No company can win if its products and offerings resemble every other product and offering. Companies must pursue relevant positioning and differentiation. As part of the strategic brand management process, each company and offering must represent a distinctive big idea in the mind of the target market.

Kotler on MarketingKotler on Marketing

NEW PRODUCT DEVELOPMENT :

Identifying market opportunities 

NPD begins with assessing opportunities in the market.

Several methods can be used to uncover significant

product opportunities.

 

a. Perceptual Mapping : This method relies on

consumer perceptions of brands currently available

in a product category. 

Through an assessment of consumer choice

criteria and the preference for brands currently

marketed, a firm can identify the gaps in the

markets, 

These gaps represent areas of opportunities for

new brands,

b. Benefit analysis : One important influence on

consumer behaviour and choice is the pursuit of

benefits provided by purchase and use of a brand,

 

A benefit analysis tries to identify the key benefits

sought by consumers and the extent to which

existing brands are providing those benefits.

  In cases where current brands are failing to

provide the benefits sought or are only partially

satisfying consumer desires an opportunity exists

for a new brand.

Benefit analysis differs from perceptual mapping

in the sense that a new product development from

benefit analysis is are improvement over existing

brands, whereas one developed from perceptual

mapping tries to assume a unique and different

competitive position to provide different benefit

altogether.

 c. Problem Solution : In some cases a firm may

discover that no brand currently available

addresses a particular problem experience by

consumers until the development of the new

products which solves the consumers problems.

Idea Generation 

After the market opportunity is identified, a firm

then tries to generate ideas for new products that

are consistent with the opportunity identified. 

New Product ideas can come from customers,

R&D, employees, competitors, channel members,

top management, consultants, ad agencies etc.

Ideas Screening : After ideas with potential are

identified, there are general criteria that are used to

judge new product possibilities.

 

a. Does the New Product have a well-defined and

obtainable market segment? Competitive

activities should be carefully considered here.

 b. Can the firm use existing production facilities to

make the product? The financial burden of new

capital investment may reduce the feasibility of

some new products.

c. Can existing distribution channels be used for the

New Product?

d. Is the firm’s sales staff qualified and large

enough to handle a new product? Retaining or

adding to the staff may need to be considered. 

e. Does the new product fit the company image?

Products that differ from the company image

may need to be marketed under a different brand

name to ensure a consistent public image.

 DROP ERROR - Company dismisses an

otherwise good idea.

   

GO ERROR - Company permits a poor idea to

move into development and

commercialisation

Concept Development & Testing 

A product idea is a possible product that the

company might offer to the market. 

A product concept is an elaborated version of the

idea expressed in meaningful consumer terms. 

A product image is the particular picture that

consumers acquire of an actual or potential product.

Product concepts are tested with an appropriate

group of target consumers, then getting those

consumers reactions. 

Rapid Prototyping – design products on computer

– then produce plastic models of each.

Virtual Reality – they use computers and sensory

devices to simulate reality.

Consumer Driven Engineering : is an

engineering effort that attaches high importance

to incorporating customer preferences in the

final design.

Marketing Strategy Development : 

The marketing strategy plan consists of three parts :

The first part describes

1. The target market size, structure and behaviour,

the planned product positioning, and the sales,

market share, and profit goals in the first few

years.

2. The second part of the marketing strategy

outlines the product’s planned price,

distribution strategy and marketing budget for

the first year.

3. The third part of the marketing strategy plan

describes the long – run sales and profit goals

and marketing – mix strategy over time.

Business AnalysisEvaluates the proposal’s business attractiveness by preparing sales, cost and profit projections to determine whether it satisfies the company’s objectives. a)    Estimating total sales

One time purchased product Infrequently purchased product Frequently purchased product

 b)    Estimating Costs & Profits

Break even analysisRisk analysis

Product Development 

The firm develops prototype in an effort to

confirm its feasibility in physical terms. 

It is necessary at this stage to ensure that

production and marketing departments are

working in close harmony. 

The marketing responsibility is to communicate

immediately any reaction that would suggest

that the nature of the prototype should be altered,

or that whole project should be seriously called

into question.

At the end of the product development stage, the

firm faces a critical decision whether to go ahead

and market the new product or to “cut its

losses” by abandoning a project which appears to

have an unlikely chance of success.

The ‘go’ decision involves the risk of the

product failure, while on the other hand the

decision to abort requires the firm to write off

large expenditure and perhaps years of time spent

in development.

Functional Tests are conducted under laboratory

and field conditions to make sure that the product

performs safely and effectively.

a. Alpha testing

b. Beta testing

Consumer Tests can take a variety of forms from

bringing consumers into a laboratory to giving

them samples to use in their homes, free trials, test

drives etc.

a. Sales wave research

b. Simulated test marketing

c. Controlled test marketing

Business Goods Testing

- Alpha testing

- Beta testing

Test Marketing – Just as the prototype must

correspond exactly to the final product, so it is vital

that the ‘test market’ chosen for partial launch of the

final product is highly representative of the total

market.

Test marketing objective are : 

To predict the efficacy of the proposed

marketing strategy (refine if needed) 

To predict the effect of strategy in terms of

market penetration.

The usual procedure for test marketing is to

select an easily identifiable sector of the market

which represents the total market in miniature and

then to launch a product in the same way as a total

market launch would be expected to take place, thus

testing the feasibility of the full marketing

programme.

Commercialisation : If test marketing has fine

tuned the appropriate marketing strategy, and the

firm has sufficient confidence and knowledge, it

should launch and commercialise the product on a

full scale basis.

 While development costs to the stage of a test

market are high, the financial loss of launching a

product ‘full – scale’ which is a subsequent failure

are always considerably higher.

‘When’, ‘Where’, and ‘Whom’