Product development process

III. Concepts of Product Development Process

3.1. Concepts of Product

We define a product as anything that is offered to a market for attention, acquisition, use or
consumption and that might satisfy a want or need. Products include more than just tangible
goods. Broadly defined, products include physical objects, services, persons, places,
organizations, ideas or mixes of these entities.
Services are products that consist of activities, benefits or satisfactions that are offered for
sale, such as haircuts, tax preparation and home repairs. Services are essentially intangible
and do not result in the ownership of anything. (Because of the importance of services in the
world economy, we will look at them more closely).
Product planners need to think about the product on three levels. The most basic level is the
core product, which addresses the question: What is the buyer really buying? As Figure 3.1.
Illustrates, the core product stands at the centre of the total product. It consists of the
problem-solving services or core benefits that consumers seek when they buy a product. Thus
when designing products, marketers must first define the core of benefits that the product will
provide to consumers.
The product planner must next build an actual product around the core product. Actual
products may have as many as five characteristics: a quality level, features, styling, a brand
name and packaging. For example, Sony's Handy cam camcorder is an actual product. Its
name, parts, styling, features, packaging and other attributes have all been combined carefully
to deliver the core benefit - a convenient, high-quality way to capture important moments.
Finally, the product planner must build an augmented product around the core and actual
products by offering additional consumer services and benefits. Sony must offer more than
a camcorder. It must provide consumers with a complete solution to their picture-taking
problems. Thus when consumers buy a Sony handy cam, Sony and its dealers might also give
buyers a warranty on parts and workmanship, free lessons on how to use the camcorder,
quick repair services when needed and a free phone number to call if they have problems or
questions. To the consumer, all of these augmentations become an important part of the total
product.
Therefore, a product is more than a simple set of tangible features. Consumers tend to see
products as complex bundles of benefits that satisfy their needs. When developing products,
marketers must first identify the core consumer needs that the product will satisfy, then

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design the actual product and finally find ways to augment it in order to create the bundle of
benefits that will best satisfy consumers.
Today, most competition takes place at the product augmentation level. Successful companies
add benefits to their offers that will not only satisfy, but also delight the customer. For
instance, hotel guests find chocolates on the pillow or a howl of fruit or a VCR with optional
videotapes. The company is saying 'we want to treat you in a special way'. However, each
augmentation costs the company money, and the marketer has to ask whether customers will
pay enough to cover the extra cost. Moreover, augmented benefits soon become expected
benefits: hotel guests now expect cable television, trays of toiletries and other amenities in
their rooms. This means that competitors must search for still more features and benefits to
differentiate their offers.

Fig 3.1. Three Levels of Products

3.2. Product Development Process

In the face of changing customer needs, technologies and competition, product innovation or
the development of new products has become vital to a company's survival. Introducing new
products, however, is not sufficient. The firm must also know how to manage the new
product as it goes through its life cycle: that is, from its birth, through growth and maturity, to
eventual demise as newer products come along that better serve consumer needs.

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Given the rapid changes in taste, technology and competition, a company cannot rely solely
on its existing products to sustain growth or to maintain profitability. The firm can hope to
maintain market and profit performance only by continuous product innovation. Product
innovation encompasses a variety of product development activities - product improvement,
development of entirely new ones, and extensions that increase the range or number of lines
of product the firm can offer. Product innovations are not to be confused with inventions.
The latter are a new technology or product which may or may not deliver benefits to
customers. An innovation is defined as an idea, product or piece of technology that has been
developed and marketed to customers 'who perceive it as novel or new. We may call it a
process of identifying, creating and delivering new-product values or benefits that were not
offered before in the marketplace. In this chapter we look specifically at new products as
opposed to value creation through marketing actions (such as product/brand repositioning,
segmentation of current markets).
The new-product development process for finding and growing new products consists of nine
main steps.

Fig 3.2. Product Development Process

Why new product fails

Why do so many new products fail? There are several reasons. Although an idea may be
good, the market size may have been overestimated. Perhaps the actual product was not
designed as well as it should have been. It may be a 'me too" product which is no better than
products that are already established in the marketplace. Or maybe it was incorrectly
positioned in the market, priced too high, or advertised and promoted poorly. A high-level
executive might push a favourite idea despite poor marketing research findings. Sometimes

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the costs of product development are higher than budgeted and sometimes competitors fight
back harder than expected.
What Governs New-Product Success?
Because so many new products fail, companies are anxious to learn how to improve their
odds of new-product success. One way is to identify successful new products and find out
what they have in common. One study of new-product successes found that the no. 1 success
factor is a unique superior product. One with higher quality, new features and higher value in
use. Another key success factor is a well-defined product concept prior to development, in
which the company carefully defines and assesses the target market, the product requirements
and the benefits before proceeding. New products that meet market needs more closely than
existing products invariably do well. Other success factors included technological and
marketing synergy, quality of execution in all stages and market strategies. Thus to create
successful new products, a company must understand its consumers, markets and
competitors, and develop products that deliver superior value to customers.
3.3. Intellectual Property
Intellectual property is protected by the federal government through patents, copyrights,
and trademarks. These affect the small businessperson in the form of start-up ventures,
innovations, or simply proprietary information gained by employees and competitors.
Each type is discussed in the following sections.
a) Patents: A patent is granted to an inventor for developing a product or a process.
Thus, an actual physical product or a particular manufacturing process can be
protected. A patent is issued by the federal government and grants the owner the right
to make, use, or sell the particular product or process for several years without
infringement. A patent contains two parts:
i. A disclosure statement describing the invention, and
ii. A set of claims covering the exact particulars to be protected by the patent.
These claims state the protection from infringement and allow the individual to license other
people to use the patented article in return for a percentage of sales revenue, which is paid to
the patent holder in the form of royalties. Patent law is very complicated and technical area.
An attorney specializing in patent law should be consulted. Such attorneys are familiar with
the patent office and its procedures, as well as the technical aspects of the patent process. One
final note is important. Pursuing a patent can be expensive. The product or process should be

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distinctive enough to warrant protection, and this investment in protection should be expected
to pay off later on.
Copyrights: - A copyright protects authors of written material for the extent of their life plus
50 years in USA. One can claim a copyright simply by using the notice of copyright on any
written work.
These elements are needed: A copyright symbol, , or the word copyright, the year, and the
name of the author Registration of a copyright is filed with the Copyright office by paying a
small fee and submitting the appropriate registration document. The copyright grants the
individual the exclusive right to reproduce and distribute the material to the public. It
prohibits derivations based on the work and any performance or display for profit. The fair
use doctrine, however, allows limited reproduction of the material for purpose of criticism,
comment, reporting, teaching, scholarship, or research without any infringement of the
copyright.
Trademarks: - A trademark is a word, name, symbol, character, slogan, series of letters or
numbers, type of packaging or labelling, or even a combination of colours that identify the
particular goods and services of a business and distinguish them from competitors. However,
not all words and symbols are eligible for trademark protection; the mark should be
arbitrary, fanciful, or suggestive, not merely descriptive of the goods or services it
identifies. A trademark provides several benefits.
First, it serves an identifying function, distinguishing an individual manufacturers goods
from those of its competitors.
Second, the trademark provides a guarantee of quality and consistency.
Finally, it serves as an advertising device.
The use of a trademark establishes rights, rather than just the registration of that trademark.
For example, if a small businesss area of operation will be only local without expansion to
other regions, the firm does not need to register, since using the name or mark in the local
area establishes trademark rights.
Problems can arise if the business expands into other areas, however.
In order to prevent competitors from using the name in other regions, registration is needed.
Professional trademark searches vary in cost.
The small business owner-manager should evaluate the extent of the business and whether a
distinct and protected trademark is necessary. Brand

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