New product development strategy and managing the product life
cycle strategy
A firm can obtain new products in two ways.
1. One is through acquisition – by buying a whole company, a patent, or a license to produce
someone else’s product.
2. The other is New product development = the development of original products, product
improvements, product modifications, and new brands through the firm’s own product
development efforts.
Why Do Companies fail when bringing a new product to the market
1. The company can overestimate its market size
2. The actual product may be poorly designed
3. Or it might be incorrectly positioned.
4. Launched at the wrong time
5. Priced too high
6. Poorly advertised.
7. Poor market research
8. Cost of product development are higher than expected
9. Competitors fight back harder than expected
The new – product development process
1. Idea Generation
Idea generation = the systematic search for new – product ideas
Major sources of new – product ideas include internal sources and external sources such as
customers, competitors, distributors and suppliers and others.
Internal idea sources
- Employees give insight about new product development. ( CISCO )
, External idea sources
Distributors 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.
Companies watch competitors ‘ads to get clues about their new products.
Other Idea sources include trade magazines shows, and seminars; government agencies;
advertising agencies; marketing research firms; university and commercial laboratories and
inventors.
Customers (3M)( open – innovation new product idea programs)= the company can analyze
customer questions and complaints to find new products that better solve consumer problems. Or it
can invite customers to share suggestions and ideas.
Crowdsourcing ( NETFLIX)
Crowdsourcing = inviting a broad communities of people – customers, employees, independent
scientists and researchers, and even the public at large – into the new – product innovation process.
2. Idea screening
The first idea - reducing stage is idea screening = screening new – product ideas to spot good ideas
and drop poor ones as soon as possible
R – W – W (real win worth doing)
1. Is there a real need and desire for the product and will customers buy it
2. Does the product offer a sustainable competitive advantage?
3. Does the product fit the company’s overall growth strategy?
3. Concept development and testing
An attractive idea must then be developed into a product concept. = A detailed version of the new –
product idea stated in meaningful consumer terms
- A product idea – an idea for a possible product that the company can see itself offering to
the market
- A product concept is a detailed version of the new – product idea stated in meaningful
consumer terms
- A product image is the way consumers perceive an actual or potential product
Concept development
- Concept 1 = an affordably priced midsize car designed as a second family car to be used
around town for running errands and visiting friends
- Concept 2 = A mid – priced sporty compact appealing to young singles and couples
- Concept 3 = A green car appealing to environmentally conscious people who want
practical, low – polluting transportation
cycle strategy
A firm can obtain new products in two ways.
1. One is through acquisition – by buying a whole company, a patent, or a license to produce
someone else’s product.
2. The other is New product development = the development of original products, product
improvements, product modifications, and new brands through the firm’s own product
development efforts.
Why Do Companies fail when bringing a new product to the market
1. The company can overestimate its market size
2. The actual product may be poorly designed
3. Or it might be incorrectly positioned.
4. Launched at the wrong time
5. Priced too high
6. Poorly advertised.
7. Poor market research
8. Cost of product development are higher than expected
9. Competitors fight back harder than expected
The new – product development process
1. Idea Generation
Idea generation = the systematic search for new – product ideas
Major sources of new – product ideas include internal sources and external sources such as
customers, competitors, distributors and suppliers and others.
Internal idea sources
- Employees give insight about new product development. ( CISCO )
, External idea sources
Distributors 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.
Companies watch competitors ‘ads to get clues about their new products.
Other Idea sources include trade magazines shows, and seminars; government agencies;
advertising agencies; marketing research firms; university and commercial laboratories and
inventors.
Customers (3M)( open – innovation new product idea programs)= the company can analyze
customer questions and complaints to find new products that better solve consumer problems. Or it
can invite customers to share suggestions and ideas.
Crowdsourcing ( NETFLIX)
Crowdsourcing = inviting a broad communities of people – customers, employees, independent
scientists and researchers, and even the public at large – into the new – product innovation process.
2. Idea screening
The first idea - reducing stage is idea screening = screening new – product ideas to spot good ideas
and drop poor ones as soon as possible
R – W – W (real win worth doing)
1. Is there a real need and desire for the product and will customers buy it
2. Does the product offer a sustainable competitive advantage?
3. Does the product fit the company’s overall growth strategy?
3. Concept development and testing
An attractive idea must then be developed into a product concept. = A detailed version of the new –
product idea stated in meaningful consumer terms
- A product idea – an idea for a possible product that the company can see itself offering to
the market
- A product concept is a detailed version of the new – product idea stated in meaningful
consumer terms
- A product image is the way consumers perceive an actual or potential product
Concept development
- Concept 1 = an affordably priced midsize car designed as a second family car to be used
around town for running errands and visiting friends
- Concept 2 = A mid – priced sporty compact appealing to young singles and couples
- Concept 3 = A green car appealing to environmentally conscious people who want
practical, low – polluting transportation
