PPT of NPD

NEW PRODUCT DEVELOPMENT:

1 NEW PRODUCT DEVELOPMENT

Why Do We Develop New Products?:

2 Why Do We Develop New Products? Increase sales and profits Product life cycle and having products in every stage/shorter cycles Correlation between R&D and profits Consumers & change/product obsolescence

Causes of New Product Failures:

3 Causes of New Product Failures Why? Overestimation of market size, Product design problems, Product incorrectly positioned, priced or advertised, Product may have been pushed despite poor marketing research findings, Costs of product development, or Competitive actions

Improving New-Product Success:

4 Improving New-Product Success New product success depends on having a: Unique superior product (one with higher quality, features, and value in use), & Well-defined product concept (a defined target market, product requirements, and benefits). To create successful new products, the company must: understand its customers, markets and competitors, & develop products that deliver superior value to customers.

Major Stages in New-Product Development (p. 560):

5 Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization Major Stages in New-Product Development (p. 560)

New Product Development Process New Product Development Process Step 1. Idea Generation:

6 Customers Competitors Distributors Suppliers Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From: New Product Development Process New Product Development Process Step 1. Idea Generation

New Product Development Process Step 2. Idea Screening:

7 New Product Development Process Step 2. Idea Screening Process to spot good ideas and drop poor ones as soon as possible. Many companies have systems for rating and screening ideas which estimate: Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return Then, the idea is evaluated against a set of general company criteria.

New Product Development Process Step 3. Concept Development :

8 1. Develop New Product Ideas into Alternative Detailed Product Concepts 2. Concept Testing - Test the New Product Concepts with Groups of Target Customers 3. Choose the One That Has the Strongest Appeal to Target Customers New Product Development Process Step 3. Concept Development Product Image is the Way Consumers Perceive an Actual or Potential Product

New Product Development Process Step 4. Marketing Strategy:

9 Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy Part Two Describes First-Year: Product’s Planned Price Distribution Marketing Budget Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share New Product Development Process Step 4. Marketing Strategy

Step 5. Business Analysis Step 6. Product Development:

10 If No, Eliminate Product Concept Business Analysis Do Projected Sales, Costs, & Profits Meet Company Objectives? Methods: payback, ROI, BE, NPV. Step 5. Business Analysis Step 6. Product Development If Yes, Move to Product Development

New Product Development Process Step 7. Test Marketing:

11 Advertising Packaging Product Budget Levels Positioning Distribution Pricing Branding Elements that May be Test Marketed by a Company Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings. New Product Development Process Step 7. Test Marketing

:

12 Standard Test Market Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. New Product Development Process Step 7. Test Market Types Electronic Test Market Use split-cable technology and scanner data

New Product Development Process Step 8. Commercialization:

13 When is the Right Time to Introduce Product? Where to Launch a New Product? Commercialization is the Introduction of the New Product into the Marketplace. New Product Development Process Step 8. Commercialization