Developing New Products

New product development is the development

of original products, product improvements, product
modifications and new brands through the firm’s own
product development efforts. New products are essential
for the continuation of the company. New products
aren’t easy to find.
There are eight major steps in the product development
process.

1. Idea generation: the systematic search for new-

product ideas. Ideas can be found via internal
sources, but also external idea sources. These can be
 distributors, suppliers, but also
competitors. Crowdsourcing means inviting broad
communities of people – customers, employees,
independent scientists and researchers and even the
public at large – into the new-product innovation
process.

2. Idea screening: screening new-product ideas to spot

good ideas and drop poor ones as soon as possible.

3. Concept development and testing. Product

concept is a detailed version of the new product idea
stated in meaningful consumer terms. Concept
testing means testing new product concepts with a
group of target consumers to find out if the concepts
have strong consumer appeal.

4. Marketing strategy development: designing an

initial marketing strategy for a new product based on
the product concept. It consists of three parts:
describing the target market and value proposition,
outlining the budgets and lastly describing the long-
term marketing mix strategy.
 5. Business analysis is a review of the sales, cost and
profit projections for a new product to find out
whether these factors satisfy the company’s
objectives.

6. Product development: developing the product

concept into a physical product to ensure that the
product idea can be turned into a workable market
offering.
Business ideas

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7. Test marketing: the stage of new product

development in which the product and its proposed
marketing programme are tested in realistic market
settings. This can be done in both controlled test
markets and simulated test markets.
 8. Commercialisation: introducing a new product into
the market.
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Music Products

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Managing New Product

Development
Reels
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1. Customer-centred new product development: new

product development must be customer centered. When
looking for and developing new products, companies
often rely too heavily on technical research in their R&D
laboratories. But like everything else in marketing,
successful new product development begins with a
thorough understanding of what consumers need and
value. Customer-centered new product development
focuses on finding new ways to solve customer problems
and create more customer-satisfying experiences.
2. To get their new products to market more quickly,
many companies use a team-based new product
development approach. Under this approach, company
departments work closely together in cross-functional
teams, overlapping the steps in the product development
process to save time and increase effectiveness. Instead
of passing the new product from department to
department, the company assembles a team of people
from various departments that stays with the new
product from start to finish. Such teams usually include
people from the marketing, finance, design,
manufacturing, and legal departments and even supplier
and customer companies. In the sequential process, a
bottleneck at one phase can seriously slow an entire
project. In the team-based approach, however, if one
area hits snags, it works to resolve them while the team
moves on.

3. Systematic New Product Development

Finally, the new product development process should be
holistic and systematic rather than compartmentalized
and haphazard. Otherwise, few new ideas will surface,
and many good ideas will sputter and die. To avoid these
problems, a company can install an innovation
management system to collect, review, evaluate, and
manage new product ideas. The company can appoint a
respected senior person to be its innovation manager.
It can set up web-based idea management software and
encourage all company stakeholders—employees,
suppliers, distributors, dealers—to become involved in
finding and developing new products. It can assign a
cross-functional innovation management committee to
evaluate proposed new product ideas and help bring
good ideas to market. It can also create recognition
programs to reward those who contribute the best ideas.
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Product Life Cycle Strategies

The product life cycle (PLC) is the course of product’s

sales and profits over its lifetime. It involves five distinct
stages:
 1. Product development: development of the idea
without any sales.
2. Introduction: slow sales growth when the product is
introduced.
3. Growth: period of rapid acceptance.
4. Maturity: period of sale slowdown because of
acceptance by most potential buyers.
5. Decline: the period when sales fall and the profit
drops.

The PLC concept can also be applied to styles, fashions

and fads. A style is a basic and distinctive mode of
expression. Fashion is a currently accepted or popular
style in a given field. Fad is temporary period of
unusually high sales driven by consumer enthusiasm and
immediate product or brand popularity. Companies must
continually innovate to keep up with the cycle. There are
different strategies for each stage.

The introduction stage is the PLC stage in which a new

product is first distributed and made available for
purchase. Profits are generally low and the initial
strategy must be consistent with product positioning.
The growth stage is the stage in which a product’s sales
start climbing quickly. Profits increase and the firm faces
a trade-off between high market share and high current
profit.

In the maturity stage, products sales are growing slowly

or level off. The company tries to increase consumption
by finding new consumers, also known as modifying the
market. The company might also try to modify the
product by changing characteristics.

In the decline stage, the product’s sales are declining or

dropping to zero. Management might decide to maintain
the brand, reposition it or drop a product from the line.

When introducing product in international markets, it

must be decided which products to offer in which
countries and how these product should be adapted.
Packaging issues can be subtle, from translating issues to
different meanings of logos.