• Seven phases to new product development
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    Why New Products Fail


    • Lack of differentiating advantage

    • Poor marketing plan

    • Poor timing

    • Target market too small

    • Poor product quality

    • No access to market

    Seven phases to new product development:


    1. New Product Strategy Development
      Only a few ideas are good enough to reach commercialization. Ideas can be generated by chance, or by systematic approach and by company culture (3M). Need a purposeful, focused effort to identify new ways to serve a market. New opportunities appear from the changes in the environment.

    2. Idea Generation
      Continuous systematic search for new product opportunities.

      • Marketing oriented sources--identify opportunities based on consumer needs, lab research is directed to satisfy that research. 1-800#s, research etc.

      • Laboratory oriented sources--identify opportunities based on pure research or applied research.

      • Intrafirm devises--brain storming, incentives and rewards for ideas. 3Ms Post it, from choir practice. Hewlett Parkards lab is open 24 hrs. day. Analyzing existing products, reading trade publications.

    Brainstorming for your group project. Ideas should not be criticized, no matter how off-beat they are.

    1. Product Screening and Evaluation
      New product check list; list new product attributes considered most important and compare each with these attributes. Check list is standardized and allows ideas to be compared.
      --General characteristics, Marketing Characteristics and Production Characteristics.

    Ideas with the greatest potential are selected for further research.

    Do they match the organizations goals (Some companies have many patents that they have not exploited for this very reason.)

    Look at companies’ ability to produce and market the product.

    Need to look at the nature and wants of the buyers and possible environmental changes.

    Concept Testing
    Sample of potential buyers is presented with the product idea through a written or oral description to determine the attitudes and initial buying intentions.

    Conjoint Analysis to see feature tradeoffs.

    This is done before investing considerable sums of money and resources in Research and Development.

    Can better understand product attributes and the benefits customers feel are most important.



    Would you buy the product?
    Would you replace your current brand with the new product?
    Would this product meet real needs?

    1. Business Analysis
      Analyze potential contribution to sales, costs and profits.

    Does the product fit into the current product mix?
    What kind of environmental and competitive changes can be anticipated?
    How will these changes effect sales etc.?
    Are the internal resources adequate?
    Cost and time line of new facilities etc.?
    Is financing available?
    Synergies with distribution channel etc.
    MIS to determine the market potential sales etc.
    Patentability should be determined, last 17 years, 14 years for a pharmaceutical product.
    Find out if it is technically feasible to produce the new product.
    If you can produce the new product at a low enough cost so as to be able to make a profit.

    1. Product Development
      Develop a prototype, working model, lab test etc.

    Attributes that consumers have identified that they want must be communicated through the design of the product.

    1. Test Marketing
      Can observe actual consumer behavior.
      Limited introduction in geographical areas chosen to represent intended market.
      Aim is to determine the reaction of probable buyers.
      It is the sample launch of the Marketing Mix.
      Determine to go ahead, modify product, modify marketing plan or drop the product.

    PROS are:

      • Lessens the risk of product failure.

      • Reduces the risk of loss of credibility or undercutting a profitable product.

      • Can determine the weaknesses in the MM and make adjustments.

      • Can also vary parts of the MM during the test market.

      • Need to select the appropriate MM and check the validity.

    CONS are:

      • Test market is expensive.

      • Firm's competitors may interfere.

      • Competitors may copy the product and rush it out. IE Clorox detergent with bleach P&G. "In a live test you've tipped your hand, and believe me, the competition is going to come after you. Unless you have patented chemistry, they can rip you off and beat you to a national launch" -Director of Marketing at Gillette's Personnel division.

    Alternatively can use a simulated test market. Free samples offered in the mall, taken home and interviewed over the telephone later.

    1. Commercialization
      Corresponds to introduction stage of the Product Life Cycle.
      Plans for full-scale marketing and manufacturing must be refined and settled.
      Need to analyze the results of the test market to determine any changes in the marketing mix.
      Need to make decisions regarding warranties etc (reduces consumers risk). Warranties can offer a competitive advantage.

    Spend alot of $s on advertising, personnel etc. Combined with capital expenditure makes commercialization very expensive.

    Need to consider:



    • the speed of acceptance among consumers and channel members;

    • intensity of distribution,

    • production capabilities,

    • promotional capabilities,

    • prices,

    • competition,

    • time period to profitability and commercialization costs.

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