Page 154 - DMGT509_RURAL MARKETING

Unit 8: Rural Product Strategy

findings. Sometimes the costs of product development are higher than expected, and sometimes Notes
competitors fight back harder than expected.
Because so many new products fail, companies are anxious to learn how to improve their odds
of new-product success. One way is to identify successful new products and find out what they
have in common. Another is to study new-product failures to see what lessons can be learned.
Various studies suggest that new-product success depends on developing a unique superior
product, one with higher quality, new features, and higher value in use. Another key success
factor is a well defined product concept prior to development, in which the company carefully
defines and assesses the target market, the product requirements, and the benefits before
proceeding. Other success factors have also been suggested—senior management commitment,
relentless innovation, and a smoothly functioning new-product development process. In all, to
create successful new products, a company must understand its consumers, markets, and
competitors and develop products that deliver superior value to customers. So companies face
a problem—they must develop new products, but the odds weigh heavily against success. The
solution lies in strong new-product planning and in setting up a systematic new-product
development process for finding and growing new products. Eight major steps in this process
are:

(a) Idea generation: New-product development starts with idea generation—the systematic
search for new-product ideas. A company typically has to generate many ideas in order to
find a few good ones. Major sources of new-product ideas include internal sources,
customers, competitors, distributors and suppliers, and others. Using internal sources, the
company can find new ideas through formal research and development. It can pick the
brains of its executives, scientists, engineers, manufacturing, and salespeople. Some
companies have developed successful “entrepreneurial” programs that encourage
employees to think up and develop new-product ideas. Good new product ideas also
come from watching and listening to customers.
The company can analyze customer questions and complaints to find new products that
better solve consumer problems. The company can conduct surveys or focus groups to
learn about consumer needs and wants. Or company engineers or salespeople can meet
with and work alongside customers to get suggestions and ideas. Finally, consumers
often create new products and uses on their own, and companies can benefit by finding
these products and putting them on the market. Customers can also be a good source of
ideas for new product uses that can expand the market for and extend the life of current
products. Competitors are another good source of new-product ideas. Companies watch
competitors’ ads and other communications to get clues about their new products. They
buy competing new products, take them apart to see how they work, analyze their sales,
and decide whether they should bring out a new product of their own. Finally, distributors
and suppliers contribute many good new-product ideas. Resellers are close to the market
and can pass along information about consumer problems and new-product possibilities.
Suppliers can tell the company about new concepts, techniques, and materials that can be
used to develop new products. Other idea sources include trade magazines, shows, and
seminars; government agencies; new product consultants; advertising agencies; marketing
research firms; university and commercial laboratories; and inventors. The search for
new-product ideas should be systematic rather than haphazard. Otherwise, few new ideas
will surface and many good ideas will sputter in and die. Top management can avoid
these problems by installing an idea management system that directs the flow of new ideas
to a central point where they can be collected, reviewed, and evaluated. In setting up such
a system, the company can do any or all of the following:

 Appoint a respected senior person to be the company’s idea manager.

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