CHAPTER 6
NEW PRODUCT DEVELOPMENT AND PRODUCT LIFE CYCLE
***List the steps in the new-product development
process. Discuss all of them in details:
Product development process:
1. Idea Generation (***)
Idea generation refers to brainstorming new product ideas or strategies to innovate an existing
product. The different internal and external sources through which a company generates ideas for
a new product are customers, distributors, suppliers, competitors, etc. Before creating any
product, companies evaluate market conditions, perform studies, understand the users’ wants and
needs, and then suggest possible solutions. SWOT analysis is a very effective technique to
discover the weak aspects of the product as well as to explore where significant opportunities
exist.
New ideas can be generated by:
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Conducting marketing research to find out the consumers' needs and wants.
Inviting suggestions from consumers.
Inviting suggestions from employees.
Brainstorming suggestions for new-product ideas.
Searching in different markets viz., national and international markets for new-product
ideas.
6. Getting feedback from agents or dealers about services offered by competitors.
7. Studying the new products of the competitors
2. Idea Screening
The second stage is called Idea Screening. This stage involves screening and reviewing all of the
ideas generated in the first step and selecting only those with the best probability of success.
Many factors are kept in mind while deciding which ideas to accept and which to reject. These
factors include product innovations, technical viability, and feasibility for marketing. For
instance, an automobile manufacturer may evaluate potential concepts for electric vehicles
before manufacturing electric cars while considering factors, like the availability of batteries,
their affordability, and how well they would appeal to consumers.
Most companies have a "Idea Committee." This committee studies all the ideas very carefully.
They select the good ideas and reject the bad ideas.
Before selecting or rejecting an idea, the following questions are considered or asked:
1.
2.
3.
4.
Is it necessary to introduce a new product?
Can the existing plant and machinery produce the new product?
Can the existing marketing network sell the new product?
When can the new product break even?
If the answers to these questions are positive, then the idea of a new-product development is
selected else it is rejected. This step is necessary to avoid product failure.
3. Concept Development and Testing(*****)
Product concept is a detailed description of the new product idea. It is
important to understand the product idea, concept and image.
 Product idea: It is an idea for designing a product for the customer.
 Product concept: it is a detailed description of the new product idea
generated by the company.
 Product image: It is a way to provide an actual view to the
customer.
Concept testing involves testing new product concept with group of targeted customer. It is
different from test marketing.
In this stage of concept testing, the company finds out:
1. Whether the consumers understand the product idea or not?
2. Whether the consumers need the new product or not?
3. Whether the consumers will accept the product or not?
Here, a small group of consumers is selected. They are given full information about the new
product. Then they are asked what they feel about the new product. They are asked whether they
like the new product or not. So, concept testing is done to find out the consumers' reactions
towards the new product.
4. Business analysis
Business analysis is a very important step in new-product development. Here, a detailed business
analysis is done. The company finds out whether the new product is commercially profitable or
not.
Under business analysis, the company finds out...
1.
2.
3.
4.
5.
6.
7.
8.
Whether the new product is commercially profitable or not?
What will be the cost of the new product?
Is there any demand for the new product?
Whether this demand is regular or seasonal?
Are there any competitors of the new product?
How the total sales of the new product be?
What will be the expenses on advertising, sales promotion, etc.?
How much profit the new product will earn?
So, the company studies the new product from the business point of view. If the new product is
profitable, it will be accepted else it will be rejected.
5. Product development
At this stage, the company has decided to introduce a new product in the market. It will take all
the necessary steps to produce and distribute the new product. The production department will
make plans to produce the product. The marketing department will make plans to distribute the
product. The finance department will provide finance for introducing the new product. The
advertising department will plan the advertisements for the new product. However, all this is
done as a small scale for Test Marketing.
6. Test marketing (****)
The stage of new product development where products and
marketing programs are tested.
Standard test market:
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The company supplies the new product in few cities.
It is time consuming
It is Costly.
Competitors can see the new product before it is
launched in full scale.
Controlled test market:
 Here a group of stores keeps the new product in the store
for testing.
 Less costly than standard testing.
 Much faster than standard testing.
Simulated Test market;
 Companies can test new product ideas in simulated
shopping environment.
 The cost is less, faster process.
7. Commercialization
If the test marketing is successful, then the company introduces the new product on a
large scale, say all over the country. The company makes a large investment in the new
product. It produces and distributes the new product on a huge scale. It advertises the new
product on the mass media like TV, Radio, Newspapers, and Magazines, etc.
8. Review of market performance
The company must review the marketing performance of the new product.
It must answer the following questions:
1.
2.
3.
4.
5.
6.
Is the new product accepted by the consumers?
Are the demand, sales and profits high?
Are the consumers satisfied with the after-sales-service?
Are the middlemen happy with their commission?
Are the marketing staffs happy with their income from the new product?
Is the Marketing manager changing the marketing mix according to the changes in the
environment?
7. Are the competitors introducing a similar new product in the market?
The company must continuously monitor the performance of the new product. They must make
necessary changes in their marketing plans and strategies else the product will fail.
Draw a product life cycle. Describe marketing objectives and
strategies at different stages of product life cycle:
The term product life cycle refers to the length of time from when a product is introduced to
consumers into the market until it's removed from the shelves. This concept is used b y
management and by marketing professionals as a factor in deciding when it is appropriate to
increase advertising, reduce prices, expand to new markets, or redesign packaging.
Introduction Stage:
The introduction phase is the first time customers are introduced to the new product.
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Profits are negative or low.
Low sales and high distribution and promotion expenses.
It is costly to get distributors to store the product.
- Characteristics: This is the initial stage when a new product is introduced into the
market. Sales are typically low, and the product faces limited customer awareness and
competition.
 - Marketing Objectives: The primary objective at this stage is to create awareness and
generate interest in the product.
 Marketing Strategies: Marketing Strategies: Focus on product differentiation, extensive
advertising and promotion to educate consumers, and distribution expansion to reach
target markets.
Growth Stage:
If the product is successful, it then moves to the growth stage. During the growth phase, the
product becomes more popular and recognizable. Financially, the growth period of the product
life cycle results in increased sales and higher revenue.
 the product gains traction and sales start to pick up significantly.
 Competition may emerge and you'll need to maintain a strong brand image.
 You might consider lowering prices slightly to attract a wider audience, but maintain
profitability.
 Characteristics: In this stage, the product experiences rapid sales growth as consumer
awareness increases. Competitors may enter the market, and market share can expand
- Marketing Objectives: The goal during the growth stage is to maximize market share and
profits. The product gains acceptance, and sales start to increase rapidly.
- Marketing Strategies: Emphasize brand building, product improvement, pricing strategies to
maintain competitiveness, expanded distribution channels, and targeted marketing campaigns.
Maturity Stage
This is the peak of product sales. The market is likely saturated- সম্পৃক্ত, and competition is
intense...
 Sales growth will slow down
 Lead to drop in profit
 Increasing their advertising and sales promotion.
 Characteristics: During this stage, sales growth slows down as the product reaches market
saturation. Competition intensifies, and price becomes a key factor in consumer decisionmaking.
 Marketing Objectives: The primary objective is to defend market share, extend the
product's life cycle, and maximize profits.
 Marketing Strategies: Differentiate the product from competitors through quality,
features, or customer service.
Decline Stage:
As the product takes on increased competition as other companies emulate- অনুকরণ করা
its success, the product may lose market share and begin its decline.
 Sales and profit decline.
 Some firms withdraw from the market.
 Characteristics: In this stage, sales decline as the product becomes obsolete, faces intense
competition, or is replaced by newer alternatives
Marketing Objectives: During the decline stage, sales and profits decline, and the product
becomes less relevant due to changing market dynamics or the emergence of new technologies.
- Marketing Strategies: Reduce costs, minimize marketing expenses, consider product
modifications or repositioning, and explore niche markets or segments.