This is about six steps involved in launching a new product into the market.
After a firm must have gone through its research process and finally decides on which new product it wants to develop on, the next stage is thinking of how to really develop on that new product in order to achieve the desired success the firm wishes in the shortest possible time. Ideally New Product Development goes through six (6) stages.
But before proceeding to each of these successive stages, management has to decide whether to proceed on the process, seek more information or abandon the new product development process.
Idea Generation: New products stem from various sources. The most important sources are customers, employees, distributors, competitors, research and development, and outside consultants (Lamb et al 1992).
Customers: The marketing concept suggests that customers are the spring board for developing new products. An organization may learn of promising products and programmes developed outside the company from either the customers themselves or the company's field representatives. Some companies also encourage customer input. For instance, many customer packaged goods provide numbers for customers to call with problems, complaints and/or possible suggestions.
Employees: Marketing personnel often create new product ideas because they analyze and are involved in market places. This applies to advertising and marketing research personnel as well as sales persons. Firms should encourage there employees to submit new product ideas and reward them if their ideas are productive and finally adopted.
Distributors: A well trained sales force will routinely question distributors about needs that are inadequately met because they are closer to end users. Distributors are often more aware of customer's needs than are manufacturers.
Competitors: No firm relies solely on internally generated new product ideas. A significant component of any organization's marketing intelligence system should be monitoring the performance of competitor's products. One purpose of competitive monitoring is to determine which, if any, of the competitors' products should be copied. Competitive monitoring may even include tracking products manufactured and sold in foreign countries.
Research and Development: Research and Development is carried out in four distinct ways from the basic research in scientific research aimed at discovering new technologies, applied research that takes these new technologies and attempts to find useful applications for them, product development goes one step further by converting these applications to marketable products and finally product modification makes changes in products and/or functional product improvement. Many new product breakthroughs come from R&D activities. For example Kodak developed the lithium battery in one of its R&D labs. R&D scientists at Bell laboratories discovered the transistor, the laser, the solar cell and the first communications satellite.
Consultants: Consultants are available to examine a business and recommend product ideas. Traditionally, consultants adopt a strategic posture, assessing company product needs as well as market opportunities. They determine if a company has a balance portfolio of products, and if not, what new product ideas are needed to offset the imbalance of the company's present product mix.
Idea Screening: After these new ideas are generated and passed through the first filter in the product development process, the next stage, called screening, eliminate new product ideas that are inconsistent with the organizations new product strategy or are obviously in appropriate for some other reason. The new product committee, the new product department, or some other formally appointed group performs screening review. Most new product ideas generated are rejected at the screening stage. Rejecting good ideas lead to lost of opportunity. Accepting poor ideas leads to increasing cost, because the cost associated with the later stages with the development process are much higher than those in idea stages. The longer it takes to scrap the poor idea, the more costly it is to the firm.
BUSSINESS ANALYSIS: new product ideas that survives the initial screening process progresses to the business analysis stage, were preliminary demands, cost, sales and profitability estimate are made. This is the first time the estimate cost and revenues are made and compared, depending on the nature of the product and the company. This process may be simple or complex. The newness of the product, the size of the market, and the nature of competition all affect the accuracy of revenue projections. In an established market like soft drinks for example, industries estimate of total, markets size are available, the challenge is to forecast market share for a new entry.
Product Development: In the early stage of development, the research and development (R&D) or engineering department may develop a prototype of the product. During this stage, firms should begging sketching out a marketing strategy. They should decide the packaging, branding, labeling and so forth. In addition. Firms should map out their preliminary promotion, price and distribution strategies. In the development stage, the technical feasibility of manufacturing the product at an acceptable cost is thoroughly examined. This stage can last a long time and thus be very expensive. For example, a toothpaste company was in the development stage of their new product for ten years. It took eighteen years to develop minute's prize, fifteen years to develop the Polaroid color pack camera, fifteen years to develop Xerox copy machine and fifty-five to develop the television (lee Adler, 1966).
Test Marketing: Test marketing involves the limited introduction of new product in selected markets. The purpose of test marketing is to try out the product and the rest of the proposed marketing strategy in the market place and to correct any defects in the strategy prior to large scale introduction. Many companies use test marketing to minimize the risk of major product failure. Test markets are usually cities that marketing management believes will be representatives of the overall national consumer reaction to the product cost. Due to high cost of test marketing, usually, only two or three test cities are chosen. Testing time may vary from two months to two years, depending on the company's lead over competition, the repurchase rate of the product, and the desire for secrecy. The goal of test marketing is to gather information on the sales of the product. It's repurchase rate, the characteristics of consumers, where the product is bought, competitive reactions, and the strength and weaknesses of distribution, promotion and price.
Commercialization: This is the final stage in the new product development process. Whether the company runs test market or not, at some point it either drops the product or goes into full scale introduction. The commercialization step involves developing, manufacturing and distribution systems to deliver the product to all intended markets. Pricing policies are set, and promotional messages are sent to all market .any changes of fund necessary in the test market are made, and the product's complete marketing strategy is implemented. Commercialization is to an extent extremely expensive .the company commits capital expenditures to manufacturing and distribution systems and begins advertising and promoting the product on a massive scale. In many cases, the cost of carrying inventory at all retail locations and at distribution points will into reasonably huge amount of money.
The process of developing a new product might not be very attractive to young entrepreneur and he would just have to select the product/service to handle from amongst existing products and services and try to find new markets or customers for himself. He of course has to work within the law by obtaining permission of the owner of the product (patented or registered) or by producing his own or selling for other producers.
