NEW PRODUCT

DEVELOPMENT
PROCESSES
Prepared By: MILTON DE GUIA

Discussion :
New Product Development Process
Product Life Cycle

ut Before We Proceed

hat is Product

(tangible or intangi

In Marketing,
- a product is anything that can be offered
to a market that might satisfy a want or need
In Retailing,
- products are called merchandise
In Manufacturing,
-products are bought as raw materials and
sold as finished goods

Levels Of Product

Remember.......

cts That Were Successfully Introduce In The Market

1st iPOD ever made

First model, with mechanical scroll

wheel. 23, 2001
October

And a generations of
iPOD were made to
satisfy the needs of the
End user

w about first Portable laptop ...

orne 1st gen. compact portable computer

by the US military in 1981

Storage media

Laptop, tablets and Smartphones

Are available in the market.

high speed reading/writing of dat

Storage media

nd who can forget ...

And now..

NEW PRODUCT
DEVELOPMENT
PROCESSES

w l
e
N ve
e
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t

t
n
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m
op

IO
T
RA
E
N
GE

New Product
Development

EV
D
CT
U
D SS
O CE
PR O
PR

= the development of new

c
u
original products, product
G
d
N
o
G
EA
NI
product
Nimprovements
E
Pr
D
I
I
E
T
R
S modification, and new brands
1.
SC
TE
D
EA
N
through
the firms own research
T
D
A
I
V
.
E
T
2
D
and
development efforts.
V
E
Y
CO
.
3

PT
E
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4

NG
I
ET
K
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PM
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5

EG
T
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RO
P
6.

IS
S
LY
A
N

CT
U
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LO
E
V
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D

T
EN

ST
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7.

MA

NT
E
PM

NG
I
ET
K
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OM
C
8.

LI
A
I
RC

ON
I
T
ZA

N
- Is IaOsystematic
search for a new product ide

A
E
ID

T
A
R
WHO GENERATES
E
N
E
IDEA?
Customers
G

Internal Sources
Competit
orsforces of analysis
Porters Five

Distributors & Suppliers

And many more..........

2.

A
E
ID

E
E
R
C
S

- Is to spot good ideas and drop poor

G
N
I
as soon the product made possi
Nones
Criteria:

2. PRODUCT PRICE

1. MARKET SIZE

3. DEVT TIME & COST 4. MANUFACTURING COST

2.

A
E
ID

E
R
SC

G
N
I
N
E

DONT FORGET THE

RATE OF RETURN

EARN PROFIT

- These are ideas that pass the screening stage in

which a detailed version of the new product idea
is stated in meaningful consumer terms

What we need to distinguish?

2. PRODUCT CONCEPT
1. PRODUCT
Remember: iPOD
IDEA

Steve Jobs big idea changing the music

industry.

- describes the idea that a product is more

than just the tangible item "on the shelf,"
and that the product also consists of the
services offered with the product - like a
warranty, advice, delivery,
maintainance/repair etc. It also includes the
intangibles such as quality, prestige and
reputation.

3. PRODUCT IMAGE

he worlds first commercially available MP3 player

MA

T
V
E
- Ddesigning
an initial marketing strategy for introducing
Y
EG the product into market. A statement of the planned strat
T
for a new product that outlines the intended target marke
RA
T
S
the planned product positioning, and the safes, market
NG
I
share and profit goals for the first few years.
ET
K
R

Marketing Strategy Statement Formulation

Part
Part One
One -- Overall:
Overall:

Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales
Sales &
& Profit
Profit Goals
Goals
Market
Market Share
Share
Part
Part Two
Two -- Short-Term:
Short-Term:

Products
Products Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget
Part
Part Three
Three -- Long-Term:
Long-Term:

Sales
Sales &
& Profit
Profit Goals
Goals

into a physical
product in order
to ensure that the
product idea can
be turned into a
IfIfYes,
Yes,Move
Moveto
to
Product
ProductDevelopment
Development

T- Developing the

EV product concept
IfIfNo,
No,Eliminate
Eliminate
Product
ProductConcept
Concept

Business
BusinessAnalysis
Analysis
Review
Reviewof
ofProduct
ProductSales,
Sales,Costs,
Costs,
and
andProfits
ProfitsProjections
Projectionsto
toSee
Seeifif
They
TheyMeet
MeetCompany
CompanyObjectives
Objectives

6.

T
C
U
D
O
R
P

S
S
E
N
I
S
BU

S
I
S
Y
L
A
AN

1.
1. Alpha
Alphatesting
testing
Occurs
Occursin
inR&D
R&DDept
Dept

Making
Makingaa
Product
ProductPrototype
Prototype

IfIfYes,
Yes,Move
Moveto
to
Product
ProductDevelopment
Development

Product Prototype

2.
2.Beta
Betatesting
testing
Examining
Examiningthe
theproduct
product
in
inreal
realuse
useusing
using
Potential
Potentialcustomers
customers

Product Prototype usually tested through

e e
p
p
y
e
t
y
p
t o ot
ove one: oSample
Handheld Cellphone
E
y
P
t
Y
r
t
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O
P ro
T
o
O
R
AP
t
P
E
H
o
K
I
Aa
N
r
S
D
Md
p
O
A
O
n
W
Y
r

o
R
E
G
H

c
a

g
in

a
c

e
l
p
ample
Prototype
m
a

A prototype is an early sample, model, or release of

a product built to test a concept or process or to act
as a thing to be replicated or learned from.[

Five (5) Basic Categories of Prototype

1. Proof-of-Principle Prototype (Model)
- explores some functional, but not all, aspects of the intended design
2.

Form Study Prototype (Model)

- explores the size and appearance, but not the functionality, of the intended design.

3.

User Experience Prototype (Model)

- captures enough aspects of the intended design that it can support user research.

4.

Visual Prototype (Model)

- captures the size and appearance, but not the functionality, of the intended design.

5.

Functional Prototype (Model)

- captures both function and appearance of the intended design. It may be created in with a

different method and scale from final design.[

T
S
TE

T
E
K
R
MA

G The stage of new product development where the

N
I
product and marketing programme are tested in
more realistic market settings.

Standard
Standard
Test
Test Market
Market

Controlled
Controlled
Test
Test Market
Market

Simulated
Simulated
Test
Test Market
Market

THREE (3) APPROACHES USED IN

TEST MARKETING- Using standard test markets, finding
Standard
Standard
Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign
in
inaasmall
smallnumber
numberof
of
representative
representativecities.
cities.

a small number of representative test cities,

firms conducts a full marketing campaign in
these cities, a way consumer can measures
and gauge product performance.

Controlled
Controlled
Test
Test Market
Market
AAfew
fewstores
storesthat
thathave
have
agreed
agreedto
tocarry
carrynew
new
products
productsfor
foraafee.
fee.

- The research organizations / firm

delivers the product to the participating
stores and controls shelf location, amount of
shelf space, displays and point-of- purchase
promotions, and pricing according to
specified plans. Sales results are tracked to
determine the impact of these factors on
demand.

Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleof
of
consumers.
consumers.

- the company or firm

shows, to a sample of
consumers, ads and promotions
for a variety of products,
including the new product being
tested.

R
E
M
M
CO

O
TI
A
IZ
L
A
CI

- Actual introduction of the new product into the

market

- EXHIBIT, TRADE EVENT, CONVENTIONS

& ACTUAL
SHOWS IN THE MARKET

R
E
M
M
CO

O
TI
A
IZ
L
A
CI

Wait!!!
The Product
Development
Process
The Movie

t
e
L

h
c
t
a
W

!
it

The Spread of New Products

How Consumer learn about and Adopt New
Products
There was this book first published in 1962 by Everett
Rogers, a professor of communication studies,
popularized the theory
Diffusion of Innovations
- seeks to explain how, why, and at what rate new ideas
and technology spread through cultures and actual
market.
Innovation = is a paradigm shift, new idea, more

efore we jump in the Diffusion Of Innovation..

derstanding How Product Is Adopted In The Market

34%
34%

13.5
%

2.5
%

16%

INTRODUCTION

GROWTH

MATURITY

DECLINE

N
E

.
.
D