Chapter 10_New Product Development_.pptx

About new product development

1. Chapter-10 NEW PRODUCT DEVELOPMENT

2. 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)

3. 1. IDEA GENERATION The systematic search for new product ideas Two major sources: Internal External

4. SOURCES OF NEW PRODUCT IDEAS R&D Department Manufacturing People Sales Staff Top Management Internal Sources Customers Secondary sources Competitors Resellers Suppliers Foreign Markets Animated films External Sources

5. 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 Existing facilities & resources R-W-W Screening Framework: Is it real? Can we win? Is it worth doing?

6. 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

7. 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.

8. 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

9. 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

10. 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

11. 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.

12. Procedure of Test Marketing

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