New products are the lifeblood of the organisation but they are extremely vulnerable and the majority never reach commercialization. In competitive markets, the best and strongest firms sustain growth through the introduction of new products and services to meet the changing needs of the consumers. All products have a finite life span and this is influenced by the type of product, its innovativeness, the management of the product through its life cycle, as well as the markets in which it is sold. All products will eventually decline and need to be replaced by new ones and companies need to be adept at adapting marketing strategies to respond to the dynamics of the environment, so as to manage the product through its life cycle effectively.
New product development is the process of developing a product from initial stage of Design to Physical Reality using concept of Designing, manufacturing processes and other economical aspects. The objective of product development are as follows:
- Converting Design into Physical Reality
- Design optimization of the product
- Manufacturing optimization of the products
- Economically applying on product to optimize it
- Market the product
The various stages of new product development is given below:
1. Idea Generation:
Is the particular Idea worth Considering?
The new product development process starts with a search for ideas. New products come from many sources customers, scientists, employees, competitors, channel members and top management. The developers of the new idea need to define the product and markets along with stating how much effort need to be devoted in developing breakthrough products, modifying existing products, and copying competitors products.
2. Idea Screening:
Any company can attract ideas by organizing itself properly. In screening ideas the company must avoid two types of errors. A Drop error where in the company dismisses an otherwise good idea and a Go error where the company permits a poor idea to move into development and commercialization. The purpose of screening is to drop poor ideas as early as possible.
3. Concept Development and Testing:
Attractive ideas must be refined into testable product concepts. (Product concept is an elaborated version of the idea expressed in meaningful consumer terms)The product concept has to letter on be changed to a brand concept. Concept testing calls for testing product concepts with an appropriate group of target consumers, then getting those consumers reactions
4. Market Strategy Development:
After testing the new product the manager must develop a preliminary marketing strategy plan for introducing the new product into the market. The marketing strategy plan consists of three parts-
- Target market size, structure, and behavior, planned product positioning and sales market share and profit goals sought in the first few years form part one.
- Second part consists of outlining the products planned price, distribution strategy and marketing budget for the first year.
- The third part will be the long run sales and profit goals marketing mix strategy over time.
5. Business Analysis:
After management develops the product concept and marketing strategy; it can evaluate the proposals business attractiveness. Management needs to estimate whether sales will be high enough to yield satisfactory profit.
6. Product Development:
If the product passes the business test it moves to R&D and engineering to be developed into physical product. The R&D department will develop one or more physical versions of the product concept. Its goal is to find a prototype that consumers see as embodying the key attributes described in the product statement, that performs safely under normal use and conditions, and that can be produced within the budgeted manufacturing costs. Once the prototype is ready it needs to pass through rigorous functional test (test conducted in laboratories) and consumer tests.
7. Market Testing:
After management is satisfied with the products functional and psychological performance, the product is ready to be dressed up with a brand name, packaging and preliminary marketing program. The goal is to test the product in more authentic consumer settings and to learn how large the market is, how consumers and dealers react to handling using and repurchasing the actual product.
Market testing gives management enough information to finally launch a new product. The commercialization is one of the largest costs the company will have to face as against the costs faced till date. The company will have to contract for manufacture or build or rent a full scale manufacturing facility. Also other factors the company will have to take under consideration in commercialization are timing i.e. market entry time, geographical strategy where to launch the product single locality, region, several regions, etc., target market prospects i.e. within the rollout markets, the company must target its distribution and promotion to the best prospect groups. And finally the introductory market strategy wherein the company must target its distribution and promotion to the best prospect groups.