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New Product Development: The 4 Elements of Marketing Mix

Learn about the key stages of New Product Development (NPD) process, from idea generation to market testing and commercialization. Understand the importance of defining "product" and implementing marketing strategies effectively.

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New Product Development: The 4 Elements of Marketing Mix

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  1. New Product Development (NPD)

  2. The 4 Elements of The Marketing Mix

  3. Defining “Product” Anything that you can “sell”

  4. Marketing applies to a broad range of “products” • Physical product • Service • Events • People • Ideas • Places

  5. Most “products” are combinations of goods and service Pure good Pure service

  6. Core ... Actual ... Augmented product

  7. Successful firms . . . • Fully understand the core benefit sought by customers and start with that concept • Consider the enhanced product including delivery, service and complementary goods

  8. The 8-Stage New Product Development (NPD) Process

  9. New Product Development Key: Recognize when you are in an NPD environment

  10. New Product Development (NPD)

  11. 1. Idea Generation & 2. Idea Screening • Generation: Firms are always on the look-out • Screening: • Fit with manufacturing and distribution expertise • Feasibility

  12. 3. Concept Screening • Prototype or storyboard • Focus group: Would you be interested in a service that . . . • Approximation of willingness to pay

  13. 4. Marketing Strategy Development and 5. Business Analysis • Marketing strategy: • Developing credible marketing plans with positioning, target and Marketing Mix • Business analysis: • Is there a high chance of a good payoff?

  14. 6. Product Development • E.g. battery life in iPod

  15. 7. Market Testing • Some firms (“fashion goods”) don’t test the market: Put it out there, see if people buy it (the costs of this must be small) = “Market test by roll out” • Simulated test market (dummy store) new product is mixed in with familiars • Test markets: Several cities let us tweak the Marketing Mix … but rivals may attempt disruption

  16. 8. Possible “roll-out” strategiesduring “commercialization” • By geography • By market size • By customer type (business/consumer/government) • By channel of distribution (Rx/OTC) • By use (special occasion/every day) • By benefit sought

  17. The model for new product adoption applies during “roll out” Awareness Interest Trial Repeat If we are not an instant hit, do the research

  18. Most New Products Fail? • Consumer packaged goods fail most often • Brand extensions not sought by consumer (“new” colors, flavors, packaging) • Products that attempt to meet a need that few consumer have (e.g. combination products)

  19. Two forces for NPD When the two align, you have a winner! Consumer needs Technological advances

  20. Big firms take a diversified“Portfolio Approach” Potential Payoff New product to new markets New product to existing markets Add feature to existing product Improve performance of existing product Risk

  21. Three keys to NPD • Recognize when you are in an NPD situation • Understand that there’ll be many ideas, and a few winners. • Tolerate a “portfolio” of products A few (only a few) high risk products And some no-brainers (with low payoff)

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