New product development Flashcards
What are the categories of new products?
New to the world, additions, improvements, repositioning, and cost reductions
Why is new product development important?
Because it helps sustain growth by replacing obsolete items, changing customer preferences. Also helps keep the firm ahead of competition.
How much money do us businesses spend on new product development?
Around 100 Billion
What are the failure rates of new product development?
80% for consumer products and 33% for industrial products.
What are the stages of finding one successful new product
- Idea screening(Least costly)
- Concept testing( More costly)
- Product development(Even more costly)
- Test marketing(Even more costly)
- National launch(Most costly)
What are some of the reasons new products fail?
They fail due to:
- poor new ideas, insignificant point of difference,
-too small and unattractive for target markets,
-Incorrect positioning, price, place, or promotion
- Higher development costs
What is the new product development process?
- Idea generation
- Idea screening
- Concept development and testing
- Marketing strategy development
- Business analysis
- Product development
- Test marketing
- Commercialization
What is the decision process?
- Is the idea worth pursuing? Yes then move on, no then drop.
- Is the product idea compatible with company objectives and resources?Yes then move on, no then drop.
- Can we find a good concept consumers say they would try?Yes then move on, no then drop.
- Can we find a cost effective affordable marketing strategy?Yes then move on, no then drop
- Will this product meet our profit goal?Yes then move on, no then drop
- Have we got a technically an commercially sound product? If yes then move on, no then drop.
- Have product sales met expectations? Yes then move on, no then possibly send the idea back for development or drop.
- Are product sales meeting expectations? If yes then lay future plans if no then drop or modify the marketing program.
What happens in step one of the NPD process?
Idea generation.
- Uses internal sources such as r&d, as well as employees.
- Uses external sources such as customers(Complaints, unique use of products, FGI), Competitors, and distributors/ suppliers.
What occurs in step 2 of the NPD process and what are the mistakes?
-Evaluating suggested ideas
_ The mistakes are dismissing good ideas and sticking to poor ideas
What happens in step 3 of the NPD process?
Concept development
- Developing new product ideas into several detailed product concepts
Concept testing
- Test the new product concepts with target market groups
What happens in the fourth stage of the NPD process?
Marketing strategy development
- Design overall market plan for short term and long term goals
What happens in the fifth step of the NPD process?
Business analysis
- Profit and loss projections
What is the step 6 of NPD process
Product development
- Where a company develops new products and performs functional tests
What happens in the 7th step of the NPD process?
Test marketing
- where the product and the marketing plan are introduced into realistic settings
-Types of this include:
- Standard: Where a company tests new products in a few selected markets like cities
- Controlled: Conducted in a controlled specific setting like a store
- Simulated: Virtual or simulated storage setting
