New products development process:
Idea generation: the development of the new product starts with a generation of new ideas. There may be a number of sources of the ideas generation. Some of main sources of the idea generation are:
1. Consumer's opinions and suggestions offered by the consumers or invited or collected by the company.
2. Salesman or distribution or retailers opinions and suggestions.
3. Competitor's products may be given an idea to involve the firm's product.
4. Own research and development department of the company may bring new ideas after market research.
5. Universities and government research laboratories.
6. Employers of the enterprises.
7. Management of the company.
All the ideas may not have immediate market product. At the same time, a firm must always keep a collection of the ideas in ready in stocks because certain of the new products is a condition for survival in the market. The specific activities performed at this stage are:
Determining the products sales fields of interest of the company. Establishing a programme for planned idea generation, and collection of the ideas through an organized work.
Idea screening: normally, a new product oriented organization will have at any time, several new product deals with them. The problem lies in identifying which ones are promising ideas. The problem lies in identifying which in the idea screening stage; the various product ideas are put to rigorous screening by the expert product evaluation committees. As the new product idea moves through development, the company will constantly need to revise its estimate of the product's overall profitability of the success, using the following formula:
Overall profitability of the success = profitability of the technical completion * profitability of the given technical completion * profitability of the economic success
Concept development and testing: when a new product idea passes the initial screening is subjected to the concept testing. The product concept involves translating the basic idea into a specific set of features and attributes that the product will offer to potential consumers. The product image, meanwhile, is concerned with determining the way the product should be perceived by the customer, and included in this is some notion of how the product will be marketed to those consumers. Once a clear product concept has been developed, it would be normal to progress by testing either the concept or sample product or both in the market. The feedback from the testing process will identify any modifications that may be necessary and perhaps more importantly will provide some indication of whether the product is likely to be successful.
Marketing strategy development: after testing, the product manager must develop a preliminary marketing strategy plan for introducing the new product into the market. The market plan consists of three parts:
1. The first part describes the target market's size, structure, and behaviour, the planned product positioning and the sales, market share, and profit goals sought in the first few years.
2. The second part outlines the planned price, distribution strategy, and the marketing bought for the first year.
3. The third part of the marketing strategy plan describes the long run sales and the profit goals and marketing mix strategy over time.
Business analysis: after management develops the products and marketing strategy. It can evaluate the proposal business attractiveness. Management needs to prepare sales, cost, and profit projections to determine the whether they satisfy company objectives. As new information comes in the business, analysis will undergo revision and expansion. This study involves the following:
1. Estimation of demand in the target at different price levels,
2. Forecasting sales based on the demand estimation and competitive analysis,
3. Estimate the cost of serving the market segment, taking into account cost of the transportation warehousing, margins required by the trade to market the new product, promotion expenses and sales force cost (if the additional sales force is required),
4. Based on the cost and anticipated sales revenue, calculate the breakeven price and the sales volume. Once a product concept is feasible, the firm takes the concept to the next stage of the product development.
Product development: idea on paper is converted into product. The product is shaped corresponding to the needs and desire of the buyers. Product development is the introduction of new markets in the present market. New or improved products are offered by the firm, to the present markets so as to satisfy better the present customers. Laboratory tests, technical evaluations etc. are made strictly on pilot models.
Test marketing: after designing, the next step is testing the product in the market. The term test marketing is also sometimes called field testing. The word test means examination or trial. Test marketing, thus, means testing the product in the market before the product is commercial on a nature of the competition, nature of the demand, and the consumers needs etc.
According to the P. Kotler, "test marketing is the stage at which the product and marketing programmes are introduces into more realistic market settings".
The objectives of the test marketing are:
a. To evaluate a complete market plan including advertising, distribution sales, pricing etc.
b. To determine media mix channels etc.
c. To forecast sales volume.
Thus, testing the products reduces the risk of the producer to a great extent.
Commercialization: once the test marketing is completed and the firm has favourable results, it is ready to commercialize the products or in the other words, launch the new products.
In the commercial stages the following factors are to be considered:
1. Acceptance by the customers and intermediates.
2. The intensity of the distribution (how many outlets).
3. Production capabilities.
4. Promotional mix (advertising, sales promotion, personal setting, publicity, public relations),
5. Competition (pure competition, imperfect competition, monopoly),
7. Break event point
8. Time period unit profitability occurs.
9. Cost of the commercialization