Page 166 - DMGT408DMGT203_Marketing Management

Unit 7: New Product Development and Product Life Cycle Strategies

Each promising idea is researched to assess its potential. Committee members sort out the ideas Notes
into three groups: promising ones, marginal, and rejects. The committee evaluates the ideas
against a set of criteria. The criteria seek the answers to questions such as:
1. Does the product meet a genuine need?
2. Would it offer customers a superior value?
3. Can it be distinctively communicated?

4. Does the company have enough resources in terms of know-how and finance?
5. Will the new product bring in expected sales volume, sales growth, and ROI?
These criteria differ across different companies.
The extent to which a company responds to new product ideas depends much on its financial
resources, availability of production capacity to meet with likely demand, availability of suitably
trained personnel, and availability of raw materials and components required for producing the
new product.
Time is another major consideration because the development process can take a long time from
idea generation to production and market launch. Some developments can take as little as a few
months while others can take years of effort to finally launch the product in market. This is
particularly true for cases where safety testing is prolonged, such as new drugs. Screening
should ensure that the new product would not cannibalise existing company products. The new
product should fit within the company’s overall marketing strategies.
The screening or filtering stage discussed here depicts it as a purely rational process. D. Forlani,
J. W. Mullins, and O. C. Walker found some evidence that the final selection of ideas for further
development is typically affected by intuitive and feeling factors, and non-analytical judgement
processes were found to have a significant affect. While screening the idea, the company must
guard against drop error and go error. A drop error occurs when the company rejects, an otherwise
promising idea from further consideration because it is easy to see some fault in the ideas of
other people. A go error occurs when an otherwise poor idea is allowed to pass through by the
company and moves into development and commercialisation phases.
7.2.3 Concept Testing

Concept testing of a new product idea refers to a more detailed version of the idea. It involves
describing the product concept through oral or written description and the benefits to a small
number of potential customers, and make an assessment of their responses regarding the product.
For a single product idea, a company can test one or more concepts of the same product. It is a
low-cost procedure and helps the company to decide whether to commit considerable resources
in research and development. Positive consumer response to product concept, also helps decide
which particular product attributes and benefits are most important from a potential customer’s
point of view.

Concept testing proves useful in most cases, but in certain cases it may not be appropriate. In
case the major benefit of a product is something intangible and subjective, concept testing often
fails. It is difficult to communicate the concept of such a product in a way that respondents would
be able to visualise in such a product. Similarly, it is difficult to test a new service unless it can
actually be demonstrated being performed. For instance, it would have been very difficult to
test the concept of a fax machine just because potential users would not have been able to
visualise and understand its technology. Because of this difficulty, some concepts with huge
potential of success are killed before further consideration. Concept testing is difficult in case of
major innovation simply because customers have no experience of such an idea.

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