Question of Whether a Producer Is Capable of Making the Product Over and Over Again
What you'll learn to practice: draw the new-product development process
We have considered the role of new products throughout this module. Information technology is of import to innovate new products in order to take a balanced portfolio containing products at the various stages of the product life cycle. Nosotros have non yet focused on ways of creating successful new products.
In this module nosotros will discuss a standard, somewhat fixed new-product development process. The logic behind this rather rigid process is that information technology requires a great deal of discipline to create new products. It's expensive to launch a successful new product—but it's far more than expensive to launch an unsuccessful products. For these reasons, organizations invest a lot in the creation and refinement of their new-production development processes. It helps them raise the odds that they'll exist successful.
Consider the post-obit dramatic product failures that, in hindsight, should have been screened out much earlier in the product evolution process.
In 1998 Frito-Lay introduced WOW! fries. These snack chips contained significantly less fatty and fewer calories than other snack foods thanks to the fat substitute Olestra. Initially, the product performed well, generating $347 1000000 in 1998 and making WOW! the best-selling potato chip make that year. The success was curt lived, though. Olestra had an unpleasant side-result: presently customers complained of cramping, incontinence, and diarrhea—in some cases requiring hospitalization—after eating the fries. Frito-Lay'south parent visitor, PepsiCo, spent $35 meg on an advertising campaign to turn things effectually, simply sales plummeted nonetheless.[1]
In 2011 Hewlett Packard launched a product designed to go head-to-head with Apple's iPad. The product boasted a higher number of performance features than the iPad, but it had none of the "cool gene" that drew customers to Apple. MarketWatch reported, "Despite large-calibration printing events and promotions, the HP TouchPad was a colossal failure and was discontinued almost immediately. As a result of the TouchPad'south failure, the company wrote off $885 million in assets and incurred an additional $755 million in costs to wind down its webOS operations, catastrophe all work on the TouchPad'southward failed operating system."
To repeat: developing new products creates opportunity and chance.
The specific things yous'll larn in this department include:
- Explain how new products are planned
- Identify approaches to generate new production ideas
- Identify methods to evaluate new product ideas
- Explain the process to create and commercialize new products
The New-Product Development Procedure
There are probably equally many varieties of new-product development systems as there are types of companies, simply nearly of them share the aforementioned basic steps or stages—they are simply executed in different ways. Beneath, we have divided the process into eight stages, grouped into 3 phases; subsequent readings will discuss these phases in greater detail. Many of the activities are performed repeatedly throughout the process, just they become more concrete every bit the product thought is refined and additional information are gathered. For instance, at each phase of the process the product team is asking, "Is this a viable production concept?" but the answers change as the product is refined and more than market perspectives can be added to the evaluation.
| Stage I: Generating and Screening Ideas | Stage Two: Developing New Products | Stage Iii: Commercializing New Products |
| Stage 1: Generating New Product Ideas | Stage 4: Business Example Analysis | Stage six: Examination Marketing |
| Stage 2: Screening Product Ideas | Phase v: Technical and Marketing Development | Stage vii: Launch |
| Stage 3: Concept Development and Testing | Stage viii: Evaluation |
Phase i: Generating New Product Ideas
Generating new production ideas is a creative task that requires a particular way of thinking. Coming upwardly with ideas is piece of cake, but generating good ideas is another story. Companies employ a range of internal and external sources to identify new product ideas. A SWOT analysis might suggest strengths in existing products that could be the basis for new products or market opportunities. Research might place market and client trends. A competitive analysis might expose a hole in the company's product portfolio. Customer focus groups or the sales squad might identify unmet client needs. Many amazing products are too the result of lucky mistakes—production experiments that don't meet the intended goal simply have an unintended and interesting application. For instance, 3M scientist Dr. Spencer Silver invented Post-It Notes in a failed experiment to create a super-strong adhesive.[2]
The fundamental to the thought generation phase is to explore possibilities, knowing that virtually will not result in products that get to market place.
Stage 2: Screening Product Ideas
The 2d stage of the product development process is thought screening. This is the kickoff of many screening points. At this early stage much is not known virtually the production and its market opportunity. Still, product ideas that do not see the organization's objectives should exist rejected at this stage. If a poor product thought is immune to laissez passer the screening phase, it wastes endeavour and money in later stages until it is abandoned. Even more than serious is the possibility of screening out a worthwhile idea and missing a significant market opportunity. For this reason, this early on screening stage allows many ideas to move forward that may not eventually go to market.
At this early stage, product ideas may simply be screened through some sort of internal rating process. Employees might rate the production ideas according to a set of criteria, for example; those with depression scores are dropped and only the highest ranked products move forward.
Stage three: Concept Development and Testing
Today, it is increasingly common for companies to run some small concept test in a real marketing setting. The product concept is a synthesis or a description of a product idea that reflects the core element of the proposed product. Marketing tries to have the about accurate and detailed production concept possible in order to get accurate reactions from target buyers. Those reactions tin can then be used to inform the final product, the marketing mix, and the business organization analysis.
New tools for technology and product development are available that support the rapid development of prototypes which can be tested with potential buyers. When concept testing can include an actual production prototype, the early test results are much more reliable. Concept testing helps companies avoid investing in bad ideas and at the same time helps them take hold of and keep outstanding production ideas.
Stage iv: Business Instance Analysis
Before companies make a meaning investment in a production'due south development, they demand to be sure that it will bring a sufficient return.
The company seeks to respond such questions as the following:
- What is the market place opportunity for this production?
- What are the costs to bring the production to market?
- What are the costs through the stages of the product life cycle?
- Where does the product fit in the production portfolio and how will it touch existing product sales?
- How does this product impact the make?
- How does this product impact other corporate objectives such as social responsibility?
The marketing upkeep and costs are 1 element of the business analysis, merely the total scope of the analysis includes all revenues, costs, and other business impacts of the product.
Stage five: Technical and Marketing Development
A product that has passed the screening and business analysis stages is ready for technical and marketing development. Technical development processes vary greatly co-ordinate to the blazon of product. For a production with a circuitous manufacturing procedure, there is a lab phase to create specifications and an equally complex stage to develop the manufacturing procedure. For a service offer, at that place may be new processes requiring new employee skills or the delivery of new equipment. These are only 2 of many possible examples, but in every instance the company must ascertain both what the product is and how it volition be delivered to many buyers.
While the technical development is under fashion, the marketing section is testing the early product with target customers to find the best possible marketing mix. Ideally, marketing uses product prototypes or early production models to understand and capture customer responses and to place how best to present the production to the market place. Through this process, product marketing must prepare a complete marketing programme—one that starts with a statement of objectives and ends with a coherent picture of product distribution, promotion, and pricing integrated into a programme of marketing activeness.
Stage half dozen: Test Marketing and Validation
Test marketing is the final phase before commercialization; the objective is to test all the variables in the marketing plan including elements of the product. Test marketing represents an actual launching of the total marketing program. Withal, it is done on a limited ground.
Initial product testing and examination marketing are non the same. Product testing is totally initiated by the producer: he or she selects the sample of people, provides the consumer with the exam product, and offers the consumer some sort of incentive to participate.
Test marketing, on the other hand, is distinguished by the fact that the test groupingrepresents the full market, the consumer must make a purchase determination and pay for the production, and the test product must compete with the existing products in the actual marketing surround. For these and other reasons, a market examination is an authentic simulation of the broader market and serves equally a method for reducing run a risk. It should enhance the new product's probability of success and let for final adjustment in the marketing mix before the product is introduced on a large scale.
Stage vii: Launch
Finally, the production arrives at the commercial launch stage. The marketing mix comes together to innovate the product to the market. This stage marks the outset of the product life bike.
Stage 8: Evaluation
The launch does non in any manner signal the terminate of the marketing role for the product. To the contrary, after launch the marketer finally has existent market data nigh how the product performs in the wild, exterior the test surroundings. These market data initiate a new cycle of idea generation about improvements and adjustments that can be made to all elements of the marketing mix.
Generating and Screening Ideas
The first stage of the new product development process is creating a viable production concept that can move through the development phase. This stage includes the following:
- Stage 1: Generating New Production Ideas
- Stage 2: Screening Production Ideas
- Stage 3: Concept Evolution and Testing
This early phase of the process differs from later phases in several ways. Commencement, it requires immense creativity. Each of the subsequently phases focuses on screening out ideas, but this is a generative phase whose goal is the production of new ideas. Second, the early phase of the process is hard to plan and manage. On what day volition the innovative product idea sally? That can't be planned or scheduled.
The Fuzzy Forepart Cease
Researcher Peter Koen refers to this starting time phase equally the Fuzzy Front End (FFE) of the product development process. In his work he has identified a number of characteristics that differentiate the FFE from later phases of production development. These are shown in the table beneath.
Difference Between the Fuzzy Front End and the New-Product Development Process[3]
| Fuzzy Front End (FFE) | New-Production Development (NPD) | |
| Nature of Work | Experimental, often chaotic. "Eureka" moments. | Can schedule work—but not invention. Disciplined and goal oriented with a project plan. |
| Commercialization Engagement | Unpredictable or uncertain. | Loftier degree of certainty. |
| Funding | Variable—in the commencement phases many projects may be "bootlegged," while others will need funding to proceed. | Approaching. |
| Revenue Expectations | Often uncertain, with a great deal of speculation. | Anticipated, with increasing certainty, analysis, and documentation as the product release appointment gets closer. |
| Activity | Individuals and team conducting inquiry to minimize risk and optimize potential. | Multifunction production and/or process development team. |
| Measures of Progress | Strengthened concepts. | Milestone achievement. |
As the product concept moves through the stages of the product development process, everything will become more refined and more than certain. The time line, the budget, and the operation expectations will all become more than physical, simply in the early phase it is important to allow for the ambivalence that supports creativity.
Creating Successful Product Concepts
How can businesses influence the success of the new business idea? Koen suggests a number of factors that play a role: the corporation's organizational capabilities, customer and competitor influences, the outside world's influences, and the depth and strength of enabling sciences and technology.[4]
Organizational Capabilities
You may have noticed that some companies are able to launch one dominant product after another. Other companies struggle to create any products that compete well or have one amazing product and and so disappear. Companies develop processes to manage new products, rent leaders to manage new-product development, and develop a culture based on their institutional values and norms effectually new products. All of these factors tip the scale toward success or failure. If leaders ask employees to accept risks with cutting-edge product ideas only fire those whose ideas are not successful, they will not depict out risky ideas that might pb to the greatest success. Also, the best ideas are often refinements of and enhancements to other ideas. If individual performance is rewarded over squad success, there is less likelihood of thought sharing and collaboration.
Customer and Competitor Influences
Innovation past a competitor can spur new ideas and possibilities beyond the industry. Similarly, customers seeking innovation who are willing to share ideas with their vendors tin can accelerate the generation of new product ideas and bring a voice of reality that increases the gamble of success.
Exterior Earth Influences
In that location are a range of influences outside of the company that affect the ease with which new ideas can be developed. Regime regulations can positively or negatively influence new-product and idea generation. Society, civilisation, and the economical environment can create a rich environment for new ideas.
Enabling Sciences and Technologies
Enabling technologies refer to those technologies that can be used to develop new products. When employees take access to technologies that betrayal them to new ideas, or technologies that allow rapid development and iteration of new ideas, this can be instrumental in sparking the development of new products. Frequently companies invest in technology components that can be reused across multiple products. Such technology has the issue of both speeding the new-product development process and facilitating the improver of refinements and enhancements to existing products.
Evaluating Production Concepts
The goal of the initial product development process is to generate ideas, actively evaluate the ideas, and create a viable product concept. In the by information technology was difficult to go a clear reading on how products might perform until late in the production evolution process. That is less true today. Consider the following examples of innovations that accelerate market feedback on new products:
Kickstarter is a crowd-funding platform that allows entrepreneurs to pitch a new product concept to potential funders. The entrepreneur receives immediate feedback on the idea from a wide market and, if it generates enough support, funding to bring the product to market place.
Etsy offers an e-commerce platform from which entrepreneurs can sell products on the Internet without having to develop their ain e-commerce Web sites to present products or procedure payments.
3-D printers create physical products from digital files. These products can be tested and refined with users much more than apace and economically than traditionally manufactured prototypes and products. The video beneath demonstrates a number of interesting examples.
On a larger scale, there are a number of Web awarding frameworks that allow programmers to chop-chop develop Internet applications, significantly speeding the pace at which software companies can epitome and develop new features.
In one case a product concept has been successfully evaluated, it moves to the side by side phase of evolution.
Developing New Products
The second phase of the new-product evolution procedure focuses on the actual development of the new production. This stage includes the following:
- Phase 4: Business Case Analysis
- Stage 5: Development
Making the Business organisation Example
The business case is often the nearly challenging screening process in the new-production development process. It is non uncommon for a production team to go excited about an idea, get positive feedback on the concept from target buyers, and and so fail to make the numbers work in the business case. Usually the business concern case review results in a "go, no-go" conclusion for the product concept.
The business case doesn't but need to answer the question "Can this product brand money?" It's also trying to answer a more complicated question: "Volition the production provide the greatest total render out of all the potential strategies nosotros could pursue?" In addition, the business concern case is looking at the expected operation of the product—financial and otherwise—over the entire product life cycle. For these reasons, the concern example takes into account a broad range of factors.
One common tool for presenting a summary of the business organisation case is chosen the "business model canvass" (see Figure one, below). The canvass doesn't embrace all of the analysis that must be washed, but it does provide a nice structure for identifying the different components that are important to the success of the product or business.
Figure i. The Business Model Canvas
Yous will find that the center of the canvas focuses on the value proffer of the product, whereas the lower segments specify the costs to create value and the revenue earned by delivering the value. In the analysis of the business organization case, the key questions are the following:
- Does the production provide sufficient unique value to the target customer?
- Can that exist achieved at a toll that supports the value?
- Does that value appeal to a large enough target market to generate sufficient acquirement?
If the product development team can demonstrate satisfactory answers to these questions, without introducing other objections, and so the product volition movement into development.
Developing the Product
Regardless of the type of product—a tangible skilful, a service, a business-to-business product—someone needs to define the marketing requirements for the product. This is the role of a product marketing managing director. Product marketing isn't usually tasked with the technical specifications for the production simply is focused on specifying the needs of the target heir-apparent. Product marketing addresses the post-obit question: "What problem does this product solve for the target heir-apparent?" The answers to this question are typically presented in a marketing-requirements document, which too includes a full heir-apparent persona. (Recall that a buyer persona describes the needs, experiences, feelings, and preferences of a specific buyer.)
Defining Marketplace Requirements
Let's say your new production is a packaged meal item, and you lot're the production marketer. Your marketing-requirements certificate would explain who the buyer is, what she needs, and which particular features of the product volition best address her needs. Your buyer persona is a woman named Aleisha. She has three kids and works office time as a nurse. She feels stretched between her job and her kids' busy schedule and the demands of keeping up the business firm. She needs to exist able to come habitation from work and get dinner on the tabular array in twenty minutes, nevertheless non experience like she's cutting corners. It's important to her to provide her family with a healthy dwelling house-cooked meal.
This description of target-heir-apparent Aleisha suggests and guides a set up of production requirements that will inform the design and evolution of the product. Whether the production is a food item, a fashion accessory, a software program, or a banking service, defining the marketing requirements based on the buyer persona will increase the chances that the final product meets the market need.
Defining Product Requirements
The marketing requirements become an input to the product team to ascertain the technical production requirements for the product. In the packaged repast example, someone will need to determine whether there are visible solids in Aleisha's sauce and how much ground oregano should be added. Those will become production requirements that bulldoze the product process.
With more than technical products or products that include a complex manufacturing procedure, the translation from marketing requirements to technical requirements can be a daunting task. For instance, in the manufacturing of semiconductors that power computers and electronics, there is significant interplay betwixt the marketing requirements, the technical requirements, and the manufacturing process. The manufacturing plant cannot evangelize products that exceed their technical capabilities regardless of the market place desires. In that instance, the limits of the manufacturing process are set, and the role of product marketing is to identify the most attractive products given a fixed manufacturing capability.
In all cases, the product squad seeks a tight match between the market place need and the product that is designed, developed, and delivered.
Creating the Go-to-Market Programme
The marketing requirements drive the technical product requirements that volition be used to develop the product, but they have a second purpose, too. The market requirements are the major input to the marketing plan that will be used during the product launch.
In answering what problem a product solves for the target buyer, we gain information nigh the messaging and promotion strategy. Past understanding the alternatives that the target heir-apparent might select and the unique value that our production provides, we tin can begin to understand the pricing dynamics. In knowing how she wants to buy the product we have options to analyze for the distribution strategy. The initial marketing mix for the product launch is driven from the information in the marketing requirements document.
Commercializing New Products
The final phase of the new-product development process focuses on commercializing the new product. This phase includes:
- Stage 6: Test Marketing
- Stage 7: Launch
- Phase 8: Evaluation
At terminal the product is ready to become. It has survived the development process and is now, you hope, on the manner to commercial success. How tin it exist guided to reach that marketing success?
The different stages in this phase include a common prepare of activities performed on increasingly larger scale. In all three stages the marketer is implementing, evaluating, and improving the marketing programme, which includes the full marketing mix.
Test Marketing
The goal of exam marketing is to ameliorate the success of the production launch. The marketer will launch the marketing plan to a smaller subset of the market place, quickly clarify how the program tin can be improved, refine the plan, and then launch to the full market place.
Test marketing provides a wonderful opportunity to go feedback from buyers in a realistic ownership state of affairs in which they feel the full marketing mix—but information technology'southward a challenge to practice it correct. Because of the special expertise needed to acquit test markets, and the associated expenses, many large manufacturers employ independent marketing enquiry agencies that specialize in test marketing. Amid the challenging decisions are the following:
- Elapsing of testing: the product should exist tested long enough to account for market factors to even out, simply a long test cycle delays the broad launch and may diminish the impact of the product annunciation.
- Option of exam markets: the test marketplace should reverberate the norms for the new product in such areas every bit advertizement, competition, distribution organisation, and product usage.
- Sample size conclusion: the number of markets and tests must account for the different variables in the market, while allowing for the fact that each test market adds cost to the launch budget and fourth dimension to the production release bicycle.
The test information drives evaluation and refinement of the marketing plan. Even after all the test results are in, adjustments to the product and other elements of the marketing mix may still be made. Additional testing may be required, or the product may be canceled.
The Launch
The product launch is truly the beginning of the implementation of a sustained marketing programme—a plan that will be analyzed, evaluated, and adjusted throughout the production life cycle. That said, at that place certain marketing techniques that figure more prominently during the launch stage.
Printing Strategies
Oft companies consequence press releases about new products in order to increment visibility through earned media. The press release can exist sent to targeted press outlets, posted on the company Web site, sent as an information bulletin to customers, and distributed to industry influencers. The goal of the press strategy is to build broad visibility for the product, backed upwardly by the credibility of the media outlet.
Price Discounts
Companies will erstwhile offer a price discount during a product launch. When nosotros cover pricing in more than detail in the side by side module, nosotros volition hash out when this can be an effective strategy.
Channel Partner Incentives
If the visitor depends on a partner to sell or distribute the pricing, information technology might cull to offer pricing discounts and incentives to the distribution partner. A new production carries some risk, and an incentive at launch tin can encourage aqueduct partners that might be reluctant to add the new product or to sell it aggressively.
Evaluation
Though we are identifying "evaluation" here as the final stage of the development process, it should be clear that product evaluation is a recurring action that begins with the idea-screening stage. Careful, objective evaluation of the production at every phase leads to amend investment decisions and better products. The difference in this final phase of the process is that the marketer has the do good of significant market data for the evaluation, which can assist improve the marketing program going forwards. It is only at this stage—after the product launch—when the marketer can see which buyers purchase the product, how competitors answer, and how the new product interacts with the visitor'due south other products in the marketplace.
Video: Target Product Blueprint
Target's design products include many of the success factors we've discussed in this module. As you watch the following video, see if y'all can identify which aspects of Target'due south approach and design process are key to their success. What function does the corporate culture play?
Read a transcript for the video "Target Product Design and Development."
Source: https://courses.lumenlearning.com/wmopen-principlesofmarketing/chapter/new-product-development-process/
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