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DEVELOPING, TESTING, & LAUNCHING NEW PRODUCTS & SERVICES


New products development is an essential and primary function of marketing. Existing and new companies, both launch products to create and enhance sales revenue, profits, and meet company objectives. A company can either develop a new product or acquire an existing product in three ways; 1, to acquire another company and its products, for instance, Walls Pakistan acquired Polka Pakistan; 2, to acquire a manufacturing and marketing license; and 3, franchising another company’s products. A company can build its products in its own laboratories or can hire an external research laboratory. A company can also launch a product by copying competitors’ products or a product whose patented period has been ended, for instance, many new drugs on diabetes and cancer are launched with patent right, which can not be copied or produced by any one until the patented period of five years or more ends.


NEW PRODUCTS FAILURE

The companies that fail to develop new product are exposed to a great risk because their existing products are vulnerable to changing consumers’ tastes and preferences, changing trends, government regulations, etc. The reasons for new products failure include: launching a product with negative market research findings; over or under priced; ineffective advertising and promotional efforts; weak distribution channels; incorrect positioning strategy; and under–estimate of competitors’ reactions; etc.

A new product is developed by research and development department(RND), or new product development team / committee and is managed by the marketing manager, but in larger organizations, product managers assisted by brand managers develop and manage new products.


NEW PRODUCT DEVELOPMENT PROCESS

It includes a series of step, as following:

1. Idea generation
2. Idea screening
3. Concept developing and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization


IDEA GENERATION:
Companies executives generate new product ideas that meet their objects of profit, sale growth, market share, high cash flows, etc. Companies pile up new products ideas through various techniques for new product development.

NEED / PROBLEM IDENTIFICATION:
A precise need/ problem and its causes are identified, for example, the need for credit cards, and the relevant benefits unmet by competitors.

ATTRIBUTE LISTING:
One may note down the attributes of a car, for example, and add new attributes/features in the product list, like fuel efficient, luxury, speed, medium price, and safe.

BRAINSTORMING:
A group is made and is directed to express their ideas on a matter, such as a new product; the group members are encouraged to freely provide numerous ideas or a heap of ideas, no criticism is done, and the ideas are combined and improved. This most famous technique is developed by Alex Osborn. The sources of new products ideas include customers, sales reps, employees, top management, competitors, distributors, suppliers, scientists, engineers, product designers, patent attorneys, university and commercial laboratories, industrial consultants, business and marketing research companies, commercial and industrial publications, etc.

CUSTOMER SURVEYS
Are done to identify customer needs and wants.

FOCUSED GROUP INTERVIEWS/ DISCUSSIONS:
A group of 8-12 people of expertise, or customers discuss an issue.

PROJECTIVE TECHNIQUES
Are specialized techniques of research to know customers’ point of view.

CUSTOMER COMPLAINT & SUGGESTION SYSTEM:
It’s also helpful in developing and modifying products.

IDEA SCREENING:
From heap of ideas, some ideas will be selected that seem more profitable/ lucrative products and the rest will be rejected.

CONCEPT DEVELOPMENTS AND TESTING:
Some of the selected ideas will be enlarged, mixed, and improved and the product will be tested by presenting it symbolically or physically to a group of potential customers to get a feedback. The new product prints, or packages, or physical prototypes are developed. Some companies like Toyota apply the superior techniques of 3D printing or stereo-lithography and virtual reality.

MARKETING STRATEGY DEVELOPMENT:
It includes both short and long run marketing plans on the key success factors about 4 Ps, product including packing, price, promotion and place/ distribution of the finally selected product. In addition, it includes marketing budgets, marketing and sales goals and plans.

BUSINESS ANALYSES:
Management prepares sales estimates, cost, and profit projections to determine whether they satisfy company’s objectives. The management seeks the advice of field force and technical experts to assume sales in target territories. The experts assume first-time sales, repeat sale, costs, and profits. Finally, the estimates are summarized and tabulated. Some financial management techniques are also deployed like cumulative discounted cash flow, payback period, break even analysis, and risk analysis to calculate a rate of return on probability distribution method, showing a range of possible rates of return in uncertain conditions.

PRODUCT DEVELOPMENT:
If the product successfully passes the business analysis stage then it moves to R N D (research and development department) or engineering department. First, one or more prototypes of the product are developed and the functional tests are conducted in the laboratory or field, or samples are given to consumers to try at home, and it’s made sure that the product performs safely and effectively.

MARKET TESTING/ TEST MARKETING:
A marketing programmer is designed to test the product in one or few selected target markets or cities and consumer’s response is noted.

COMMERCIALIZATION:
The results of test marketing help determine whether to launch the product at large scale or reject it at the initial stage. If the product is commercialized, the marketing strategy helps deciding about the entry timing, target markets, target customers, the introductory promotional offers, and the distribution channels.

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