New Product Development Stages and Product Life Cycle Strategies

Chapter Nine

New Product Development and Product Life-Cycle Strategies

Two Ways to Obtain New Products

• Acquisition: Refers to the buying of a whole company, a patent, or a license to produce someone else’s product.
• New Product Development: Refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development (R&D).

Major Stages in New Product Development

1. Idea Generation
2. Idea Screening
3. Concept Development and Testing
4. Marketing Strategy Development
5. Business Analysis
6. Product Development
7. Test Marketing
8. Commercialization

Idea Generation

Idea generation is the systematic search for new product ideas.

Sources of New Product Ideas

• Internal Sources: Refer to the company’s own formal research and development, management and staff, and intrapreneurial programs.
• External Sources: Refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms.

Crowdsourcing

Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process.

Idea Screening

• Identify good ideas and drop poor ideas.
• R-W-W Screening Framework:
  • Is it Real?
  • Can we Win?
  • Is it Worth doing?

Concept Development and Testing

Concept testing refers to testing new product concepts with groups of target consumers.

• Product Idea: An idea for a possible product that the company can see itself offering to the market.
• Product Concept: A detailed version of the idea stated in meaningful consumer terms.
• Product Image: The way consumers perceive an actual or potential product.

Marketing Strategy Development

Marketing strategy development refers to the initial marketing strategy for introducing the product to the market.

The Marketing Strategy Statement includes:

• Description of the target market
• Value proposition
• Sales and profit goals

Business Analysis

Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives.

Product Development

• Involves the creation and testing of one or more physical versions by the R&D or engineering departments.
• Requires an increase in investment.
• Shows whether the product idea can be turned into a workable product.