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what are the 5 stages in new product development?
idea generation
idea screening
idea evaluation
development
commercialization
what does step 3, idea evaluation, consist of?
concept development & testing
marketing strategy development
business analysis
what does step 4, development, consist of?
product development
market testing
Step 1: Idea Generation
major idea sources
internal (company’s own R&D, management, employees)
external (sources outside the company, customers, competitors, etc.)
Step 2: Screening (formula)
Probability of Technical Completion X Probability of Commercialization (given 1) X Probability of Economic Success (given 1 and 2) = Attractiveness of Opportunity
Step 3a: Concept Development & Testing
-An Idea/opportunity converted to a testable version of the product
-Describes/shows the New Product and its Positioning (thus requires a well defined Target Market)
concept testing examples
verbal description
sketch
photograph
storyboard
video
working prototype
Calculating demand forecasting
Q= M x A x P
Q=sales (annual)
M= market size
A = awareness x availability (fractions)
P= probability of purchase (surveyed)= Cdef x top box + Cprob x second box
Step 3b: Marketing Strategy Development
refers to the initial marketing strategy for introducing the product to the market and includes:
Step 3c: Business Analysis
involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives
Step 4a: Product Development
involves the creation and testing of one or more physical versions by the R&D or engineering departments
Step 4b: Test Marketing
the product and entire marketing program are introduced into more realistic marketing settings
what does test marketing help us understand?
helps to understand how consumers & dealers may handle, purchases, use & repurchases the new products
Step 5: Commercialization
the introduction of new product.
key decisions needed to be made about commercialization
When to Introduce
where to launch
to whom
how: whats the action plan?
PATH 1 FOR NPD
New Use of the Existing Products (New Markets)
PATH 2 FOR NPD
Add Creative New Features to the Existing Products (New Products)
PATH 3 FOR NPD
Expand Products to Services
PATH 4 FOR NPD
Retailers, the New Service Providers
PATH 5 FOR NPD
Technology Enabled New Product and Service
Feature Bloat
• Overload of features detracts from a product’s usability
• Do customers really use that many functions?
• Trade-off between capability and usability
