Chapter-10

NEW PRODUCT DEVELOPMENT

 New Product

 Any product which the consumers perceive as an addition

to the already available choices
 It can be:
– An innovative product (Apple iPod)
– A replacement for existing products (Maggi Aatta
Noddles)
– An imitate product which are new to a company
but not new to the market (Dettol Dishwasher)
 1. IDEA GENERATION

The systematic search for new product ideas

Two major sources:
– Internal
– External
 SOURCES OF NEW PRODUCT IDEAS

Internal Sources External Sources

•Customers
•Secondary sources
•R&D Department •Competitors
•Manufacturing People •Resellers
•Sales Staff •Suppliers
•Top Management •Foreign Markets
•Animated films
 2. IDEA SCREENING

 Critical evaluation of product

ideas generated by a company
 Main objectives:
– Check the feasibility
– Scrap unsuitable ideas
 Factors to be considered:
– Technical know-how
– Possibility of Marketing
– Sales potential
R-W-W Screening Framework:
– Existing facilities & resources
Is it real?
Can we win?
Is it worth doing?
 3. CONCEPT DEVELOPMENT & TESTING

 Concept Development refers to

conversion of selected ideas into
product concepts
– A detailed version of the idea
stated in meaningful consumer
terms
 Concept Testing helps the company
to choose the best among the
alternative product concepts
– Different consumer groups are
called upon to offer their comments
on the selected product concepts
 4. MARKETING STRATEGY DEVELOPMENT

 Designing the initial marketing strategy for

introducing new product
 Includes:
– Describing target market, the planned product
positioning and the sales, market share & profit
goals
– Determining the product’s planned price,
distribution and marketing budget
– Describing the planned long-run sales, profit goals
and marketing mix strategy.
 5. BUSINESS ANALYSIS

 An evaluation of product idea in depth with a view to determine its

financial, competitive, manufacturing and marketing viability in a
given set of business environment.
 The management mainly performs the following acts:
• Identifying the product characteristics
• Production capability
• Production facilities
• Estimating cost of production
• Estimating profits and sales
• Programme for new product development
 6. PRODUCT DEVELOPMENT

 A scientific and engineering task leading to the design and

building of a prototype working models of the product so as to
ascertain whether the idea has the technical potential
 Includes the following steps:

– Engineering research
– Developing models
– Consumer preference testing
– Developing marketing mix
 7. TEST MARKETING
 To put the product in the market for test
before it is introduced in the market
commercially.

 The consumers are closely observed so

that the nature and response of the
market towards the newly introduced
product.

 Test marketing is a way in which the

entire product and marketing programme
is tries out for the first time in a smaller
number of well chosen and authentic
sales environment.
---Philip
Kotler
 8. COMMERCIALISATION

 Refers to launching of product in the market

 When the product is proved successful in test
marketing, a decision to produce it on commercial
basis is taken.
 Procedure of Test Marketing

Determinin Duration of
Selection of
g number of test
cities
cities marketing

Collecting
Launching Cost of test
necessary
the product marketing
information
 Test Marketing
Advantages Disadvantages
 Development of marketing
mix Information to
 Estimation of sales competitive firms
 Removal of defects in Away from reach of
product
small firms
 Formulation of policy related
to middlemen Test results are not
 Measurement of consumer fullly relaible
reaction
Not possible for all
 Development of potential
customer products