New Product Development Techniques

Although a lot of new products get launched in the market yet many of them do not see the light of the day. Before we discuss new product development techniques, let us attempt to highlight causes of product failures. Some of them could be attributed to overestimation of market size; product design problems; improper positioning of the product, its pricing and advertisement; costs associated with development of the product and competitive actions in the form of alternatives and substitutes.

In order to create successful new products, the company must understand target market, consumers and competitors. Based on the needs and demand of consumers, products to be developed that deliver superior value.

Let us understand the steps involved in the new product development process comprising idea generation & screening; concept development & testing; marketing strategy; business analysis; product development; test marketing and commercialization.

Idea Generation revolves around systematic search for new product ideas from internal sources, consumers, competitors, distributors and suppliers.

Idea Screening involves process of identifying good ideas and dropping poor ones, based on market size, product pricing, development time & costs, manufacturing costs and rate of return.

Concept development & Testing could consist of converting product ideas into alternative product concepts, testing the product concepts with group of target consumers and choose the best one.

Strategy development has three stages in the form of overall one catering to target market, product positioning, sales & profit goals and capturing market share. Short-term would take care of product's planned pricing, its distribution and marketing budget. Long-term strategy has sales & profit goals besides marketing mix strategy.

Business Analysis means review of product sales, costs and profit projections to see if those meet company goals and objectives.

Product development entails meeting company goals and objectives otherwise eliminate product concept.

Test Marketing happens on pilot basis in small number of outlets with full marketing campaign, which is termed as Standard Test market. Controlled Test Market covers a few branches those have carried new product launches. Simulated test market comprise a sample of consumers for testing in a simulated environment.

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