{"id":2919,"date":"2015-12-24T19:06:19","date_gmt":"2015-12-24T19:06:19","guid":{"rendered":"https:\/\/courses.candelalearning.com\/waymakerintromarketing1xmaster\/?post_type=chapter&p=2919"},"modified":"2024-05-15T15:32:08","modified_gmt":"2024-05-15T15:32:08","slug":"reading-the-product-development-process","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/waymakerintromarketingxmasterfall2016\/chapter\/reading-the-product-development-process\/","title":{"raw":"Reading: Overview of the New-Product Development Process","rendered":"Reading: Overview of the New-Product Development Process"},"content":{"raw":"

\"Artist's<\/a><\/h2>\r\n

Introduction<\/h2>\r\nThere are probably\u00a0as many varieties of new-product development systems as there are types\u00a0of companies, but most of them share the same basic steps or\u00a0stages\u2014they are just executed in different ways. Below,\u00a0we have divided\u00a0the process into eight stages, grouped into three phases; subsequent\u00a0readings will discuss these phases\u00a0in greater detail.\u00a0 Many of the activities are performed repeatedly\u00a0throughout the process, but they become more concrete as the product idea is refined and additional data are gathered. For example, at each stage of the process the product team is asking, \"Is this a viable product concept?\" but the answers change as the product is refined and more market perspectives can be added to the evaluation.\r\n\r\n\r\n\r\n\r\n\r\n\r\n
New-Product Development Process: Phases and Stages<\/caption>\r\n
Phase I: Generating and Screening Ideas<\/th>\r\nPhase II: Developing New Products<\/th>\r\nPhase III: Commercializing New Products<\/th>\r\n<\/tr>\r\n<\/thead>\r\n
Stage 1:\u00a0Generating New Product Ideas<\/td>\r\nStage 4: Business Case Analysis<\/td>\r\nStage 6: Test Marketing<\/td>\r\n<\/tr>\r\n
Stage 2: Screening Product Ideas<\/td>\r\nStage 5: Technical and Marketing\u00a0Development<\/td>\r\nStage 7: Launch<\/td>\r\n<\/tr>\r\n
Stage 3: Concept Development and Testing<\/td>\r\nStage 8: Evaluation<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n

Stage\u00a01: Generating New Product Ideas<\/h2>\r\n\"Black<\/a>\r\n\r\nGenerating new product ideas is a creative task that requires a particular\u00a0way of thinking. Coming up with\u00a0ideas is easy, but generating good<\/em> ideas is another story. Companies use 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 identify market and customer trends. A competitive analysis might expose a hole in the company's product portfolio. Customer focus groups or the sales team might\u00a0identify unmet customer needs. Many\u00a0amazing products are also the result of\u00a0lucky mistakes\u2014product experiments that don't meet the intended goal but have an unintended and interesting application. For example, 3M scientist Dr. Spencer Silver invented Post-It Notes in a failed experiment to create a super-strong adhesive.[footnote]https:\/\/en.wikipedia.org\/wiki\/Post-it_note<\/a>[\/footnote]\r\n\r\nThe key to the idea generation stage\u00a0is to explore possibilities, knowing that most will not result in products that go to market.\r\n

Stage\u00a02: Screening Product Ideas<\/h2>\r\nThe second stage\u00a0of the product development process is idea screening. This is the first of many screening points. At this early stage much is not<\/em> known about the product and its market opportunity. Still, product ideas that do not meet the organization's objectives should be rejected at this stage. If a poor product idea is allowed to pass the screening stage, it wastes effort and money in later\u00a0stages until it is abandoned. Even more serious is the possibility of screening out a worthwhile idea and missing a significant market opportunity. For this reason, this early screening stage allows many ideas to move forward that may not eventually go to market.\r\n\r\nAt this early stage, product\u00a0ideas may simply be\u00a0screened through some sort of internal rating process. Employees might rate the product ideas according to\u00a0a set of criteria, for example; those with low\u00a0scores are\u00a0dropped and only the highest ranked products move forward.\r\n

Stage 3: Concept Development\u00a0and Testing<\/h2>\r\n\"Yellow<\/a>\r\n\r\nToday, it is increasingly common for companies to\u00a0run some small concept test in a real marketing setting. The product concept <\/em>is a synthesis or a description of a product idea that reflects the core element of the proposed product. Marketing tries\u00a0to have the most accurate and detailed product concept possible in order to get accurate reactions from target buyers. \u00a0Those reactions can then be used to inform the final product, the marketing mix, and the business analysis.<\/span>\r\n\r\nNew\u00a0tools for technology and product development are available that support the rapid development of prototypes which\u00a0can be tested with potential buyers. When concept testing can include an actual product 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 catch and keep outstanding product ideas.\u00a0<\/span>\r\n

Stage 4: Business Case Analysis<\/span><\/h2>\r\nBefore companies make a significant investment in a\u00a0product's development, they need to be sure that it\u00a0will bring a sufficient return.\r\n\r\nThe company seeks to answer such questions as the following:\r\n
    \r\n \t
  1. What is the market opportunity for this product?<\/li>\r\n \t
  2. What are the costs to bring the product to market?<\/li>\r\n \t
  3. What are the costs through the stages of the product life cycle?<\/li>\r\n \t
  4. Where does the product fit in the product portfolio and how will\u00a0it impact existing product sales?<\/li>\r\n \t
  5. How does this product impact the brand?<\/li>\r\n \t
  6. How does this product impact other corporate objectives such as social responsibility?<\/li>\r\n<\/ol>\r\nThe marketing budget and costs are one element of the business analysis, but the full scope of the analysis includes all revenues, costs, and other business impacts of the product.\r\n

    Stage 5: Technical and Marketing Development<\/h2>\r\n\"Artist<\/a>\r\n\r\nA product that has passed the screening and business analysis stages is ready for technical and marketing development. Technical development processes vary greatly according\u00a0to\u00a0the type of product. For a product with a complex manufacturing process, there is a lab phase\u00a0to\u00a0create specifications and an equally complex phase\u00a0to develop the manufacturing process. For a service offering, there may be new processes requiring new employee skills or the delivery of new equipment. These are only two of many possible examples, but in every case the company must define both what the product is and how it will be delivered to\u00a0many buyers.\r\n\r\nWhile the technical development is under way, the marketing department is testing the early product with target customers to find the best possible\u00a0marketing mix. Ideally, marketing uses product prototypes or\u00a0early production models\u00a0to understand and capture customer responses and to identify how best to present the product to the market. Through this process, product marketing\u00a0must prepare a complete marketing plan\u2014one that starts with a statement of objectives and ends with a coherent picture of\u00a0product distribution, promotion, and pricing integrated into a plan\u00a0of marketing action.\r\n

    Stage 6: Test Marketing and Validation<\/h2>\r\nTest marketing is the final stage before commercialization; the objective is to test all the variables\u00a0in the marketing plan including elements of the product. Test marketing represents an actual launching of the total marketing program. However, it is done on a limited basis.\r\n\r\nInitial product testing and test marketing are not the same. Product testing is totally initiated by the producer: he or she selects the sample of people, provides the consumer with the test product, and offers the consumer some sort of incentive to participate.\r\n\r\nTest marketing<\/em>, on the other hand, is distinguished by the fact that the test group\u00a0represents<\/em> the full\u00a0market, the consumer must make a purchase decision and pay for the product, and the test product must compete with the existing products in the actual marketing environment. For these and other reasons, a market test is an accurate simulation of the broader\u00a0market and serves as a method for reducing risk. It should enhance the new product's probability of success and allow for final adjustment in the marketing mix before the product is introduced on a large scale.\r\n

    Stage 7: Launch<\/h2>\r\nFinally, the product arrives at the commercial launch stage. The marketing mix comes together to introduce the product to the market. This stage marks the beginning of the product life cycle.\r\n

    Stage 8: Evaluation<\/h2>\r\nThe launch does not in any way signal\u00a0the end of the marketing role for the product. To the contrary, after launch the marketer finally has real market data about how the product\u00a0performs in the wild, outside the\u00a0test environment. These\u00a0market data initiate\u00a0a new cycle of idea generation about improvements and adjustments that can be made to all elements of the marketing mix.","rendered":"

    \"Artist's<\/a><\/h2>\n

    Introduction<\/h2>\n

    There are probably\u00a0as many varieties of new-product development systems as there are types\u00a0of companies, but most of them share the same basic steps or\u00a0stages\u2014they are just executed in different ways. Below,\u00a0we have divided\u00a0the process into eight stages, grouped into three phases; subsequent\u00a0readings will discuss these phases\u00a0in greater detail.\u00a0 Many of the activities are performed repeatedly\u00a0throughout the process, but they become more concrete as the product idea is refined and additional data are gathered. For example, at each stage of the process the product team is asking, “Is this a viable product concept?” but the answers change as the product is refined and more market perspectives can be added to the evaluation.<\/p>\n\n\n\n\n\n\n\n
    New-Product Development Process: Phases and Stages<\/caption>\n
    Phase I: Generating and Screening Ideas<\/th>\nPhase II: Developing New Products<\/th>\nPhase III: Commercializing New Products<\/th>\n<\/tr>\n<\/thead>\n
    Stage 1:\u00a0Generating New Product Ideas<\/td>\nStage 4: Business Case Analysis<\/td>\nStage 6: Test Marketing<\/td>\n<\/tr>\n
    Stage 2: Screening Product Ideas<\/td>\nStage 5: Technical and Marketing\u00a0Development<\/td>\nStage 7: Launch<\/td>\n<\/tr>\n
    Stage 3: Concept Development and Testing<\/td>\nStage 8: Evaluation<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Stage\u00a01: Generating New Product Ideas<\/h2>\n

    \"Black<\/a><\/p>\n

    Generating new product ideas is a creative task that requires a particular\u00a0way of thinking. Coming up with\u00a0ideas is easy, but generating good<\/em> ideas is another story. Companies use 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 identify market and customer trends. A competitive analysis might expose a hole in the company’s product portfolio. Customer focus groups or the sales team might\u00a0identify unmet customer needs. Many\u00a0amazing products are also the result of\u00a0lucky mistakes\u2014product experiments that don’t meet the intended goal but have an unintended and interesting application. For example, 3M scientist Dr. Spencer Silver invented Post-It Notes in a failed experiment to create a super-strong adhesive.[1]<\/sup><\/a><\/p>\n

    The key to the idea generation stage\u00a0is to explore possibilities, knowing that most will not result in products that go to market.<\/p>\n

    Stage\u00a02: Screening Product Ideas<\/h2>\n

    The second stage\u00a0of the product development process is idea screening. This is the first of many screening points. At this early stage much is not<\/em> known about the product and its market opportunity. Still, product ideas that do not meet the organization’s objectives should be rejected at this stage. If a poor product idea is allowed to pass the screening stage, it wastes effort and money in later\u00a0stages until it is abandoned. Even more serious is the possibility of screening out a worthwhile idea and missing a significant market opportunity. For this reason, this early screening stage allows many ideas to move forward that may not eventually go to market.<\/p>\n

    At this early stage, product\u00a0ideas may simply be\u00a0screened through some sort of internal rating process. Employees might rate the product ideas according to\u00a0a set of criteria, for example; those with low\u00a0scores are\u00a0dropped and only the highest ranked products move forward.<\/p>\n

    Stage 3: Concept Development\u00a0and Testing<\/h2>\n

    \"Yellow<\/a><\/p>\n

    Today, it is increasingly common for companies to\u00a0run some small concept test in a real marketing setting. The product concept <\/em>is a synthesis or a description of a product idea that reflects the core element of the proposed product. Marketing tries\u00a0to have the most accurate and detailed product concept possible in order to get accurate reactions from target buyers. \u00a0Those reactions can then be used to inform the final product, the marketing mix, and the business analysis.<\/span><\/p>\n

    New\u00a0tools for technology and product development are available that support the rapid development of prototypes which\u00a0can be tested with potential buyers. When concept testing can include an actual product 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 catch and keep outstanding product ideas.\u00a0<\/span><\/p>\n

    Stage 4: Business Case Analysis<\/span><\/h2>\n

    Before companies make a significant investment in a\u00a0product’s development, they need to be sure that it\u00a0will bring a sufficient return.<\/p>\n

    The company seeks to answer such questions as the following:<\/p>\n

      \n
    1. What is the market opportunity for this product?<\/li>\n
    2. What are the costs to bring the product to market?<\/li>\n
    3. What are the costs through the stages of the product life cycle?<\/li>\n
    4. Where does the product fit in the product portfolio and how will\u00a0it impact existing product sales?<\/li>\n
    5. How does this product impact the brand?<\/li>\n
    6. How does this product impact other corporate objectives such as social responsibility?<\/li>\n<\/ol>\n

      The marketing budget and costs are one element of the business analysis, but the full scope of the analysis includes all revenues, costs, and other business impacts of the product.<\/p>\n

      Stage 5: Technical and Marketing Development<\/h2>\n

      \"Artist<\/a><\/p>\n

      A product that has passed the screening and business analysis stages is ready for technical and marketing development. Technical development processes vary greatly according\u00a0to\u00a0the type of product. For a product with a complex manufacturing process, there is a lab phase\u00a0to\u00a0create specifications and an equally complex phase\u00a0to develop the manufacturing process. For a service offering, there may be new processes requiring new employee skills or the delivery of new equipment. These are only two of many possible examples, but in every case the company must define both what the product is and how it will be delivered to\u00a0many buyers.<\/p>\n

      While the technical development is under way, the marketing department is testing the early product with target customers to find the best possible\u00a0marketing mix. Ideally, marketing uses product prototypes or\u00a0early production models\u00a0to understand and capture customer responses and to identify how best to present the product to the market. Through this process, product marketing\u00a0must prepare a complete marketing plan\u2014one that starts with a statement of objectives and ends with a coherent picture of\u00a0product distribution, promotion, and pricing integrated into a plan\u00a0of marketing action.<\/p>\n

      Stage 6: Test Marketing and Validation<\/h2>\n

      Test marketing is the final stage before commercialization; the objective is to test all the variables\u00a0in the marketing plan including elements of the product. Test marketing represents an actual launching of the total marketing program. However, it is done on a limited basis.<\/p>\n

      Initial product testing and test marketing are not the same. Product testing is totally initiated by the producer: he or she selects the sample of people, provides the consumer with the test product, and offers the consumer some sort of incentive to participate.<\/p>\n

      Test marketing<\/em>, on the other hand, is distinguished by the fact that the test group\u00a0represents<\/em> the full\u00a0market, the consumer must make a purchase decision and pay for the product, and the test product must compete with the existing products in the actual marketing environment. For these and other reasons, a market test is an accurate simulation of the broader\u00a0market and serves as a method for reducing risk. It should enhance the new product’s probability of success and allow for final adjustment in the marketing mix before the product is introduced on a large scale.<\/p>\n

      Stage 7: Launch<\/h2>\n

      Finally, the product arrives at the commercial launch stage. The marketing mix comes together to introduce the product to the market. This stage marks the beginning of the product life cycle.<\/p>\n

      Stage 8: Evaluation<\/h2>\n

      The launch does not in any way signal\u00a0the end of the marketing role for the product. To the contrary, after launch the marketer finally has real market data about how the product\u00a0performs in the wild, outside the\u00a0test environment. These\u00a0market data initiate\u00a0a new cycle of idea generation about improvements and adjustments that can be made to all elements of the marketing mix.<\/p>\n\n\t\t\t

      \n\t\t\t

      Candela Citations<\/h3>\n\t\t\t\t\t
      \n\t\t\t\t\t\t
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      CC licensed content, Original<\/div>