New Product
New Product Development Process or new product development process stages:
Marketers often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g., medicines) while less scientific companies may pull together resources for product development on a less structured timetable. 8- step process ( which normally be followed ) comprising the key elements of new product development . While some companies may not follow a deliberate step - by - step approach, the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products.
Step 1: Idea Generation
evaluated as potential product options. For many companies idea generation is an ongoing process with contributions from inside and outside the organization. Many market research techniques are used to encourage ideas including: running focus groups with consumers, channel members, and the company's sales force; encouraging customer comments and suggestions via toll-free telephone numbers and website forms; and gaining insight on competitive product developments through secondary data One important research technique used to generate ideas is brainstorming where open-minded, creative thinkers from inside and outside the company gather and share ideas. The dynamic nature of group members floating ideas, where one idea often sparks another idea, can yield a wide range of possible products that can be further pursued. Main sources from where companies try to generate new ideas are their employees, competitors, top management, consumers and media etc. For instance, Lay's chips, marketed division of Frito-Lay of PepsiCo Inc had started a contest of favorite flavor ideas . The strategy for adopting this approach was to collect innovative ideas from consumers.
Step 2: Screening Ideas Step
In Step 2 The ideas generated in Step1 are critically evaluated by company personnel to isolate the most attractive options. Depending on the involving company executives judging the feasibility of ideas while successive rounds may utilize more advanced research techniques. As the ideas are whittled down to a few attractive options, rough estimates are made of an idea's potential in terms of sales, production costs, profit potential, and competitors' response if the product is introduced. It is the stage at which go or drop decisions are made. Acceptable ideas move on to the next step.
Step 3: Concept Development and Testing
With a few ideas in mind, the marketer now attempts to obtain initial feedback from customers, distributors and its own employees. An attractive idea has to be developed into a product concept. For instance, customers may be shown a concept board displaying drawings of a product idea or even an advertisement featuring the product. In some cases focus groups are exposed to a mock-up of the ideas, which is a physical but generally non-functional version of the product idea. For some concept tests, a word or a picture may be sufficient; however a physical presentation will increase the reliability of the concept test. After being exposed to the concept, consumers are asked to respond to it by answering a set of questions designed to help the company decide which concept has the strongest appeal. Then the company can project these findings to the full market to estimate sales volume.
Step 4: Marketing Strategy Development
The strategy statement consist of three parts: The first part describes the target market, the planned product positioning and the sales, market share and profit goals for the initial few years. The second part outlines the product's planned cost, distribution and budget for the first year. The third part of the marketing strategy describes the planned long-run sales, profit goals and the marketing mix strategy (which includes strategies relating to 7 P's Product, Price, Place, Promotion, People, Process and Physical evidence).
Step 5: Business Analysis
potentially large number of ideas down to one or two options, Now in Step 4 the process becomes very dependent on market research as efforts are made to analyze the viability of the product ideas. (Note, in many cases the product has not been produced and still remains only an idea.) The key objective at this stage is to obtain useful forecasts of market size (eg, overall demand), operational costs (eg, production costs) and financial projections (eg, sales and profits). Additionally, the organization must determine if the product will fit within the company's overall mission and strategy. Much effort is directed at both internal research, such as discussions with production and purchasing personnel; and external marketing research, such as customer and distributor surveys, secondary research, and competitor analysis.
Step 6: Product and Marketing Mix Development
Ideas passing through business analysis are given serious consideration for development. Here, Research & Development or Engineering cell develops the product concept into a physical product. Marketers also begin to construct a marketing plan for the product. Once the prototype is ready, the marketer seeks customer input. However, unlike the concept testing stage where customers were only exposed to the idea, in this step the customer gets to experience the physical product as well as other aspects of the marketing mix, such as advertising, pricing, and distribution. Favorable customer reaction helps solidify the marketer' decision to introduce the product and also provides other valuable information such as estimated purchase rates and understanding how the product will be used by the customer. Less favorable reactions may suggest the need for adjustments to elements of the marketing mix. Functional tests are then conducted under laboratory and field conditions to ascertain whether the product performs safely and effectively.
Step 7: Test Marketing (Market Testing)
Products surviving till Step 6 are ready to be tested as real products. It is the stage at which the product and the marketing program are introduced to a more realistic market setting. Test marketing gives the marketer an opportunity to tweak the marketing mix before going into the expense of a product launch. The amount of test marketing varies with the type of product. Cost of test marketing can be enormous and it can also allow competitors to launch a 'me-too' product or even sabotage the testing so that the marketer gets skewed results. For instance, Lay's has also entered into the test marketing phase for testing their flavors selected from the Delicious flavor' contest
Step 8: Commercialization
If market testing displays promising results, the product is ready to be introduced in the market. Some firms introduce or roll-out the product in waves with parts of the market receiving the product on different schedules. This allows the company to ramp up production in a more controlled way and to fine tune the marketing mix as the product is distributed to new areas. Companies must develop an effective research program for new product development strategy. Their current products face little life spans and must be constantly replenished. New products can fail. The key to successful new product introduction lies in a research effort, strong planning and system approach. The new product development process consists of eight steps and at each stage, the company must further decide whether the idea should be further developed or dropped. After that the company must develop a life cycle strategy with thorough research at each level. Each stage in the life cycle has its own unique problems and opportunities.
