New Product Development

1. New Product Development
By
Dr. P.Rathinam,
Department of Economics
Govt. Arts College,
Coimbatore.

2. New Product Development
• Definition
"A new product’s likelihood of success can
be determined before its development by
answering three questions: (1) Do people need
the product? (2) Is it different and better than
competitors’ offerings? (3) Would people be
willing to pay the proposed price? (Kotler,
2003)"

3.  New product development refers to “unique products,
product improvement, product modification, and new
brand developed from the firm’s own research and
development.”

4. The consulting firm Booz, Allen & Hamilton has
identified six categories of new products in terms of
their newness to the company and the marketplace.
 New-to-the-world:
Product is new to the firm and the market.
 New product lines:
Firm that allow a new products to enter in to an existing market for
the first time.
 The product is new to the firm but not to the market.

5. Additions to existing product lines:
New products of the firm is addition to an established products
lines.
For example; Colour, size, packing, flavors, etc.
 Improvements and revisions of existing products:
A firm which introduce a new products that give improved
performance or greater perceived value and replace existing
product

6.  Repositionings:
A firm introduce their existing products into new markets or
market segments
It is to be a new product that there must be some changes in the
existing product to the new segments.
 Cost reductions:
A firm reduce the cost with similar features.

7. New Product Development Process
Idea Generation
Business
Analysis
Idea Screening Test Marketing
Marketing
Strategy
Product
Development
Commercialization
Concept
Development
and Testing

8. Idea Generation
Systematic search for new products ideas
It comes from any form and everywhere.
External sources
Internal sources
Research and
Development
Employees
Customers Competitors
Distributers Suppliers

9. Idea screening
 Filtering the new ideas.
 Select the good ideas and drop poor ideas.
 Ideas are screened based on
Firm objectives
Firm policies
Technical feasibility
Financial feasibility
Market condition

10. Concept Development and Testing
Concept development
It is an alternative product concepts.
It is a blueprint version of the idea.
The following criteria should be consider
 Target consumer
 Primary benefit of the product
 utility of the product
Affordable price
 Compact

11. Concept testing
Test the new product concept with target customers.
The test may be either symbolically or physically.
Physical presentation will increase the reliability than
others.
 Find out the customer value of each concept.
Finally select the best one.

12. Marketing strategy
It is a initial marketing strategy.
Introducing this new product to the market.
It consists
Description of the target market
Product positioning
Market share
Competition
Distribution channels
Marketing mix
Budget
Profit Goals

13. Business analysis
Evaluate the business attractiveness of the proposed new
product.
Check out the financial as well as marketing point of
view, whether it is beneficial or not.
Should estimate
 Cost
Selling price
Sales volume
Profitability
Break even point

14. find out whether these factors satisfy the company’s
objectives.
If no, eliminate the product concept
If yes, moved to the product development stage.

15. Product development
R&D will develop prototypes
Tests will be conducted under laboratory for whether the
product performs safely and effectively.
Conduct test with few focus group customers.
 Make adjustments based on customers opinion.

16. Test marketing
Now the product is ready for preliminary market testing.
It involves placing the product for sale in selected areas.
Observing the actual performance of the product and
whether it relevant to proposed marketing plan.
Approaches
Standard test markets
Controlled test markets
Simulated test markets

17. Standard test markets
 A small representative markets where the firm conducts a full marketing
campaign.
Controlled test markets
 Conduct the test in a few stores for a fee
Simulated test markets
 Create a shopping environment and note the buying behavior
of the consumers.

18. Commercialization
The final stage in the new product development process
is commercialization.
Introducing a new product into the market.
Huge amounts may be incurred on advertising, sales
promotion and other marketing efforts in the first year.

19. Some factors should be considered
Where to launch
When to launch
How to launch
To whom
The most important focus of new product
commercialization is on creating superior customer
value.

20. Conclusion
• Actually very few products get the chance to
become a success.
• The risks and costs are too high to allow every
product to pass every stage of the new product
development process.

21. Thank you