THE NEW PRODUCT DEVELOPMENT PROCESS

• There are three distinct categories of new product:

Definition of a New Product

• are truly unique products. They satisfy a real need that has not been satisfied at the time they are introduced.

Innovative Products

• are significantly different from existing products in form, function, and benefits.

Replacement Products

• are new to the company but not entirely new to the market.

• These products imitates competitive products with identical features; best described as "me, too" products.

Imitative Products

New Product Development Process

A new product is developed through a series of eight stages.

The formal development of new products provided benefits such as higher success rates in terms of sales and profits, increased customer satisfaction, and achievement of better quality and low-priced products.

- Involves a continuing search for product ideas that are in line with the need of the target market and the objectives of the organization.

1. IDEA GENERATION

- Is the stage in which alternative ideas are sorted. - This involves analyzing new ideas to determine which need further study and which are to be rejected.

2. IDEA SCREENING

- Is the development of screened ideas into product concepts.- A Product Concept is a concrete version of the product idea detailing all of the product's characteristics, color, style, design, cost, size, use, etc. - Concept Testing- involves testing the product concept with a group of consumers to determine their reaction.

3. CONCEPT DEVELOPMENT AND TESTING

- Involves developing a marketing strategy in introducing product to the market.- It consists of 3 parts:a. The first part describes the target market, positioning of the product, the market share and the target sales and profits for the first few years.

4. MARKETING STRATEGY DEVELOPMENT

b. The second part describes the pricing, distribution, and marketing budget for the first year of production.c. The third part describes the long-term potential of the goods of the company in terms of sales, profits, and marketing mix strategy.

- Requires both creativity and analysis. - Emphasizes performance criteria and chances for success in the marketplace.

5. BUSINESS ANALYSIS

- Follows favorable result of the business analysis, that is, a prototype or a trial model of the product is developed. - For tangible Products, a small quantity of the prototype is manufactured according to designated specifications.

6. PRODUCT DEVELOPMENT

- Is an experimental procedure in which the company tests a new product under realistic market conditions in order to obtain measure of its potential sales when it is distributed nationally.- In this stage, the design of the product and the planned production may be modified based on the results of the market tests.

7. TEST MARKETING

- Is the implementation of full-scale production and distribution. - This entails great financial risks because it involves huge amounts of physical as well as human resources.

8. COMMERCIALIZATION

The Product Life Cycle

• The Product Life Cycle is a graphic presentation of a product's sales history from its birth, or market beginning, to its death, or the withdrawal from the market.

Product Life Cycle Stages

• At this stage, the product is launched full-scale into the market. It is the period of attempting to gain market acceptance for the product.

1. INTRODUCTIO

N

• If the product earns market acceptance, it should at some point enter a period of comparatively rapid growth.

2. GROWTH

Product Life Cycle Stages

• As the product approaches the end of its growth period, sales begins to decline.

• Profit level off and then fall in the maturity stage.

3. MATURIT

Y

• The decline stage is characterized by falling sales and falling profits.

• Most competitors have withdrawn from the market.

4. DECLINE