List and define the steps in the new-product development process Essay

By its truly nature, merchandising requires companies and organisations to develop innovative ideas and dupe adjustments to their marketing efforts. New concepts, designs and returns atomic number 18 inborn for responding to the ever-changing demands of the target market/s, and atomic number 18 crucial for maintaining client satisf serve, which ultimately leads to increased revenues and network for the firm. New- crop emergence dictates the caller-ups future in the market. Every persons wants argon unlimited however, a persons inescapably be narrowed to a limited amount. A harvesting is something that bum satisfy peoples wants and needs. It is one of the variables in the marketing mix (one of the 7Ps). A increase post be considered as the most measurable item in the marketing mix, since ultimately the marketing mix revolves around the Product. It support be offered to the market in the form of honests, services, ideas, events etc, The following are the classificati on of goods . This is crucial in organisation for marketers as market segmentation exercises are carried out within the company in dictate to target certain sort outs of guests with specific use-related and use-situated needs. Below are four main classifications of goods Convenience Goods these are those goods which are bought on a daily basis, harvest-feasts of this type are usually considered as needs. These are goods such as milk, bread, detergents etcShopping Goods these are mostly semi-durable goods which are purchased less frequently then convenience goods. These cost more than(prenominal) than convenience goods, thus people tend to choose yields over others in a process of choosing the preferred alternative. Clothes and white goods are ordinary examples persuasiveness Goods these are goods which are bought infrequently. If a person decides to purchase a specialty good, one allow take time on choosing the good, since these goods are much more costly than the two previously mentioned. When this type of good is bought after gross sales service is usually provided. Example of this type of goods includes property & motor vehicles & a luxuriousness holiday in a high standard hotel. Impulse Goods these goods are not actively searched by customers when one is making a purchase. However, a locomote minute impulse makes a customer purchase goods. Impulse goods usually occur in supermarkets or department stores.Idea Markets The creation and evaluation of tonic ingathering ideas are important procedures in the brisk ware development process. Idea markets help companies by using virtual stocks to represent product ideas, introducing a virtual marketplace for these ideas to interact and use the forces of the market to generate certain stock prices that allow for indicate whether a product idea could be happy or not. Thus, the concept of idea markets has been considered as one of the leading regularitys of creating and evaluating recent-fang led product ideas. Both the creation and evaluation of ideas require certain things such as creativity and long-range forecasting abilities, nevertheless they also suffer from a great deal of uncertainty (Creative Trainer 2007) . The following three factors show why idea markets have been proposed as the saucy method of creating and evaluating product idea, mainly because they positively influence the prime(a) of freshly product ideas 1.Large Number of Ideas and Idea CreatorsIt is essential that the feel of product ideas is given importance, as this determines the commercial success of the product. However, it is not quite that easy to determine the people that should be involved in the product creation as well as the main characteristics of the product idea. A wide pool of ideas might give rise to some unexpectedly good concepts that arent in demand at the moment but might be the breakthrough product idea sometime in the future. To broaden the background signal of the search of the next outgo product idea, companies consult with several diverse and external sources such as employees, suppliers and researchers . Due to its uncertainty, participants of idea creation should come up with a substantial amount of product ideas. It follows that a high quantity of idea correlates to a high quality of positive product ideas, thus, creativity is an important element that shouldnt be under-valued or diminished. Activities of idea creation, such as brainstorming, should promote individual creativity.Companies nowadays are creating and innovation friendly and relaxed office environment so as to enhance the innovative performance and creative thinking. Innovation leads to the development of new ideas in order to sustain present customer needs within the market. This can be achieved with the support of many different processes that help the company to expand into something different sooner of building on something that they already have. whiz ofthe many methods of innovation is symbiotic ideas, where multiple ideas are combined, adding the pros of all ideas without incurring all the cons, to make a better general idea. The second method, targeted innovation, is highly use in bragging(a) scale companies and deals with the idea of a direct path that leads to a result that is not completely known from the beginning of the process but also expected. Finally, the revolutionary idea is one that portrays a whole new different perspective which sets it apart from traditional school of thought. An example of this ideology is Marxism .2.Group decisions instead of individual decisionsWhen companies engage in purpose a new product to develop, ideas about a new product can be established from a group of idea creators and by means of a discussion and exchange of opinions. This allow result in high quality ideas that can prove usable to the company when deciding what product to produce. Ideas formed through group discussion can be generated through se veral activities such as idea competitions and ideation games, this pass on cause the participants to widen their thoughts and observe other participants ideas before acting. It is also ideal that the persons that entrust evaluate the product work as a group, this will remediate the quality of their evaluations imputable to the fact that one person might see something that the other person missed and even one can also remark the other until a compromise is found. Interactive and iterative evaluation techniques allow participants to widen their knowledge and continuously learn more and more, thereby improving the quality of the decision taken .3.Combining the creation of ideas with their evaluationMost of the ideas generated will support either the creation of the new product or the evaluation of the new product. This will be beneficial due to the fact that participants can focus more towards the creation process. The problem that arises whitethorn be the fact that idea creators will not receive immediate feedback regarding their ideas, this whitethorn result in the ideas being vague or even out of the range intended for them to be in.The ideas generated are usually split into three main criteria mainly being in respect of their quality, commercial success and new to the world. Thecriteria usually provide skewed results and only hardly a(prenominal) of the ideas turn out to be of a high quality. Another problem that may arise is the fact that companies review a large number of ideas from which only a moderate portion are processed for further development. Participants who have knowledge of the product and are able to create new product ideas are usually even capable of evaluating the product ideas generated. Combing these participants together results in a positive and successful evaluation of new product ideas.Levels of product When intrusive for new product ideas one must also keep in mind that the product is make up of three components Core product, Ac tual product and Augmented product. The core product is the part of the product that makes it beneficial to the consumer and answers the question What is the buyer really buying? The actual product is the tangible, physical product. The Augmented product on the other hand refers to the non-physical part of the product, the added value one gets from purchasing the product, such as customer service, after sales support, delivery, installation etc .Product Characteristics When finding and developing new product ideas one should incorporate and think about the product attributes, branding, packaging and labelling. One must consider the quality level and quality consistency of the product. This refers to how the product is perceived and how the product will be expected to perform during its life. One should also think about the features that are expected to die hard from the product and the characteristics of the product that contribute to the benefits it offers. Substantial thought sho uld also be given regarding the design of the product. Another important aspect of the product that requires rational, especially in new companies, is the brand of the product. This usually incorporates a name to the product, sign, symbol or a combination of the above mentioned. Branding provides a unique attribute to the product therefore it should be attractive and easy to recognise and remember. Many people buy a product solely on the strength of the brand. The packaging of the product is yet another important factor. It includes the wrapper or container for the product. The packaging shouldprotect the product and ensure it reaches the buyer in the condition it is intended to and also incarnate with the packaging should be a set of instructions and natural rubber labels on how to handle the product .Managing the New-Product Development Process The need for new product development may arise due to other external forces such as competition from rival firms. Innovation and new ide as are forced into play within the market as firms compete for a bigger customer base and market share. In addition, new product development may occur due to the actual product becoming obsolete and/or inadequate for present customers needs. There are many other reasons why new product development is vital. These may include -Innovative/unique products earn higher profits than older products. -New products can help reposition the company in customers minds and shift their perception about the new product/s -Some firms market seasonal products that reap their highest sales during a certain time of the family (for example, ice-cream vendors). Expanding the firms product mix into new areas may help offset these fluctuations.The development method may take two forms. The company can develop new products in its own laboratories or it may contract independent researchers or firms to develop specific original products. Furthermore, we can identify sestet categories of new products 1.New -to-the-world products. (Such as the first Microsoft tablets were in 2002) 2.New product lines (new products that allow a company to enter an established market) 3.Additions to alive product lines (New product that supplement existing products, eg new flavours, sizes etc) 4.Improvements and revisions of existing products5.Repositioning ( existing products that are targeted to new markets)6.Cost ReductionsBefore we get to the new product development process there are few decisions a company must take. It must decide on how to segment the market, which will be the target customers, identify their needs and determine its market positioning for the new product. Nowadays, companies use customer-driven engineer, which is the process whereby the design of the final (new) product incorporates its target customers preferences. These preferences are determined through market research methods, such as the collection ofprimary and secondary data. Lastly, the company must set a budget for the new product. Management must decide what proportion of investment will be necessary for research and development activities as well as the gathering of market intelligence and market research. Once this is set, the New-Product Development process may begin. There are 8 steps in the New-Product Development process as defined by kotler.1. Idea GenerationThe process starts with the hunt for new ideas. The key to successful ideas, is understanding customers present or unmet needs in the market. For example , Procter &Gambles efforts in 1985 to create a bold new advertising campaign for Folgers to catapult it into market leadership began by watching consumers make coffee and by listening to their descriptions of their process of open-eyed up in the morning. From these efforts came the insight that people actually wake up to the smell of coffee before they get to the taste And, thus was born The best part of waking up The insight worked so well, its still guiding the marketing campaign t oday twenty years later. Ideas for new products can be obtained from customers, the companys R&D department, focus groups, competitors, salespersons, employees, trade shows and events etc2. Idea ScreeningThe second stage is to get rid of unsound ideas prior to dedicating resources to them. The screeners must ask at least three questions Will the customer in the target market benefit from the product? Is it technically feasible to do the product?, Will the product be profitable when manufactured and delivered to the customer at the target price? An important consideration must be made in screening ideas. This stage is crucial for companies as they must avoid two types of errors A Drop-error which occurs when a company dismisses a good concept for the new product A Go- error occurs when a company goes forward with a poor idea up until the last new-product development stage, commercialization. This can prove to be extremely costly is the idea is not received well in the market. A recent example of this is when in 2010, GAP launched a new logotype in an attempt to be more modernThis only lasted two days as GAP received an unbelievable criticism from the public, who expressed felt that GAP was changing their image for the worse. 3. Concept Development and TestingHaving identified the right product idea, a product concept must follow this is an flesh out version of the screened idea. The notion here is that a product idea can be turned into numerous product concepts. These concepts are developed with marketing and engineering specifics. Before the next step, the product concept must be tested. This follows by giving the concept and all information about the product to a group of target customers and obtaining feedback and responses from them. The reactions obtained would indicate whether the customers in the target market would welcome concept or not.4. Marketing Strategy developmentIn this stage, the new product formation will begin as a result of the co nclusions derived from the concept development and testing stage. A system-plan would be drawn up as to how best to predate the new product into the segmented target market. The plan describes three parts , The first part describes the markets structure, size and behaviour, as well as the planned positioning of the product and the market share. The second part shapes the expected price, distribution approach and marketing financial plan. The last part of the marketing strategy outlines the sales and profit targets as well as the marketing-mix strategy.5. Business analysisThis is an important step in new product development. The firm must learn different aspects of the new product. It should find out whether the product is profitable or not and what the cost of the new product will be. Under this stage, the demand for the new product should be established and whether the demand is seasonal or regular while also gathering information re any competitors of this new product.Estimatio ns of sales and expenses such as advertising and sales promotion should be made to provide calculations for the approximate profit which thenew product should render. Hence, the new product is analyse from a business aspect. If the new product should earn a profit, it will be accepted, otherwise it will be rejected.6. Product developmentIn this product development stage, the company takes the necessary steps to produce and distribute this product since the company would have already decided to introduce this new product in the market. The production development department will make strategies to produce one or more physical versions of the product concept, while the marketing department will make plans on how to distribute the product. The financial department will provide all the finances required to introduce the new product. Before the test marketing stage, plans for the advertisements for the new product will be made on a trivial scale.7. Test marketingTest marketing is introd ucing this new product on a small scale and in a small market, in a more realistic setting. If this product is a success in the small market, then it is later introduced on a larger scale. However, if this new product fails in the small market, then the company will test for reasons for its failure. There are different types of test marketing which include the following sales-wave research, simulated test marketing, controlled test marketing and test markets .In sales-wave research, the company gives customers the opportunity to use the product at no cost. At a later stage the company then reoffers the same product or a competitors product at a slightly cheaper price and notes the number of times (sales-waves) each customer selects each product. The simulated test market is a cheaper and faster method when compared to the other methods, but it is not considered as the most accurate due to the controlled setting. The company will make necessary amendments in the new product and will then introduce it again in the small market. If the new product fails for the second time, the firm will reject it. Test marketing is a safety device which reduces risk from large-scale marketing. Although this is a very time-consuming stage, it must be done especially for costlyproducts.8. CommercializationIf the test marketing performed on the new product is successful, then the company introduces their product on a larger scale, which is known as commercialization. The firm will make a large investment in the new product. It will plan when to launch the product in a larger market and where since the market- penetration timing and location are very critical. First entry has its advantage of being on the market before its competitors but might backfire if it is rushed. When a firm coincides its products entry with its competitors, known as parallel entry, this will enhance the markets attention on analysing and comparing products. Whilst a late entry launch will reduce costs while also gathering further knowledge on the size of the market. Companies usually wait for the killer application to occur this may depend on the season or for the older product to be drawn down and to be replaced. The company will produce and distribute the new product on a larger scale where it will advertise the new product on mass media such as Radio, TV, Magazine and Newspapers.The Consumer espousal Process This is the process by which potential customers learn about the new product, tests it out and adopts or rejects it. This process begins from when the consumer first hears about the new innovation up until final adoption of the product. Adoption is a decision made by an individual to become a regular user of a product. There are five stages which adopters of new products have been observed to pass through 1.Awareness consumer becomes aware of the new innovation 2.Interest the consumer seeks more information about the new innovation 3.Evaluation the consumer considers whethe r or not to try the product 4.Trial the consumer actually tries the product so as to enhance his/her evaluation of it. 5.Adoption the consumer becomes a customer and decides to make regular use of the product. It is the task of the new-product marketer to make this process as easy and swift as possible so as to capture the consumers interest and turn it into the action of actually adopting the product.Conclusion In conclusion, companies must realise the importance that the product has in the marketing mix. Improved and replaced products will expand and maintain sales and profits for the company. However, when coming to develop a new product, companies must realise the importance and relevance of the steps involved in creating and introducing new products into the market. The key is to develop a product which is innovative, up to standard, meets the customers present needs and which ultimately has the ability to penetrate the market and claim a place in the customers minds. Thus b y following the New Product Development process, as we have discussed in this assignment, companies will be able develop a product which has a high probability of being successful in the market and which will be demanded by its customers.