NEW PRODUCT DEVELOPMENT
AND
PRODUCT LIFE-CYCLE STRATEGIES
• SHOULD A NEW WEBSITE BE A NEW PRODUCT?
• IS PLAYSTATION-4 A NEW PRODUCT (PLAYSTATION-3 EXISTS)?
• CHATGPT-4 IS A NEW PRODUCT IN THE PRESENCE OF GPT-2&3?
• ROOHAFZA MILKSHAKE
• JAZZCASH, TIMASHA, SIMOSA, BIP & VION AS LAUNCHED BY MOBILINK JAZZZZ
• NESTLE MILK PACK WITH SCREWCAP
• TREAT CORPORATION (PHARMA + BATTERIES MANUFACTURING
DIVERSIFICATION)
• NEW-TO-THE-WORLD ( I.E. REALLY NEW PRODUCTS):
• UNIQUE AND INNOVATIVE PRODUCT
• RISKY DUE TO UNWILLINGNESS AND EDUCATION OF THE CONSUMER TO SELL
• CONSIDERABLE R & D COST
• EXAMPLE: DESKTOP COMPUTER WITH WORD PROCESSOR KICKED TYPEWRITER
APPLE’S TABLET IPAD (2010)
• NEW PRODUCT LINES:
• NEW PRODUCT CATEGORIES
• ALREADY EXIST IN THE MARKET (I.E., SALES, TRENDS, COST, DEMAND IS PREDICTABLE)
• LOST RISK AS THESE ARE SAME TO THE PRODUCTS ALREADY EXISTING IN THE MARKET)
• EXAMPLES: GOURMET (A BAKERY RETAIL CHAIN) LAUNCHED GOURMET NEWS
NETWORK (GNN); MICROSOFT MOBILE PHONES; UNILEVER DOVE SOAP TO SHAMPOO)
• IDEA GENERATION AND SCREENING
• CONCEPT DEVELOPMENT AND TESTING
• MARKETING STRATEGY
• BUSINESS ANALYSIS
• PRODUCT DEVELOPMENT
• TEST MARKETING
• COMMERCIALIZATION (LAUNCH)
New
New Product
Product Development
Development Process
Process
Step
Step 1.
1. Idea
Idea Generation
Generation
Systematic Search for New Product Ideas
Internal sources (Employees, Executives, Sales Force)
Customers
Competitors
Distributors
Suppliers
Crowd Sourcing (inviting large audience)
Example: PayPal Challenge to Top Coder Community to
develop innovative iPhone and android app
Source: Ehsan ul Haque, Khalid Hasan, "New Product Development"
In Strategic Marketing Management in Asia. Published online: 16 Jan 2017; 225-260.
Permanent link to this document: [Link]
New
New Product
Product Development
Development Process
Process
Step
Step 2.
2. Idea
Idea Screening
Screening
• PROCESS TO SPOT GOOD IDEAS AND DROP POOR
ONES
• CRITERIA
• MARKET SIZE
• PRODUCT PRICE
• DEVELOPMENT TIME & COSTS
• MANUFACTURING COSTS
• RATE OF RETURN
• EXECUTIVES WRITE UP NEW IDEAS FOR REVIEW
BY NEW PRODUCT COMMITTEE.
• R-W-W (‘REAL , WIN , WORTH DOING?)
New
New Product
Product Development
Development Process
Process
Step
Step 3.
3. Concept
Concept Development
Development &
& Testing
Testing
Distinction
1.
1. Develop
DevelopProduct
ProductIdeas
Ideasinto
into Product idea: possible product that may be
Alternative
Alternative offered to the market.
Product
ProductConcepts
Concepts Product concept: Detailed version of idea
into meaningful way.
Product image: Consumer perception about
an actual or a potential product.
2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups
of
ofTarget
TargetCustomers
Customers
3.
3. Choose
Choosethe
theBest
BestOne
One
New
New Product
Product Development
Development Process
Process
Step
Step 4.
4. Marketing
Marketing Strategy
Strategy Development
Development
Marketing Strategy Statement Formulation
Younger, well-educated, moderate- to
high-income individuals, couples, or small
families seeking practical, environmentally
responsible transportation;
50,000 cars first year (loss of $15M);
Profit $25 Million;
fun to drive and less pollutant
Marketing Budget for the first year.
Red, White, Blue
Pricing for distributors, Promotion etc.
Advertising budget.
Increasing price in 2nd and 3rd year…
Budget increase annually
Marketing research etc.
New
New Product
Product Development
Development Process
Process
Step
Step 5.
5. Business
Business Analysis
Analysis
Step
Step 6.
6. Product
Product Development
Development
Business
Business Analysis
Analysis
Review
Review of
of Product
Product Sales,
Sales, Costs,
Costs,
and
and Profits
Profits Projections
Projections to
to See
See ifif
They
They Meet
Meet Company
Company Objectives
Objectives
IfIf No,
No, Eliminate
Eliminate
Product
Product Concept
Concept
New
New Product
Product Development
Development Process
Process
Step
Step 7.
7. Test
Test Marketing
Marketing
Standard
Standard Controlled
Controlled
Test
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign AAfew
fewstores
storesthat
thathave
have
in
inaasmall
smallnumber
numberof of agreed
agreedto
tocarry
carrynew
new
representative
representativecities.
cities. products
productsfor
foraafee.
fee.
Simulated
Simulated
Test
Test Market
Market
Test
Testininaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleofof
consumers.
consumers.
Sales and
Profits ($)
Sales
Profits
Time
Product Introduction Growth Maturity Decline
Develop-
ment
Losses/
Investments ($)
Sales
Sales Low
Low sales
sales
Costs
Costs High
High cost
cost per
per customer
customer
Profits
Profits Negative
Negative
Create
Create product
product awareness
awareness
Marketing
Marketing Objectives
Objectives and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product
Price
Price Use
Use cost-plus
cost-plus
Distribution
Distribution Build
Build selective
selective distribution
distribution
Advertising Build
Build product
product awareness
awareness among
among
Advertising early
early adopters
adopters and
and dealers
dealers
Growth
Growth Stage
Stage of
of the
the PLC
PLC
Sales
Sales Rapidly
Rapidly rising
rising sales
sales
Costs
Costs Average
Average cost
cost per
per customer
customer
Profits
Profits Rising
Rising profits
profits
Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Offer
Offer product
product extensions,
extensions,
Product
Product service,
service, warranty
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market
Distribution
Distribution Build
Build intensive
intensive distribution
distribution
Advertising Build
Build awareness
awareness and
and interest
interest in
in
Advertising the
the mass
mass market
market
Maturity
Maturity Stage
Stage of
of the
the PLC
PLC
Sales
Sales Peak
Peak sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits High
High profits
profits
Marketing Maximize
Maximize profit
profit while
while defending
defending
Marketing Objectives
Objectives
market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models
Price
Price to
to match
match oror best
best
Price
Price competitors
competitors
Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution
Advertising Stress
Stress brand
brand differences
differences and
and
Advertising benefits
benefits
Decline
Decline Stage
Stage of
of the
the PLC
PLC
Sales
Sales Declining
Declining sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits Declining
Declining profits
profits
Marketing Reduce
Reduce expenditure
expenditure and
and milk
milk the
the
Marketing Objectives
Objectives
brand
brand
Product
Product Phase
Phase out
out weak
weak items
items
Price
Price Cut
Cut price
price
Go
Go selective:
selective: phase
phase out
out
Distribution
Distribution unprofitable
unprofitable outlets
outlets
Advertising
Advertising Reduce
Reduce to
to level
level needed
needed toto retain
retain
hard-core
hard-core loyal
loyal customers
customers
