Most new products fail. The risk of failure can be reduced by establishing a sound NPD process or new product development process.
Although there are variations, the basic process includes the following distinct stages: ideas are generated, screened, evaluated in more detail, developed, tested and finally launched.
Ideas come from everywhere. Whether from sophisticated social, anthropological or technical studies that reveal hidden needs and opportunities for new products; or just ideas from brain-storming teams, suggestions from customers, distributors and employees.
Ideas are then screened to see how well they match the market’s needs; and simultaneously fit with the organisation’s overall objectives, strengths and resources.
The ideas that get through the initial screening are researched and developed into concepts for further evaluation. Although often presented on concept boards and researched in focus groups, some organisations, like Coca Cola, carry out concept research among larger numbers of potential customers. The commercial viability of an idea is also evaluated by estimating costs, prices, sales, revenues, investment and profit.
The big spending then starts with the development stage. Teams of Research and Development specialists create prototype after prototype, testing and refining until they achieve the best solution.
To invest or not to invest. That is the question. A big investment goes into the tools which manufacture the final product. The tools can take 6 months to make. Once they are commissioned then there is no turning back. This may require board room approval.
Meanwhile marketing specialists develop the rest of the marketing mix. Brand names are registered, packaging designed, distribution channels selected, sales force briefed, and promotional activities prepared.
This is followed by testing – laboratory and real life testing for safety and performance as well as market acceptance.
If the results are positive the product is launched usually on a ‘roll-out’ basis in one area after another, allowing demand and production to build up in a co-ordinated manner. The roll-out can also identify any last minute, hidden problems before going national or global.
The NPD process is not a linear sequence of events. Results from tests, customer feedback and general discussions send everyone back to the drawing board. So the NPD process is a series of loops rather than a linear process.
NPD plays a big continual part in a company’s long term success. Constant improvement of old products along with the development of new ones means companies like Sony produce 1,000 new products per year or 4 new products each day. Their founder Akio Morito, explained the underlying NPD drive when he said that his job was to make his products obsolete.
One of the most common concepts referred to in marketing is the product life cycle. Whether it is candles, Political, economic, social and technological changes affect product life cycles. The time frame can vary according to the industry but the pattern remains the same: slow sales growth, rapid sales growth, mature sales, and falling sales, as the product is launched, grows rapidly, matures and eventually declines. horseshoes, hair nets or Harrier jets – products have life cycles. That means they all have a beginning… and an end.
Perhaps a little simplistic but nevertheless it can provide a useful insight into a common pattern of total industry sales which the marketer must recognise. Businesses, like steam engine manufacturers refused to see the end of their product’s life cycle. They went out of business. They did not acknowledge the inevitable end of their product’s life cycle.
Although candles and horseshoes still exist today, their sales have peaked long ago and are now minuscule compared to the vast volumes which were sold during previous centuries. Vinyl records and turntables have a shorter life cycle.
Black and white TV had a relatively short cycle which was extended by colour TV which is now near its decline stage as multimedia on-line PC/TVs emerge.
The marketing mix varies during each stage of the product life cycle.
A product’s life cycle can be extended by finding new users, new uses, increased usage and of course, product modification.
New users mean new target markets. New uses for a product mean that new benefits and new ways of using the product have to be found. Increased usage is simply trying to get customers to increase their quantity and frequency of use.
Extended or not, the Product Life Cycle is usually applied more easily to product form rather than product class or specific brands. For example, a product form such as black and white TV has a clearer life cycle than televisions in total which is a product class
Different products and whole industries have different time horizons, for example the horseshoe’s life cycle has had hundreds of years while TV may have perhaps only 70.
The danger of over-dependence on the life cycle means that a temporary dip in sales could trigger a premature withdrawal of a product – if the dip is misinterpreted as the final decline of the product. Peter Doyle, in the linker, explains his dislike for the concept.
Finally, the life cycle is more descriptive than predictive. It describes the behaviour or sales pattern of a product as opposed to predicting its future sales precisely. Despite this limitation , the steam engine companies might just have survived in some manner or form if they’d been aware of where they were on the Product Life Cycle and its fatal finality.
Product and the Marketing Mix
Over a hundred years ago Ralph Waldo Emerson suggested that “If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbour, though he builds his house in the woods the world will make a beaten path to his door.”
This is certainly not true today. Many excellent products fail because no one knows about them, or they are wrongly positioned, or they’re not available when people want them, or they’re too expensive for the chosen target market.
Other excellent products fail because a competitor’s lower priced and inferior product is widely available before you even get to launch your product on the market place. Going back to the Emerson’s better mousetrap, ironically the best product is not always the best option. For example, the product might be so good that it costs too much to produce and therefore the best product might just put you out of business.
Do customers really want that extra feature? Can you afford it? Can they afford it? Can competition copy it? Whatever the decision, the final combination of the core product, tangible product and augmented product along with price, promotion and distribution need to work together if a product is to be successful.. Better mousetraps are often beaten by poorer mousetraps. It happens all the time.
Competitors constantly juggle their marketing mixes to maximise their product sales. Speed to market; blocked distribution channels; clever pricing strategies; powerful promotions; are all used by competitors to win and keep market share.
The better mousetrap also needs to be part of a coherent, fully integrated marketing mix. The distribution has to get the product to where the target customer can buy it w