the viability of the concept.
 Prototype: A prototype is developed to understand the viability of
the product better.
 MARKETING STRATEGY DEVELOPMENT
Once a promising concept is finalised, the next step involves developing
a marketing strategy for the new product. The marketing strategy is
divided into three parts:
 The detailed description of the target market’s size structure and
behaviours, the planned value proposition, the product positioning
strategy, and sales size, market share and profit goals for the first few
years.
 An outline of the pricing strategy, distribution strategy, and the
required marketing budget for the first year.
 The marketing mix strategy and the planned long-term sales and
profit goals.
 BUSINESS ANALYSIS:
A review of sales, costs and profit projections for a new product to
find out whether these factors satisfy the companies objectives
–
 i. It is evaluation of business attractiveness of the proposal.

 ii. The company uses the sales and costs figures to analyse the
new products financial attractiveness.
In simple terms, this step evaluates the product as a business by
reviewing –
 Costs involved in producing, marketing, and selling.

 Projected sales

 Projected profits
 PRODUCT DEVELOPMENT:
Developing the product concept into a physical product in order to assure
that the product idea can be turned into a workable product.
i. This stage involves large investments.
ii. The R&D department will develop and test one or more physical
versions of the product concept (prototype).
iii. The prototype must have the required functional features and also
convey the intended psychological characteristics.
It may take days, weeks, or months to develop the final product as the
product goes through a series of testing phases (alpha testing and beta
testing) to validate all the assumptions and incorporate everything that
was promised during the previous stages.
 Alpha testing is testing the product within the firm to make sure it fits
the standards set.
 Beta testing involves launching an MVP or a test version in the market
to validate the product-market fit. However, it doesn’t involve testing
the final product or marketing strategy.
 TEST MARKETING
Philip Kotler says, “Test marketing is the stage at which the product
and marketing programs are introduced into more realistic market
settings.”
i. The stage of new product development in which the product and
marketing program are tested in more realistic marketing settings.
ii. Test marketing gives the marketer experience with marketing the
product before going to the great expense of full introduction.
iii. When using test marketing consumer products companies
usually choose one of three approaches:
(a) Standard Test Marketing:
Using standard test marketing the company finds a small number of
representative test cities, conducts a full marketing campaign in
these cities and use store audits, consumer and distribution
surveys and other measures to gauge product performance.
TEST MARKETING
 TEST MARKETING
(b) Controlled Test Marketing:
Under this test, the company select certain stores in different
geographic areas and ask them to keep its new product into
their stores in return for a fee. The company controls the shelf
position, displays, point of purchase promotions and pricing.
(c)Test Markets: Under this, the firm chooses the representative
cities where the full-fledged launch of the new product is done
starting from the promotion campaign to the ultimate sales.
Once it is successful, the firm goes for the national launch.
CONSUMER-GOODS MARKET TESTING
This test is conducted to know the consumer behavior in terms
of:
 Trial: Whether a consumer will try a product, at least once.

 Repeat: Whether the consumer will repurchase it after the trial.

 Adoption: Whether the consumer accepts the product and will

purchase it again.
 Purchase Frequency: How often the consumer will buy the
product.
 TEST MARKETING
(d) Simulated Test Marketing: A simulated test market, or STM for
short, is a specific type of qualitative research that attempts to mimic
a real-life purchase experience. It involves recruiting participants for
one-on-one interviews with a market research professional. The
interviews may take place at a specific store, location, or at a 
market research facility. 

Under this test, 30-40 customers are selected and are invited to the
store where they can buy anything. The new products are placed with
the old or competitor’s product and then consumer’s preference is
ascertained through their selection of the products.

In case, the new product is not chosen by them, then the free
samples are given to the customers and are inquired telephonically
about their product experience after some weeks.
WHAT IS COMMERCIALIZATION?
Commercialization is the process of bringing new products or
services to market. The broader act of commercialization entails
production, distribution, marketing, sales, customer support, and
other key functions critical to achieving the commercial success
of the new product or service.
 Commercialization is the process of bringing new products or
services to market.
 Commercialization requires a carefully-developed three-tiered
product roll-out and marketing strategy, that includes the ideation
phase, the business process, and the stakeholder stage.
 The broader act of commercialization entails production,
distribution, marketing, sales, customer support, and other key
functions critical to achieving the commercial success of the new
product or service.

 WHAT IS A PRODUCT LAUNCH?
 A product launch refers to a business’s planned and coordinated
effort to debut a new product to the market and make that
product generally available for purchase. A product launch serves
many purposes for an organization— giving customers the chance
to buy the new product is only one of them. It also helps an
organization build anticipation for the product, gather valuable
feedback from early users, and create momentum and industry
recognition for the company.
 PRODUCT LAUNCH CHECKLISTS
1. Make sure the team has successfully executed on the strategic vision outlined in
the product roadmap
2. Test and QA the new product (Alpha & Beta Testing)
3. Draft and distribute sales and marketing collateral
4. Train the sales team on the new product
5. Train the customer support department on the new product
6. Complete the product’s support and/or technical documentation
7. Let your entire organization know about the approaching product launch
8. Develop and review the customer journey to buy the product, make sure the
process is as smooth as possible
9. Devise a plan for tracking user behavior and/or gathering feedback from early
users
10. Decide on the metrics you and your team will use to judge the success or failure
—for example, revenue or new users within a certain timeframe.
11. Conduct a product launch pre-mortem— where your product team thinks
through possible problems or missteps that could hurt your product launch and
prepares plans of action for each potential problem in advance.
 WHAT IS PRODUCT FAILURE?
 A product is a failure when its presence in the market leads to:
The withdrawal of the product from the market for any
reason; ... The inability of a product to achieve the anticipated
life cycle as defined by the organization due to any reason; or,
The ultimate failure of a product to achieve profitability.
 REASONS FOR NEW PRODUCT FAILURE
1. Poor product quality: Obviously, a product, which is of poor quality,
cannot be sold in the market.
2. Higher price: Another reason for the failure of certain products is the
price factor. Higher production and distribution costs may lead to higher
price. Such a product cannot be sold in a market consisting of middle and
lower income buyers.
3. Poor timing: It is important that a product, to be successful, is introduced
in the market at the correct time. If it is introduced at an unsuitable time
it may turn out to be a failure.
4. Inherent defect: There may be an inherent defect in the product, which
may affect its market potentialities. Such a product may not be preferred
by the buyers even if the defect is rectified later.
5. Extent of competition: A monopolist may not have any difficulty in
marketing his product. In the case of a market where there are a large
number of sellers for a particular product, the buyer will have many
alternatives. Therefore, in such a condition unless the marketer brings out
the product to the satisfaction of the buyers, he cannot be successful.
REASONS FOR NEW PRODUCT
FAILURE
6. Lack of promotional measures: Popularizing the brand, particularly, in the 
introduction stage of a product is essential. Such a step will ensure repeated buying and bring
long-term benefits for the marketer. Failure to do so will ‘prove to be disastrous for the
product.
7. Faulty distribution policy: It is important that a product reaches the right market at the right
time and at the right price. The faulty distribution policy of the marketer may lead to many
problems, i.e., the goods may not be available when required, may lead to higher price and so
on.
8. Unavailability of spare parts: In the case of durable goods like televisions sets, Air-
conditioners, etc., and also in the case of two wheeler and cars, easy availability of spare parts
is an important requirement. Unavailability of spares may frustrate the buyers. Such buyers
would not recommend the product to their friends and relatives.
9. Poor after-sale service: The quality of after sale service is yet another important cause. Most
marketers, particularly those marketing durables, two-wheeler, etc., are courteous while
making sale. When the customer requires service later and approaches the seller, the latter
may show indifference.
10. Imitation products: Last, but not the least, the presence of a number of imitation products
in the market makes the genuine products vulnerable. An average buyer may not be able to
distinguish between the genuine product and the fake one.
 CONSUMER ADOPTION PROCESS 
 Adoption is an individual’s decision to become a regular user of
a product which may be an innovation in form of a good,
service, or idea. The consumer adoption process is a kind of a
consumer-loyalty process.
 Philip Kotler considers five steps in consumer adoption process,
such as awareness, interest, evaluation, trial, and adoption. On
the other hand, William Stanton considers six steps, such as
awareness stage, interest and information stage, evaluation
stage, trial stage, adoption stage, and post-adoption stage.
CONSUMER ADOPTION PROCESS 
 CONSUMER ADOPTION PROCESS 
STAGES
Awareness Stage:
 Individual consumer becomes aware of the innovation. He is exposed to
innovation but knows very little regarding the innovation. He has only limited
information about it. He is aware of either by discussion with friends,
relatives, salesmen, or dealers. He gets idea about a new product from various
means of advertising like newspapers, magazines, Internet, television, outdoor
media, etc. At this stage, he doesn’t give much attention to the new product.
Interest and Information Stage:
 In this stage, the consumer becomes interested in innovation and tries to
collect more information. He collects information from advertising media,
salesmen, dealers, current users, or directly from company. He tries to know
about qualities, features, functions, risk, producers, brand, colour, shape,
price, incentives, availability, services, and other relevant aspects. Simply, he
collects as much information as he can.
CONSUMER ADOPTION PROCESS 
STAGES
Evaluation Stage:
 Now, accumulated information is used to evaluate the innovation.
The consumer considers all the significant aspects to judge the
worth of innovation. He compares different aspects of innovation
like qualities, features, performance, price, after-sales services,
etc., with the existing products to arrive at the decision whether
the innovation should be tried out.
Trial Stage:
 Consumer is ready to try or test the new product. He practically
examines it. He tries out the innovation in a small scale to get
self-experience. He can buy the product, or can use free samples.
This is an important stage as it determines whether to buy it.
 CONSUMER ADOPTION PROCESS 
STAGES
Adoption Stage:
 If trial produces satisfactory results, finally the consumer
decides to adopt/buy the innovation. He decides on quantity,
type, model, dealer, payment, and other issues. He purchases
the product and consumes individually or jointly with other
members.
Post Adoption Behaviour Stage:
 This is the last stage of consumer adoption. If a consumer
satisfies with a new product and related services, he continues
buying it frequently, and vice-versa. He becomes a regular user
of innovation and also talks favourable to others. This is a
crucial step for a marketer.
 ADAPTOR CATEGORIES:
Companies are finally interested in the level and rate of diffusion
because, the ultimate level of diffusion is a limit on the total
sales of the company, while the rate of diffusion affects how
quickly the company covers Its costs and begins to make a profit.
The notion of diffusion suggests that some people adopt a new
product well before others. That is, people vary in their degree
of innovativeness.
One means of classifying people according to their innovativeness
is based on the normal distribution curve as developed by Mr. E.
Rogers and Mr. Shoemaker in 1971. Using the mean and
standard deviations, it is possible to categories the adopters into
five main classes as given in the Fig
ADAPTOR CATEGORIES
1. Innovators:
 These represent the first 2.5 per cent of the total adoptors. They
are young risk runners, rich, better educated, more cosmopolitan,
but less integrated with local groups. They are the forerunners
and important to the victory of new product so introduced.
2. Early adoptors:
 These represent the next 13.5 per cent of the total adoptors.
These adopt in the per groups act as taste-makers or opinion
leaders in their local groups. These are wealthier and better
educated and have greater technical knowledge of the
innovation.
 As they are integrated with the community, they exert influence.
Others turn to them for their advice the moment they come in
contact with these persons.
 ADAPTOR CATEGORIES
3. Early majority:
 This group accounts for the next 34 per cent of the total
adoptors. These are average people in terms of income,
education, age and occupations. These tend to be more cautious
before adopting normally waiting until its benefits and other
features have been clearly demonstrated well before adoption.
4. Late majority:
 This group represents the next 34 per cent of the total adoptors.
These are more conservative, less educated and older with
limited purchasing power. The reason for their adoption is that
majority of the people have adopted or the product is within
their purchasing power now.
ADAPTOR CATEGORIES
5. Laggards:
 This last chunk accounts for remaining 16 per cent of the total
adoptors. This group considers adopting as the last resort as
there is no alternative. The features of this group are not
available because, very less is known about this group.