new product development and test marketing

04/08/2023 HITESH SONKAR MBA MARKETING 1

NEW PRODUCT DEVELOPMENT AND TEST

MARKETING

04/08/2023 HITESH SONKAR MBA MARKETING

Outline

N P D N P D Process Test Marketing Uses of Test Marketing Types of Test Marketing Guidelines for Designing Market Tests

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N P D

Why? Poor Sales/Failure of current Product Range Complaints about its Product According to Product Life cycle stages

Ways of Carrying it out: By adapting, modifying, magnifying,

minimizing, substituting, or combining the existing features of a product

Different Quality Versions of the existing Products

Additional Models and sizes of the existing Product3


R1 – R15: new product development by adopting

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New Product Development Process

Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization

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N P D ProcessStep 1. Idea Generation

Systematic Search for New Product Ideas from Internal sources Customers Competitors Distributors Suppliers

By Attribute Listing Forced Relationship Problem Analysis- Customer Complaint analysis Brainstorming Mind Mapping Reverse assumption Analysis

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Step 2. Idea Screening

Process to spot good ideas and drop poor ones

Criteria Market need? Offers Value? Development Time & Costs? Manufacturing Costs? Rate of Return? How can it be distinctively

marketed?7


Step 3. Concept Development & Testing

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1. Develop Product Ideas into Alternative

Product Concepts

1. Develop Product Ideas into Alternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

2. Concept Testing - Test theProduct Concepts with Groups

of Target Customers

3. Choose the Best One3. Choose the Best One


Concept Testing

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Purposes of concept testing:

Determine customer attitude towards the product concept or idea.

Measure customers’ reaction towards the product’s attributes, e.g.. packaging, color, size, etc..

Predict the trial rate of the intended product

provide guidance on how the concept might be improved or re-defined.

Data collection methods include:

Focus group discussion

Survey Research Not very easy Questions are to

be formulated carefully to capture and effectively communicate the spark of an idea.

Demonstration


Questions to ask the customers:

Communicability and believability Need Level Gap Level Perceived Value Purchase Intention User, Purchase Occasions, Purchasing

Frequency

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Step 4

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Part Two - Short-Term:Product’s Planned Price

DistributionMarketing Budget

Part Two - Short-Term:Product’s Planned Price

DistributionMarketing Budget

Part Three - Long-Term:Sales & Profit Goals

Marketing Mix Strategy

Part Three - Long-Term:Sales & Profit Goals

Marketing Mix Strategy

Marketing Strategy Statement Formulation

Part One - Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

Part One - Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share


Step 5 Business Analysis

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Business Analysis

Review of Product Sales Projections, Costsand Profits Projections to See if They Meet Company Objectives

Business Analysis

Review of Product Sales Projections, Costsand Profits Projections to See if They Meet Company Objectives

If Yes, Move to Product Development

If Yes, Move to Product Development

If No, Eliminate Product ConceptIf No, Eliminate Product Concept


Step 6 Product Development

Quality Function Deployment (QFD)

List of Desired Customer Attributes (CAs)generated by M.R

Turn them to Engineering attributes(EAs)

Physical Prototypes Customer tests: Alpha and Beta Testing

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Some Prototypes

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Market Testing

“Controlled experiment, done in a limited but carefully selected part of the market, whose aim is to predict the sales or profit consequences, either in absolute or relative terms, of one or more proposed marketing actions”

Managerial Control Tool: Evaluation of Alternative Marketing Variables Reduce the commercial risk

Predictive Research Tool

Market Potential

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Types

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StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

SimulatedTest market

Test in a simulated Shopping environment

to a sample of Consumers.

SimulatedTest market

Test in a simulated Shopping environment

to a sample of Consumers.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled shelf position

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled shelf position


Test Markets: some major decisions

How many cities?

Which cities?

Length of test?

What Information to be collected?

What action to take? Trial Rate/ Repurchase rate

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Approaches to measure performance of the test product

Three Approaches: Testing against a standard product

Test Product --> brand leader Horse Racing Alternative e.g. LML Freedom

Several test products are developed for testing against one another to determine which one attains the highest level of consumer acceptance.

Testing against a historical standard Test product --> Performance of a successful

product which may not be involved in the test. A seldom used technique.

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Typical Information Gathered

Awareness level;

Purchase and repurchase rate;

Users’ experience with the product;

Users’ perception of the product;

Users’ profile and lifestyles;

Reasons for not using products;

Market share.

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Designing Market Tests

Guidelines:

Market Test should be representative of the, whole market under consideration.

Run it at least for a year. Control all your extraneous Variables as far as

possible. Only One variable to be tested at a time.

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Step 7 Commercialization

Production and Marketing Highest cost incurred to the company

When: First Entry, Parallel Entry, Late Entry

Where? To whom? How?

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04/08/2023 HITESH SONKAR MBA MARKETING22


Thank you

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new product development and test marketing

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