Updated 2016 June 21
NEW   PRODUCT 
DEVELOPMENT PROCESS
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. This page used in the following courses taught by Prof. Richardson
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CCT 322
BUS 106		 BCS 555
MRK 106
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While the Dilbert cartoon is funny, it represents the challenge that companies always have coming up with new products

New Product
Development
Process		 .... Steps in the New Product Development Process, as understood by most marketing textbooks
 
Shapiro book,

10th edition
Chpt 7 page 209		 also
Chapter 10

of the MRK 106 text		 and
Chpt 4

of the BUS 106 Text
FYI - for many years it was understood that this process had 5 main steps - some teachers/professors use 8 steps, - the first 4 are the same - what is different is that some educators take the last step "commercialization" and break it out into 3 steps
 
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New Product
Development
Process		 .... 1. Idea Generation 
2. Screening - obtaining opinions from potential users  
3. Idea Evaluation / Concept Development
4. Development of Product / Business Analysis
5. Commercialization
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New Product
Development
Process		 .... 1. Idea Generation   
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New Product
Development
Process		 .... 2. Screening - obtaining opinions from potential users
  • what are the weaknesses of existing products that are similar
  • is there any competition for a new product
  • What are the industry sales and market trends the product idea is based on
sources of where you can obtain opinions
  • employees 
    • do they think the new product will sell
    • can they see themselves being able to sell the product compared ti the existing product line-up
  • customers
    • can be done with a survey, formal or informal

      • "what do you think if we came out with this..."
    • customer opinion may help you tweak features of a new product, eg. colour, shape, size, pricing
  • media
    • newspaper stories may discuss a similar product being launched in another part of the world and the initial feedback may help you decide how to develop your product
    • newspaper stories may discuss deficiences in existing products which may suggest new opportunities
    • online blogs may discuss cuistomers disastisfaction with a certain product, which may provide ideas to inventors or a new product or service
  • government agencies
    • rules and regulations may have some limitations on what your new product can do
    • governments can enact new laws making changes to the way people use a product, which provides opportunity
      • when new law created banning cell phones while driving, many companies rushed to sell bluetooth devices for "handsfree" calling
      some government agebncies can tell you if a new product is complient with pollution controls, or language laws or labelling rules
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New Product
Development
Process		 .... 3. Idea Evaluation / Concept Development 
  • estimate costs, revenue, profit, 
  • do market research 
  • target market segmentation
    • describe the main group of people who will be the first customers 
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New Product
Development
Process		 .... 4. Development of Product / Business Analysis
  • physically design and manufacture the product 
    • produce a physical prototype or mock-up
  • estimate likely selling price based upon competition and customer feedback
    • develop some metrics (input and output) to help withyour analysis
  • estimate sales volume based upon size of market 
    • this requires knowing your target market segmentation
  • test the product (and its packaging) in typical usage situations 
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New Product
Development
Process		 .... 5. Commercialization 
  • $ $ $ 
  • Sometimes the biggest problem at this stage is getting the money (acquiring capital) to buy the supplies and materials to make enough quantity of product to be able to ship out the first round of orders
  • "make enough to sell" 
    • manufacture a large amount to send out to the stores that will stock the items so they have enough inventory on hand for the public to buy
    • if you are an electronics products company and you want to sell to Future Shop you have to be able to supply enough of the product to enable the company to sell it in their 140 stores coast to coast 
  • launch "promotion campaign"
    • personal selling
    • sales promotion
    • mass selling
      • advertising you pay for
      • publicity you create
        • publicity tactics like viral marketing
  • review pricing strategy and adjust based on early sales
 
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New Product
Development
and the Net

Chpt 8 in Hanson		 New Product Development
- physical products
- cyber products

Internet Time
Two important apsects, says Prof. Ward Hanson in his book

First - it refers to the rapid change and evolution of

  • internet tools, 
  • markeplace (the customers) 
  • business practices
Second - it refers to the acceleration of 
  • new product development, 
  • competitve activity 
  • and business tactics that are made possible by the internet
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New Product
Development
Process

Chpt 7 p. 209		 How New Product Characteristics affect adoption, as explained in the Shapiro book, 10th edition
Chpt 7 page 214

1. Relative Advantage
- the Competitive Environment
... better price than competition
... better features than competition
2. Compatibility
- does it fit with what the consumers want to do
3. Complexity
- is it easy to use
- adoption resistance must be comparably low
4. Trialability
- you have to get people to sample it
5. Observability
- can you actually see it work
- is it obvious it is effective and saves time and money
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