Page 164 - DMGT408DMGT203_Marketing Management

Unit 7: New Product Development and Product Life Cycle Strategies

3. Products that are new to the company but not new to target customers generally pose high Notes
challenge or risk.

Task What type of innovations are the products mentioned below? Identify the
characteristics of people who adopted these products.
(a) Cellular phone
(b) Notebook PCs
(c) Wristwatch with camera.

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Caution The degree of product newness to the company, its target customers, or both all
help determine the extent of complexity and uncertainty involved in the engineering,
operations, and marketing tasks necessary to make it successful as a new product. A truly
new innovation both to the company and customers requires great expenditure of resources
and efforts and also involves high degree of risk. Products new to consumers but not new
to the company are often not so innovative in design or manufacturing. However, they
may require high levels of marketing efforts to deal with uncertainty to build primary
demand. Finally, products new to the company but not new to target customers generally
do not pose much challenge or risk.

7.2 New Product Development Process

Before its launch in a market, a new product passes through several distinct phases and the
process may vary across different companies. The steps involved in the development of a new
product are presented in the Table 7.1.

Table 7.1: New Product Development Phases

Phases Marketing Activities
Idea Generation Searching for new product ideas from internal and external sources.
Idea Screening Select the most promising ideas and drop those with only limited potential.
Study the needs and wants of potential buyers, the environment, and
competition.
Concept Testing Describe or show product concepts and their benefits to potential
customers and determine their responses. Identify and drop poor product
concepts. Gather useful information from product development and its
marketing personnel.
Business Analysis Assess the product’s potential profitability and suitability for the market-
place. Examine the company’s research, development, and production
capabilities. Ascertain the requirements and availability of funds for
development and commercialisation. Project ROI.
Product Development Determine technical and economic feasibility to produce the product.
Convert the product idea into a prototype. Develop and test various
marketing mix elements.
Test Marketing Conduct market testing. Determine target customers’ Reactions. Measure
its sales performance. Identify weaknesses in product or marketing mix.
Commercialisation Make necessary cash outlay for production facilities. Produce and market
the product in the target market and effectively communicate its benefits.

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