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 When we talk of product development,

we are referring to a process of making
a new product to be sold by a business
or enterprise to its customers. Product
development may involve modification
of an existing product or its
presentation, or formulation of an
entirely new product that satisfies a
newly-defined customer’s needs, wants
and/or a market place.
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The term development in this
module refers collectively to the
entire process of identifying a
market opportunity, creating a
product to appeal to the identified
market, and testing, modifying,
and refining the product until it
becomes ready for production.
Management 8/e - Chapter 7 3
There are basic, yet vital
questions that you can ask
yourself about product
development. When you find
acceptable answers to them, you
may now say that you are ready
to develop a product and/or
render services.
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These questions include the
following:
 1. For whom are the product/services aimed
at?
 2. What benefit will the customers expect
from product/service?
 3. How will the product/service differ from
the existing brand? From its competitor?

Management 8/e - Chapter 7 5

In addition, needs and wants of the
people within an area should also be
taken into big consideration. Everyone
has his/her own needs and wants.
However, each person has different
concepts of needs and wants. Needs in
business are the important things that an
individual cannot live without in a
society.
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These include:
 1. basic commodities for consumption,
 2. clothing and other personal belongings,
 3. shelter, sanitation and health, and
 4. education.

Management 8/e - Chapter 7 7

Basic needs are essential to an
individual to live with dignity and
pride in a community. These
needs can obviously help you
generate business ideas and
subsequently to product
development.
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Wants are desires, luxury and extravagance
that signify wealth and expensive way of
living. Wants or desires are considered
above all the basic necessities of life. Some
examples of wants or desires are: fashion
accessories, expensive shoes and clothes,
travels, eating in an expensive restaurant,
watching movies, concerts, having
luxurious cars, wearing expensive jewelry
and perfume, living in impressive homes,
among others.
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Needs and wants of people are the basic
indicators of the kind of business that you
may engage in because it can serve as the
measure of your success. Some other
points that might be considered in
business undertakings are the kind of
people, their needs, wants, lifestyle,
culture and tradition, and their social
orientation.
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To summarize, product development
entirely depends on the needs and wants
of the customers. Another important
issue to deal with is the key concepts of
developing a product. The succeeding
topic shall enlighten you about the
procedure in coming up with a product.

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 THE MEANING OF “PRODUCT”

 A product is a set of tangible and

intangible attributes, which include
packaging, color, price, quality, brand
name and manufactures and retailers
services , all these that buyer accept as a
want satisfaction.

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 Product
Product
quality
quality Physical
Physical
Seller’s
Seller’s characteristics
characteristics
services of
services ofgoods
goods

Seller’s
Seller’s Price
Price
reputation
reputation

Color
Color Brand
Brand

Product
Product
warranty Packaging
Packaging
warranty
Design
Design
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8-3
 Product Classification
On the basis of purpose for which they
are bought.

Consumer product Business Product

Goods or Services Products which
which are bought purchased for
by final consumer further processing
for consumption. to produce other
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 What is new Product
A new product is a product which is totally new in concept.
Any product which is perceived by the customer as being
new.
A new product can be categorize into :

 Truly  Innovated
new product from
product. the existing one.
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Reasons for new product developing

 Computation:
To maintain or to gain the competitive image in the
market.
Change the consumer needs:
To bring the changes in the consumer needs

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Continue….
Technology:
Technology that in the favors to develop or to
take the risk of new product development

Good Image:
Company good image in the Market ( in
the mind of customer) to take the risk of
new product development.
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Methods used for developing new product

A firm can obtain new product through to

ways

– By Acquisition
 By R &D Cell: By this a firm
Developing new product buy an other
through R&D , either firm wholly or
from entirely new product get licensee in
or bringing innovation in order to obtain
the existing products. new product
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Process of new product development

New product are develop through a

systematic process ,in which first the
product are find out and then it grows.

The whole process can be divide into many

stages, some Seven stages are given below.

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 20
s
ces
pr o
ent
opm
vel
t de
duc s
Pro n step
e
se v
Stage#1 Idea Generation
 The starting stage for new product
development in which typically an
organization develop a number of ideas for
new product
 Such types of alternatives idea are develop
into a meeting called brain storming session

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 Continue…
 Sources for idea generation
The organization takes new ideas from two
sources External Sources:
 Customer Questions &
Complaints
 Distributor Feed backs
Internal sources:
 Competitors activates
R&D Cell e.g. their Ads as a clue
Employees feed
backs

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Stage#2 Idea Screening
 In this step one idea is selected from the
alternative idea of the first stage
 The basis for best idea are:
Utilization
How much that product will be able by the
Target customer with the sense of that
product utilization.
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Continue…
Resources
Which type, quality and at which price that
resources will be available.
Ethical Aspect
What will be the responses of the society to
whom that product will launch.

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Stage#3 Product Concept Development

 Once the idea is selected in the idea

screening stage ,then in this stage the
concept of product is developed.

 Some time alternative concept of the same

product are developed according to
customer needs ,wants etc

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Stage#4 Mrkg Strategy Development
 Developing strategy that how to introduce
the product into market.
 Marketing strategy consisting 3 statements
Described the target market
Price ,Channel of distribution and
Budget
Goal of the organization,
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Stage#5 Business Analysis
 Analysis the product with the business point
of view. This analysis involve a review of
the sales, cost ,profit.
 The main aim of business analysis is to find
out whether the product satisfies the
company objective or not.

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Stage#6 Product Development
 In this stage the product concept is came
into its physical form, then this product is
presented to the market for testing.

 Testing Marketing help the organization in

creating financial decision about whether to
launch that product in the market or not..

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Stage#7 Commercialization
 After successful passing the product from
the “ testing market” then the firm properly
introduce that product into market.

 Note After commercialization Stage then

that product's life cycle ( PLC) begin.

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Product life Cycle ( PLC)
 The commercialization stage of the new
development is consider birth stage for its life
cycle
 The whole PLC can be divided into Four stages

o Stage -1 Introduction
o Stage -2 Growth
o Stage -3 Maturity
o Stage-4 Decline
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PLC 1st Stage Introductions
It is the pioneer stage of PLC in which the
new product is first distributed and made
available for purchases.
Characteristic of this stage:
Negative Profit due to:
Low sale volume
Distribution Exps
Promotion Expns

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Continue…

Some product disappear due to:

Failed to attract target customer
Quick attack from compotators

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PLC 2nd Stage Growth

The second stage of PLC in which a

product's sales starts climbing
quickly. Hence this stage is termed
as Market Acceptance stage.

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Continue…
Characteristic Of this stage:
Increase in profit due to :
Sale Increase
Per unit cost
Competitor enter which push the firm:
Introduce new feature
Improve product quality
Giving Promotion & discounts
Introducing new channels of distribution

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PLC 3rdnd Stage Maturity
The third stage of PLC in which Sales
growth slow down.
Characteristic Of this stage:
The product growth begins to slow down
(but at later stage of the “Maturity Stage”

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Continue…
This stage can be longest one if the
company meet consumers. Needs e.g.
Baring extra features in their productivity.
If the firm don't brings extra features in in
their product, then it possible to enter into
next stage, that is decline stage.

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PLC 4th Stage Decline
The stage of PLC in which the product is became
out of business
Characteristic Of this Stage:
Product sales decrease due to:
Shifting consumer tats
Technological Associated with product
Organization that failed to anticipate the decline stage in
earlier may possible to go out of the business

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Continue…
Some firm out innovation in their declined
product and this the product is again enter into its
life cycle
For example P&G has don with its
several brands that where at decline stage.

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