New Product Development

Submitted By noemidbenitez
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Pages: 10
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New Product Development There are a variety of different stages and most firms follow this. It’s not just a random theoretical thing. Companies that develop new products constantly do this. Stages Idea Generation Idea Screening Concept Development & Testing Marketing Strategy Forecasting Prototype Development Market Testing Commercialization • launching a product • take the product nationwide after market testing • big questions o when do you commercialize? § day of the week? § season? § time of the day? § pick what is appropriate o relative to competitive § when do you want to launch relative to our competitors § ie .very few electronics companies want to launch at the same time as Apple § movie companies don’t want to launch their movies at the same time § a lot of times larger competitors try to avoid launches at the same time as competitors o Where § everything everywhere all at once? § roll it out, place by place? § big city then small cities § worldwide? § domestic then go international o Deliver products without having customers wait § Ie. a lot of companies try to launch everything at once and can’t handle the logistics side of it o from a marketing standpoint, you want to know how these things will affect our customers perception

As marketing managers, you want to know what percentage of your customers are persuadable Rate of Product Adoption – Rogers theory • the extent to which a product has been adopted by the people who will use the product at some point when we talk about a product being adopted, we are talking adoption by someone means that a person is using the product on a regular basis ie. I have a large flat screen tv in my room. Therefore, I am one of those people who have adopted flat screen tvs • rate of adoption o there are some people that will never use a product, we don’t use them in the calculations o calculates how many consumers who would ever use the product are actually using the product o how quickly are we going to go from no one using it to everyone using it o why do we care? § There is a big difference between me launching a product and everyone using it 60 days later than me launching and everyone using it 60 years later § how soon we will reach that threshold (adoption) ú how quickly will they adopt? o there has been a lot of research on it § Frank Bass – Bass model ú One of the earliest model of product diffusion ú if you know the ultimate market size and the quotient of innovation and quotient and imitation, you can estimate the shape of the curve ú innovation • use the product without influence from others ú imitation • those who use the product after seeing other people using Roger’s Theory We can look at the product itself. If we can recognize the 5 factors – relative advantage, compatibility, complexity trialability, observability •

Relative advantage o What is the relative advantage of this new product to the old way o the greater the relative advantage, the more quickly the product will be adopted into the marketplace o more painful to lose a dollar than pleasurable to gain a dollar § a product needs to have more than a relative advantage ú you need 2-3 x better than the old way • compatibility o not technical compat o the extent to which the new product is compatible to the benefits we got from the old product o the more compatible - doesn't need a lot of change on my end- the more quickly it will be adopted • complexity o the more complicated/complex the product, the slower the rate of adoption o if its hard to understand, steep learning curve, à slower adoption • trialability o extent we can try the product and observe the benefits o try it out in a way where you can actually experience the benefits myself o faster we can try, faster adoption rate o it’s one thing to read about something. IT’s another thing to experience it yourself or at least observe it • observability o the more quickly we can observe the benefits (don’t have to experience it
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