New
Product Development refers to a product,
that is new to the company introducing to market or any product that consumer
treat as an addition to the available choices could be consider as new idea. It
taken place in the following ways:
- Any addition to the existing product line
- Improved performance of product
- New product line
- Cost reductions
- New to the world market
- Reposting in the product
Steps
in New Product Development
Step 1 - Idea Generation: It may
happened by internal and external sources. Internal sources include R& D
Department, Employees, Agent and Middlemen’s. External sources includes from
any sources other than internal sources such as Consumer, government, Companies
etc
Step
2 - Idea Screening: After gathering ideas from a variety of sources are
evaluated by review committee to provide the required market validation to
ensure they meet customer need and wants.
Step
3 – Business Analysis: Under this stage the producer should determine
Break Even Point (BEP), Return on Investment (ROI), Cash Flows, Pay out ration
etc to evaluate business effects on the product.
Step
4 – Product Development: Under this stage the producer is try to
describe the Technical Aspect such as Product Specification, Product method
etc. Marketing Aspects such as Branding, Packaging, labeling, etc.
Step
5 – Test Marketing: Is the actual conduct of marketing of the product
with in limited areas or location for the short period to test the
acceptability from the consumers. Essentials of test marketing are
Responsiveness, Demographic validation, Competition, Profit project etc.
Step
6 – Commercialization: Refers the
actual introduction of the product in the market. Under this stage the product
enters the market with large scale production, distribution, advertising and
sales promotion.
Reasons
for the Failure of New Products
- Poor demand management
- Changes in consumer taste and preferences
- Changes in environmental factors
- Low profitability
- Unattractive features
- Wrong segmentation and targeting
- Weak positioning strategy
- Distribution related problems
- Bad pricing strategies
