Page 183 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes New product development involves seven stages:
idea generation involves searching for new product ideas;
idea screening refers to selecting the potential ideas
concept testing is presenting product concepts and product benefits to target customers
to assess their responses to identify and eliminate poor product concepts
business analysis step assesses the new product’s profit potential and compatibility
with markets
test marketing involves testing the product in some types of settings to evaluate
consumer responses towards the product and the marketing programme, and

commercialisation is full-fledged product launch in the market.
Use of modern virtual reality technology may be of help to shorten the duration involved
in new product development.

Product life cycle is one of the enduring and widely publicized frameworks in marketing
literature. Both, theory of innovations and diffusion, as well as theory of monopolistic
competition endorse this framework.

Product life cycle can be viewed from different levels of products, like core product,
product category, brand and so on. In marketing literature, several prescriptions have
been proposed for using product life cycle for formulating marketing strategy.
A typical product life cycle passes through stages of introduction, growth, maturity and
decline stage. The characteristics and strategies to be followed at each of these stages vary
from one to another.

7.7 Keywords

Concept Testing: Getting information from customers about how well a new product idea fits
their needs.

Drop Error: This is an error, which the product manager commits by dropping a very good
purchase idea.
Go Error: This is an error which a new product manager commits by taking a bad idea further
and investing in that idea.
New Product: A product that is new in any way for the company concerned.
Product Development: Offering new or improved products for present markets.
Product Life Cycle: The market response to a new product idea after the product is commercialized
and till it eventually goes out of the market.
Test Marketing: This is a process of testing the feasibility of the product and its marketing
program in a limited and selected market.
7.8 Review Questions

1. If developing new products is risky, why do companies bother to spend huge sums of
money on it?

2. Define a new product. Give example of three products you consider as ‘new’.
3. Explain the relevance of ideas in new product development.

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