Summary of New Product Development and Product Life Cycle
New Product Development & Product Life Cycle Explained
Introduction
New product development (NPD) and product life cycle management are central to strategic and operational marketing. This unit explains how firms generate, screen, develop, test, launch, and manage products throughout their life cycle to achieve sustainable market success.
Definition: New product development (NPD) is the process of converting ideas into commercially successful products by progressing through idea generation, screening, development, testing, and commercialization.
1. Overview of the Unit
- Content sections: 7.1 New product concept and causes of failure; 7.2 Idea generation, development, testing and launching; 7.3 Adoption and diffusion of innovations; 7.4 Product life cycle management and relaunch strategies.
2. What is a New Product?
Types of innovation
- Radical (discontinuous) innovation: Products with no prior history that require new learning and consumption patterns. Higher risk.
- Incremental (non-radical) innovation: Variations, extensions or improvements of existing products that require little new learning.
Definition: Radical innovation produces fundamentally new consumption routines, while incremental innovation modifies or improves existing offerings.
Comparison (table)
| Basis | Incremental innovation | Radical innovation |
|---|---|---|
| Consumer learning needed | Low | High |
| Example | New detergent formula, new phone color | Electric toothbrush, personal computer |
| Marketing emphasis | Promote differentiating benefits | Educate consumers; product testing & personal selling |
3. Why Launch New Products?
- Fill out a product portfolio
- Exploit company capabilities and resources
- Achieve an innovative brand image
- Respond to market saturation or competitor moves
4. Causes of New Product Failure
- Product does not meet a real need
- Poor coordination of marketing mix
- Overestimation of demand
- Deficient market research
- Poor timing (development or launch)
5. The New Product Development Process (Step-by-step)
- Idea generation
- Internal sources: executives, scientists, engineers, employees, vendors
- External sources: consumers, competitors, distributors, suppliers, consultants, agencies, market research firms
- Idea screening
- Quickly discard poor ideas; perform shallow analyses to focus resources
- Concept development and testing
- A single idea may produce multiple concepts. Test which concept is most appealing.
- Concept includes: expected functions/benefits, target buyer group, and core technology
- Test concept with target consumers
Definition: Product concept testing evaluates consumer reactions to a detailed description of the product idea before physical development.
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Marketing strategy statement & economic analysis
- Marketing strategy: target market, positioning, sales targets, market share and profit goals for initial years; pricing, distribution, communication and first-year marketing budget
- Economic analysis: review sales projections, costs and benefits
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Product development
- Turn the concept into a physical prototype
- Create preliminary versions for internal and consumer testing
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Product testing
- Prototype tests among end consumers: alone or vs competitors, blind or branded, instant or extended use, at home or in purchase settings
- Brand tests and packaging tests
Testing variants (key dimensions):
- Number of stimuli: monadic (one), paired (two), multiple (three+)
- Time/place: instantaneous, use test (short/medium duration), long-term consumption test
- Presentation: blind, identified, full marketing-mix
- Market test
- Small-scale commercialization to estimate acceptance and refine product
- Advantages: realistic feedback and opportunity to improve
- Disadvantages: reveals product to competitors, may only capture early purchases, no
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New Product Development
Klíčové pojmy: New product development (NPD) transforms ideas into marketable products through structured stages, Idea sources: internal (employees, R&D) and external (customers, suppliers, agencies), Idea screening quickly discards poor concepts to save resources, Concept testing evaluates expected functions, target buyers and technology with consumers, Marketing strategy statement includes target market, positioning, sales goals, pricing and first-year budget, Prototype/product tests vary by stimuli (monadic, paired, multiple), time (instant, use, long-term) and identification (blind, branded), Diffusion adopter categories: innovators $2.5\%$, early adopters $13.5\%$, early majority $34\%$, late majority $34\%$, laggards $16\%$, Product characteristics that speed diffusion: relative advantage, compatibility, visibility, testability; complexity slows it, PLC stages: Introduction, Growth, Maturity, Decline with distinct objectives and tactics, Intro pricing: skimming vs penetration; maturity strategies include line extensions and promotions, Relaunch strategies: product redesign, new users, new applications to revive sales