New Product Development Process Product Development Process

New Product Development Process

Product Development Process A product development process is the entire set of activities required to bring a new concept to a state of market readiness. A design process the set of technical activities is within a product development process. It does not include business, financial, or marketing activities.

Product Design Process • Understanding the Opportunity • Develop a Concept • Implement a Concept

New-Product Development Strategies for Obtaining New Product Ideas Acquired Companies Original Products Acquired Patents Product Improvements Acquired Licenses Product Modifications New Brands

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

New Product Development Process Step 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers

Step 2. Idea Screening Process to spot good ideas and drop poor ones Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return

Step 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

Step 4. Marketing Strategy Development Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy

Step 5. Business Analysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If No, Eliminate Product Concept If Yes, Move to Product Development

Step 7. Test Marketing Standard Test Market Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee. Simulated Test Market Test in a simulated shopping environment to a sample of consumers.

Product Life-Cycle Strategies PLC Stages • Product development • Begins when the company develops a new-product idea • Sales are zero • Investment costs are high • Profits are negative

Product Life-Cycle Strategies PLC Stages • Introduction • Low sales • High cost per customer acquired • Negative profits • Innovators are targeted • Little competition

Product Life-Cycle Strategies PLC Stages • Growth • Rapidly rising sales • Average cost per customer • Rising profits • Early adopters are targeted • Growing competition

Product Life-Cycle Strategies PLC Stages • Maturity • Sales peak • Low cost per customer • High profits • Middle majority are targeted • Competition begins to decline

Product Life-Cycle Strategies PLC Stages • Decline • Declining sales • Low cost per customer • Declining profits • Laggards are targeted • Declining competition