Chapter 9
Developing New Product
New Product Development
The development of original products, product improvements,
product modifications, and new brands through the firm’s own
product development efforts
New Product Development
Idea Generation Idea Screening Concept
The systematic Screening new Development &
search for new product ideas to spot Testing
good ones and drop Testing new product
product ideas. poor ones as soon
Internal Sources concepts with a group of
as possible. target consumers to find
(R&D) out if the concepts have
External Sources R-W-W (“real, win, strong consumer appeal.
(Crowdsourcing) worth doing”) &
SMART Approach
• Concept 1. An affordably priced
compact car designed as a second
family car to be used around town for
running errands and visiting friends.
• Concept 2. A mid-priced sporty
compact appealing to young singles
and couples.
• Concept 3. A “green” everyday car
appealing to environmentally
conscious people who want practical,
no-polluting transportation.
Tesla’s initial all-electric full-size sedan
• Concept 4. A compact crossover
SUV appealing to those who love the
space SUVs provide but lament the
Which concept do we work on?
poor gas mileage.
New Product Development
Marketing Strategy
Development
Designing an initial Business Analysis
marketing strategy for a A review of the Product Development
new product based on sales, costs, and Developing the product
the product concept. profit projections for concept into a physical
3 parts: a new product to find product to ensure that
1. Target market, value out whether these the product idea can be
proposition, market-share factors satisfy the turned into a workable
etc.
2. Product’s planned price,
company’s market offering.
distribution, and marketing objectives. Typically, the R&D or
budget for the first year engineering develops
3. Long-run sales, profit goals,
and marketing mix the product
New Product Development
Test Marketing Commercialization
The stage of new product Introducing a new product into
development in which the the market.
product and its proposed
marketing program are tested in Preparing the market beforehand is
realistic market settings. a good idea.
Intense advertising and sales
promotion
Varies product to product Companies must decide on
High cost or time may allow introduction timing
opportunities to slip by Companies must decide where to
Often skipped for fast-changing launch the new product—in a single
market developments location, a region, the national
market, or the international market.
1. Product Development begins when
the company finds and develops a new
product idea. During product
Product Life Cycle development, sales are zero, and the
company’s investment costs mount.
2. Introduction is a period of slow
sales growth as the product is
introduced in the market. Profits are
nonexistent in this stage because of the
heavy expenses of product introduction.
3. Growth is a period of rapid market
acceptance and increasing profits.
4. Maturity is a period of slowdown in
sales growth because the product has
achieved acceptance by most potential
buyers.
5. Decline is the period when sales fall
off and profits drop.
Product Life Cycle
Not all products follow all five stages of the PLC…
❑ Some products are introduced and die quickly; like- Doel laptops,
❑ Others stay in the mature stage for a long, long time. Like- Keya soap, Potato crackers
❑ Some enter the decline stage and are then cycled back into the growth stage through
strong promotion or repositioning. Like- Meridian chips, Mojo
Table 9.2 of page 297
Thank you!
Any question?