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New Product Development
(NPD)
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The 4 Elements of The Marketing
Mix
Product Price Place Promotion
Marketing Mix
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Defining Product
Anything that you can sell
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Marketing applies to a broad
range of products Physical product
Service Events
People
Ideas
Places
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Most products are combinations
of goods and service
Pure
service
Pure
good
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Core ... Actual ... Augmented product
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Successful firms . . .
Fully understand the corebenefit sought by customers and
start with that concept
Consider the enhanced product
including delivery, service and
complementary goods
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The 8-Stage New Product
Development (NPD) Process
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New Product Development
Key: Recognize when you are
in an NPD environment
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New Product Development (NPD)
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1. Idea Generation & 2. Idea Screening
Generation: Firms are always on
the look-out
Screening:
Fit with manufacturing and
distribution expertise Feasibility
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3. Concept Screening
Prototype or storyboard
Focus group: Would you beinterested in a service that . . .
Approximation of willingness to pay
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4. Marketing Strategy Development
and 5. Business Analysis Marketing strategy:
Developing credible marketing
plans with positioning, target
and Marketing Mix
Business analysis: Is there a high chance of a
good payoff?
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6. Product Development
E.g. battery life in iPod
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7. Market Testing
Some firms (fashion goods) dont testthe market: Put it out
there, see if
people buy it (the costs of this must besmall)
= Market test by roll out
Simulated test market (dummy store)new product is mixed in with
familiars
Test markets: Several cities let ustweak the Marketing Mix but
rivals
may attempt disruption
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8. Possible roll-out strategies
during commercialization
By geography
By market size By customer type
(business/consumer/government)
By channel of distribution (Rx/OTC) By use (special
occasion/every day)
By benefit sought
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The model for new product adoption
applies during roll out
Awareness Interest Trial Repeat
If we are not aninstant hit, do the
research
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Most New Products Fail?
Consumer packaged goods fail most
often
Brand extensions not sought by
consumer (new colors, flavors,
packaging)
Products that attempt to meet a
need that few consumer have (e.g.
combination products)
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Two forces for NPD
Consumer
needsTechnological
advances
When the
two align,
you have a
winner!
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Big firms take a diversified
Portfolio Approach
Risk
Potential Payoff
Improve performance of existing product
Add feature to existing product
New product to existing markets
New product to new markets
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Three keys to NPD
1. Recognize when you are in an NPD
situation
2. Understand that therell be manyideas, and a few winners.
3. Tolerate a portfolio of products
A few (only a few) high risk products
And some no-brainers (with low
payoff)
