Name: Feeza Akmal
Semester: 4th
Department: BBA
Course code: MKT-402
Course title: Marketing
Management
Assignment #3
New Product Planning and Development
Introduction:
A firm can obtain new products in two ways. One is through acquisition- by buying a whole
company a patent or a licence to produce someone else's product. The other is through the
firm's own new product development efforts by new product we mean the original product,
product improvement, product modification and new brands that the firm develops through its
own product development.
Importance:
New products are important to both customers and the marketers who serve them. They bring
new solutions and variety to customers' lives and they are a key source of growth for
companies. To create successful new products a company must understand its consumers,
marketers and competitors and develop products that deliver superior value to the customer.
Example:
For example, new products have almost completely transformed Apple in recent years. The
iPhone and iPad, both introduced only within the past decade or so, are now the company's two
biggest selling products with the iPhones alone bringing in more than 62% of Apple's total
global revenues and 77% of device unit sales.
New Product Development Process:
The company must carry out a strong new product planning and systematic customer driven
new product development process for finding and growth of new products. This process
consists of 8 major steps.
Stages of Product Development:
Idea
generation
Marketing
strategy
development
Business
Analysis
Coomercialization
Idea
screening
Concept
development
and testing
Product
development
Test
marketing
1. Idea Generation:
New product development starts with idea generation-the systematic search for new
product ideas. A company typically generates hundreds even thousands of ideas to find a
few good ones. Major source of new product ideas includes:
• Internal idea sources: Companies use internal sources to find new ideas through
formal research and development.
• External idea sources: Companies cannot
obtain good new product ideas from any of
a number of external sources. For example,
distributors and suppliers can contribute
ideas for stop distributors that are close to
the market and can pass along information
about consumer problems and new product
possibilities. Suppliers can tell the company
about new concept techniques and
materials that can be used to develop new products.
• Competitors: Competitors are another important source. Companies watch
competitor ads to get clues about their new products. They buy competing new
products, take them apart to see how the work analyse their shares and decide
whether they should bring out a new product of their own for stop other ideas source
includes trade magazines shows websites, and seminar; government Agencies; as
advertising Agencies; marketing research firms; University and commercial
qualities; and inventors.
• Crowdsourcing: Through crowdsourcing, a company invites broad communities
of people such as customers, former employees and independent scientists and
researchers, and even the public at large into the innovation process. Tapping into
a breath of sources both inside and outside the company can produce unexpected
and powerful new ideas.
2. Idea Screening:
The purpose of Idea generation is to create a large
number of Ideas to stop the purpose of the
succeeding stages is to reduce that number. The
first Idea reducing stage is idea screening, which
helps spot good ideas and drop poor ones as soon
as possible. product development costs rise greatly
in later stages so the company wants to go ahead
only with only those product ideas that will turn
into profitable products.
3. Concept Developing and Testing:
An attractive Idea must then be developed into a product concept. It is important to
distinguish between a product idea, a product concept and a product image.
Product idea: A product idea is an idea for a possible product that a company can see itself
offering to the market.
Product concept: A product concept is a detailed version of the idea stated in the
meaningful consumer terms.
Product image: A product image is the way consumers perceive an actual or potential
product.
➢ Concept Development: Concept development helps you evaluate your customers'
reactions to your product or service before your product launch. It is a structured way
to develop an idea, see if customers like your idea, and determine what customer market
is willing to buy it.
➢ Concept testing: Concept testing is the process of testing your concept before launch,
so you can confidently put it into the market with a fairly good understanding of how
your customers feel and how they will respond.
4. Marketing Strategy Development:
Market Development Strategy is a growth strategy put in place by companies or
organizations to introduce their product or solution to target audiences they have not yet
reached or are not yet currently serving.
Marketing Strategy Statement: A strategy statement communicates your company’s
strategy to everyone within your start-up. The statement consists of three components:
objective, scope and competitive advantage. All three components must be expressed as
clearly as possible.
5. Business Analysis:
Business analysis is a review of sales cost and profit projections for a new product to find
out whether these factors satisfy the company's objectives.
To estimate the sales company might look at the sales history of similar products and
conduct market surveys. it can then estimate minimum and maximum sales to assess the
range of risk. After preparing the sales forecast for, management can estimate the expected
cost and profit for the product, including marketing, research and development, operations,
accounting and finance cost. The company then uses the sales and cost figures to analyse
the new product's financial attractiveness.
6. Product Development:
If the product concept passes the business test, it moves into product development.
Research and Development and Engineering develops the product concept into a physical
product. It will show whether the product idea can be turned into a workable product.
The Research and Development Department will develop and test one or more physical
versions of the product concept. research and development hopes to design a prototype that
is satisfied and excite consumers and that can be produced quickly and at budgeted cost.
Example: Software, Apps and Games developers use beta-testing with potential customers
to test the products pre-release.
7. Test Marketing:
If the product passes both the concept test and the product test, the next step is test
marketing, the stage at which the product and its proposed marketing program is attested
in a realistic market setting. test marketing gives the marketing experience with marketing
a product before going to the great expense of full introduction.
Example: The first Overwatch 2 Beta ended on May 17, 2022. The current Overwatch 2
Beta began June 28, 2022 and runs through July 18, 2022.
8. Commercialization: Commercialization is the process of bringing new products or
services to market. The broader act of commercialization entails production, distribution,
marketing, sales, customer support, and other key functions critical to achieving the
commercial success of the new product or service.
Importance:
Commercialization plays a huge part in deciding the role of an idea, product, or service in
society. It generates job opportunities, creates choices for consumers, and paves the way
for more market needs. It affects a nation’s economy and sustains the quality-of-life
standards. It also demands the learning and propagation of new skill sets, knowledge, and
innovations.
Example:
The first product launched by Young’s was Mayonnaise which received tremendous
acceptance and appreciation from Pakistani consumers. Today, Young’s enjoys successful
brand leadership in Mayonnaise and Spreads category throughout Pakistan. Young’s is
remarkably spreading in various parts of the world.
Reference
✓ Principles of marketing, Philip Kotler, Gary Armstrong ,17th edition.
✓ Marketing Management, Phillip Kotler, Kevin Lane Keller, 15th edition