Developing New Products

Developing New ProductsIsaa Ruth F. LesmaMarketing ManagementG14-0139Key Steps in New Product DevelopmentIdea generation is a continuous, systematic search for new-product opportunities. It involves delineating sources of new ideas and methods for generating them.

After the firm identifies potential products, it must screen them. In product screening, poor, unsuitable, or otherwise unattractive ideas are weeded out from further actions.Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this early stage of development. Business and financial analysis for the remaining product concepts is much more detailed than product screening.Product development converts a product idea into a physical form and identifies a basic marketing strategy.It involves product construction, packaging, branding, product positioning, and usage testing.Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan.Commercialization involves implementing a total marketing plan and full production.Product life-cycleMarketing Strategies: Introduction StageProduct offer a basic productPrice use cost-plus basis to setDistribution build selective distributionAdvertising build awareness among early adopters and dealers/resellersSales Promotion Heavy expenditures to create trialProduction life-cycle strategiesMarketing Strategies: Growth StageProduct offer product extensions, service, warrantyPrice penetration pricingDistribution build intensive distributionAdvertising build awareness and interest in the mass marketSales Promotion reduce expenditures to take advantage of consumer demand

Marketing Strategies: Maturity StageProduct diversify brand and modelsPrice set to match or beat competitionDistribution build more intensive distributionAdvertising stress brand differences and benefitsSales Promotion increase to encourage brand switching

Production life-cycle strategiesMarketing Strategies: Decline StageProduct phase out weak itemsPrice cut priceDistribution use selective distribution: phase out unprofitable outletsAdvertising reduce to level needed to retain hard-core loyalistsSales Promotion reduce to minimal level