DEVELOPING NEW

PRODUCTS

Isaa Ruth F. Lesma

Marketing Management
G14-0139

KEY STEPS IN NEW PRODUCT

DEVELOPMENT
Idea Generation
Idea Screening
Concept Development
& Testing
Business Analysis
Product Development
Test Marketing
Commercialisation

Idea Generation

Idea generation is a continuous, systematic

search for new-product opportunities. It involves
delineating sources of new ideas and methods for
generating them.

Idea Screening

After the firm identifies potential products, it

must screen them. In product screening, poor,
unsuitable, or otherwise unattractive ideas are
weeded out from further actions.

Concept Development & Testing

Concept testing presents the consumer with a

proposed product and measures attitudes and
intentions at this early stage of development.

Business Analysis

Business and financial analysis for the remaining

product concepts is much more detailed than
product screening.

Product Development
Product development converts a product idea into
a physical form and identifies a basic marketing
strategy.
It involves product construction, packaging,
branding, product positioning, and usage testing.

Test Marketing

Test marketing involves placing a product for sale

in one or more selected areas and observing its
actual performance under the proposed
marketing plan.

Commercialization

Commercialization involves implementing a total

marketing plan and full production.

Product
Development

Begins when the company develops

a new-product idea
Sales are zero
Investment costs are high
Profits are negative

Introduction

Low sales
High cost per customer acquired
Negative profits
Innovators are targeted
Little competition

PRODUCT LIFE-CYCLE

MARKETING STRATEGIES:
INTRODUCTION STAGE
Product offer a basic product
Price use cost-plus basis to set
Distribution build selective distribution
Advertising build awareness among early
adopters and dealers/resellers
Sales Promotion Heavy expenditures to create
trial

Rapidly rising sales

Average cost per customer
Rising profits
Early adopters are targeted
Growing competition

Sales peak
Low cost per customer
High profits
Middle majority are targeted
Competition begins to decline

Maturity
Growth

PRODUCTION LIFE-CYCLE
STRATEGIES

MARKETING STRATEGIES: GROWTH

STAGE
Product offer product extensions, service,
warranty
Price penetration pricing
Distribution build intensive distribution
Advertising build awareness and interest in the
mass market
Sales Promotion reduce expenditures to take
advantage of consumer demand

MARKETING STRATEGIES:
MATURITY STAGE
Product diversify brand and models
Price set to match or beat competition
Distribution build more intensive distribution
Advertising stress brand differences and
benefits
Sales Promotion increase to encourage brand
switching

Declining sales
Low cost per customer
Decline profits
Laggards are targeted
Declining competition

Decline

PRODUCTION LIFE-CYCLE
STRATEGIES

MARKETING STRATEGIES: DECLINE

STAGE
Product phase out weak items
Price cut price
Distribution use selective distribution: phase
out unprofitable outlets
Advertising reduce to level needed to retain
hard-core loyalists
Sales Promotion reduce to minimal level