The Meaning of a New Product
The term new product can mean many things. Sometimes, it is a major innovation, other times, it may refers to a small modification in the feature or packaging of an existing product. A product can be called “NEW” for only a limited time. A new product is one that is new in any way for the company concerned. To order the Complete Project Material, Pay thr Sum of N3,000 to: BANK NAME: FIRST BANK PLC ACCOUNT NAME: CHIBUZOR TOCHI ONYEMENAM ACCOUNT NUMBER: 3066880122 Then send the Project Topic, Your Email Address and Full Name to 07033378184.
To order the Complete Project Material, Pay thr Sum of N3,000 to:
BANK NAME: FIRST BANK PLC
ACCOUNT NAME: CHIBUZOR TOCHI ONYEMENAM
ACCOUNT NUMBER: 3066880122
Then send the Project Topic, Your Email Address and Full Name to 07033378184.
Kotler (1995, p. 316) stated that a new product embraces the original product, major modification of existing product, duplications of competitors product and addition of something well into the product mix.
Onyebuagu (1995) observed that for most organizations, the idea of new product development would become necessary after examining the progress of old ones, or after a market survey that provided:
- Proof of demand of new product development
- Where changes in consumers tastes and preferences show noticeable desire for new product development.
- Where the decline in the life cycle of the old product has reached obsolesces state
- Where stiff competition forced a company to look for alternative substitution or even different product.
- Where company is diversifying it’s scope of operation and decides to add new dimensions of product to it’s line.
- Where there is specific demand for specific new product preference.
- Where a company is research oriented and has leadership in new product development emphasis and or new product innovation.
WHY COMPANIES DEVELOP AND MARKET NEW PRODUCTS
Many reasons have been given why producers develop new products. Adirika (1988) points out that, new products do not emerge by accident.
Rather firms design and develop new products for certain reasons which may include:
The need to remain in business: Products and services are subject to changes as consumers life style does. Moreover, products and services of a firm of through some stages like introduction, growth, maturity and decline. For a company to remain in business it must at the declaiming state of its product, develop a new one or modify the existing one to meet the changing taste and life style/pattern of the consumers.
As a solution to a perceived problem: Consumers satisfaction entails that the producers should monitor results of sales from the market, percentage of it’s market share, cost and profit. This monitoring is essential because it provides the organization an insight into how actual performance or result deviates from the standard or targeted performance which may be attributed to no performance of the products in the market. If a product fails to satisfy the consumers need, there is no way such a customer will buy it again.
To be precise, marketing control shows what marketing variables to monitor, when and who and also what may be done if result vary from the planned standards. There is always the need for producers to appraise the economic variability of the market they intend to introduce their product and equally, measure the attitude of consumers towards accruable to such marketing effort after getting the consumer satisfied.
The need to maintain a desired level: The concept of profit level implies that changes in the project margin of company is necessary so that as a given product moves from introduction to decline stage, the profit volume will be fluctuating. Therefore, if the company wants to stabilize it’s profits, there is the need for it to either develop a new product or improve on the existing one.
Thigh, in the modern business world, emphasis have shifted from company’s profit maximization to customers satisfaction.
To meet up with the changing taste of the customers, success they say I business meant repaid and intelligent adaptation to event occurring outside the business. Therefore, producers should be able to study the reports of their sales force of field men as it relates to what is happening within the society.
This is where marketing actually difference from selling because the marketer tries to identify whatever consumers wants at any given time and either develop a new product for then or modify the existing one to satisfy their needs. He does not just produce for production sake but produce in accordance with what the consumer wants.
There is the believe that the consumers determine what a business should be. The consumers are the foundation of any business and the existing consumers are satisfied with what they derive form the produce.
They easily get fed-up with a particular product or service and might have the need to taste new product. In order to remain in business, companies due to this, develop new products and service to satisfy them. The newness in the product may make them keep on buying the product or service.
Management of adequate ability should be available. It is important that he executives in the company have the necessary time and ability to handle the proposed new product.
The product should be in-line with the company’s image, self concept and objectives.
The proposed product should not counter the company’s goals.
REQUIREMENT FOR SUCCESSFUL NEW PRODUCT
Kotler (1980) stated that a successful product comes through proper planning, implementation and control of programmes designed to create exchange and sustain mutually beneficial exchange and relationship with target market.
In their bid for market acceptance of their products organizations develop and display a combination of marketing strategies, some having to do with the various promo tools. Others with product quality, pricing, distribution etc. all for the purpose of maximizing their share of the target market.
Kotler (1993; p. 355) also believed that the risks of innovation are as great as the records. They key to successful innovation according to him, lies in developing better organization arrangement for handling new product ideas and developing sound research and decision procedures at each stage of the new products development process. Like he pointed out, every new product launched either a product life cycle market by changing sets of problems and opportunities.
New and modified products often fail to obtain market acceptance. Modern (1991, p.251 – 253) stated that one of the key factors in determining the likely acceptance and success of new products lies in the degree to which they possess significant advantages over competing products. Such advantages are sometimes described as unique selling propositions USPs or “product pluses”.
Product development and modification must of course be related to
- Market research findings
- Company knowledge of consumer and buying behaviour
- Product positioning requirements of market segmentation and customer targeting.
The reasons why new products fail in recent times are due to:
Inadequate market Analysis: Over estimating potential sales of the new product, inability to determine buying motives and habits of the consumer and misjudgments as to what products the market wanted.
Product deficiencies: Products that did not offer significant advantage over competing items already in the market.
Lack of Effective Marketing effort: Failure to provide sufficient follow-up effort after introducing the product and failure to train marketing personnel for new products and new marketers.
Higher Costs than Anticipated: This leads to high prices which in turn leads to lower sales volume than expected.
Poor Timing of Introduction: The usual mistakes companies make here, is to introduce their new products late, although, in a few case the problem may be premature market entry.
Technical or Production Problem: Companies could be produce sufficient quantities to meet demand, so competition gained an unanticipated share of the market.
In concerning idea for new product development, a company has a look into the criteria the new product must meet. This is necessary because not all new products are worthwhile or make contribution to company’s profit. Some clear-cut criteria can be applied and if they are observed, the chances are likely to be greatly increased.
Stone (1976, p. 95) pointed out that once a firm has decided which new products to produce, it is immediately faced with two problems. The first concerns the marketing of the product and the second is how to organize the products management. In general, if the firm is introducing its product into a well-established market, a re-examination of the market policies of all competitive products will be in order.
In developing a new product, one must have to be careful. The developer must bear in mind that, there are already similar existing products in the market place. Therefore, products quality should be considered first. Company’s policy must be adequately taken care of. This requires a conscious effort by top management to prevent the launching of product defects, higher developmental costs, poor market strategy etc. These problems can be curtailed through a careful organized planning process that meets the corporate objects.
Organizations eager to embark on new product development must consider many more other factors such as:
Cost Constraint and Cost benefits it is imperatives to reconcile cost of production with the possible revenue accruable from the sales of such product.
Market Acceptability: A new product must be one that has consumer demand and the target market assured. These makes for easy acceptability and repeat purchase of the product.
The new product must have competitive evaluation and must meet the standard set by the Standard Organization of Nigeria (SON) the agency bestowed with the right of formulating and monitoring the standard of products in the country before it is eventually consumed by the consumers.
Because so many product fails in the market after their introduction, many organizations are now eager to learn how to improve on the products to make it successful. On approach determines what is common to them. Another key success factor is a well defined product concept poor to development where the company carefully defines and assesses the target market, product requirements, and benefits before proceeding. Other success factors are technological and marketing synergy, quality of execution on all stages and market alternatives.
PRODUCT PLANNING AND DEVELOPMENT
Companies must carry on new product development. Replacement must be found in order to maintain or build future sales. Furthermore, consumers wants new products and competitors will do there best to supply them. A company can add new products through acquisition and or new product development.
New product development route can take two forms. The company can develop new product in it’s own laboratories or it can contract its independent researchers or new product development firms to develop specific products for the company.
They pursue growth through both acquisition and new product development. Their management feels that the best opportunities might lie in acquisition at certain time and new product development at other times and would want to be skilled at both (Kotler, 1995, p. 316).
Stone (1976, p.1) pointed out that product line change is the process by which a firm alters the range of products or service which it sells which is one of the most important kind of business activity. A firm’s product range is one of the key determinants of it’s profitability and sales. Changes in product line can produce major changes in a firm’s marketing strategy depends crucially on the success of the characteristics of the products sold by the firm. Product strategy therefore has a claim to be one of the most fundamental elements of marketing strategy
Because of the process of changing a product, modifying the existing one or withdrawal of a produce takes up resources therefore, some kind of planning must be involved if the product line change is to be accomplished smoothly and without task to the overall success of the firm. Although some kind of planning will always be taking place during the process of product line change, the quality of this planning will vary tremendously.
PRODUCT DEVELOPMENT STRATEGIES
Product development strategies may be either proactive (leading) or reactive (following). Modern (1991, p. 248) stated that the success of a new product development will depend on having an effective source of new ideas and innovations which can be incorporated as unique selling proposions. The unique selling propositions must be relevant to be characteristics of the market segments on which the product is to be targeted, and must effectively differentiate the product so as to give it purchase appeal.
PROACTIVE PRODUCT DEVELOPMENT STRATEGY
A decision may be taken by a company to undertake product development strategies that are proactive. This means deliberately taking lead in new developments/innovations and being the first to break new ground for such product. Such a policy carries with it both the greatest opportunity for the generation of profit and cash
REACTIVE PRODUCT DEVELOPMENT STRATEGY
In this regard, a firm’s product development may be designed to react to or follow developments else where. Such a strategy lessens the risk of product development since the enterprise will try to learn from the mistakes and failures of it’s more adventures competitors. At the same time, reactive strategy carries the risk of delayed market acceptance.
Companies using reactive strategies will wait till some one else prepares the ground and launch the product under more favourable circumstances.
Reactive development strategies can also take the from of fast seconding. This means the development and marketing of competitive product shortly after their introduction by other companies. Fast secondary is sometimes described as “me too” marketing.
It explains the promotional activity undertaken by rivals especially where the fast seconder is able to gain intensive distribution on very short time scale.
THE NEW PRODUCT DEVELOPMENT PROCESS
According to Kotler (1988, p. 412 – 437) product planning and development is a systematic process for originating, evaluation and developing new product ideas and adopting those showing promise so that they can be profitably sold in the market place. This means that management procedures must be employed to generate, collect and screening ideas for new products and then, develop, test ad commercialize the new item.
Kotler pointed out that there are several stages that are involved in the new product development process. These stages are:
– Idea generation
– Idea screening
– Concept development and testing
– Marketing strategy development
– Business analysis
– Product (prototype) development
– Market testing
According to Kotler (1993), p. 317 – 318) the new product development process starts with the search for ides. The research should not be casual, top management should define the products market to emphasize. It should state the new product objectives, whether it is high cash flow, market – share domination or some other objectives.
It should state how much effort should be devoted to developing original products, modification of existing products, and company competitors products.
The development of new product begins with an idea which may come from many sources, customers, scientists, competitors, employees, channel members, top management. Private research organizations, trade associations and governmental agencies. When looking for ideas, the customers view points is all important it may be helped to consider the image that potential customers have of the firm.
This stage also involves creation of ideas for new or improved products. In this case, the extent and importance of the market need is determined and an appraisal is made of the extent to which present product fulfills that need
SCREENING OF PRODUCT IDEAS
The main purpose of the first stage of the new product development process is to increase the number of goods ides where as other succeeding stages is to reduce the number of ideas. In the screening stage of the new product development process the major objective is to evaluate the number of product ideas previously developed. This reduces the number of product ideas to those that can under go further detailed analysis.
In trying to screen each of these ideas, certain product idea criteria are usually utilized to rate each of the new product ideas. Such criteria may be
– Relationship to present channel of distribution
– Relationship to present product line
– Price quality relationship
– Breath of market
– Stability of market
– Resistance of seasonal and cyclical fluctuations
– Necessary equipment
– Raw materials availability
– Growth potential
– Competitive situation
Return on investment (ROI) is a crucial screening criteria. If many ideas passes the screening criteria, then it is necessary to set priories for which ones go onto the next step in the process. This can be done by comparing the ROI for each idea assuming the firm is ROI oriented.
The most attractive alternatives are to be pursued first. Analysis of company resources could indicate the adequacy of plant capacity product service, facilities, marketing channels, engineering abilities, and other human resources. Thus in the screening of ides – weeding out of marginal ideas, the criteria requires that;
– The product will meet clearly defined consumer need.
– The product is consistent with the firm’s production and marketing policies.
– The product will utilize the existing skills and resources.
– The product will contribute to long term profitability.
Furthermore, companies must seek to avoid two errors, a drop-error and a go-error. A drop-error occurs when the company dismisses an otherwise good idea because of lack of vision of its potentialities while a go-error occurs when the company lets a poor idea proceed to development and commercialization and when this errors occurs, it leads to product failure.
CONCEPT DEVELOPMENT AND TESTING
E3bue, Nnolim, Adirika et al (1997, p. 89) refer to concept development as that subjective consumer meaning that the company tries to build into a product idea. Attractive ideas need to be developed into finer product concept if they are to be tested.
Any product idea can be turned into several product concepts. After turning product ideas into concept, each concept should be positioned.
Each required positioning so that its real competition can be understood. The concept also has to be positioned against existing brands. In the product category, once the core product concept is chosen, it helps to determine the character of the product space I which the product has to be positioned with reference to product and brand positioning.
The next step is to test the concept to see if it is understood by consumers. This calls for showing these concepts to a group of target consumer and getting their reactions. The product may be presented symbolically or physically and also, the consumers may be offered a word description.
The following concept testing should include the following questions:
– Do the consumers clearly and distinctly understand the concept?
– Do they see some distinct benefits of this product over competitors?
– Do they really prefer this product to the competitors?
– Would they buy the product – their purchase intentions?
– What improvements can they suggest in various attributes of the product?
– Would the product meet a real need of their – for re-purchase?
The marketer new summarize the sampled respondents
answers to judge whether the concept has a broad enough and strong enough consumer’s appeal. If the concept looks good, the information will tell the company what products this new product would replace and what consumers are best targets.
MARKETING STRATEGY DEVELOPMENT
This involves the development of a well articulated marketing strategy plan for successful introduction of the product into the market. The marketing strategy deals with the marketing mix coordination’s that could because, the market and the marketing budget. The new product manager will have to develop a preliminary marketing strategy statement.
The marketing strategy will undergo further refinement in subsequently stages.
This marketing strategy statement consists of three parts. The first part describes the size, structure and behaviour of the market, the planned product positioning and the sales, market share and project goals sought in the few years. The second outlines the products’ planned price, distribution strategy and marketing budget for the first while the third describes the planned long- run sales and profit goals and marketing mix strategy overtime.
The basic purpose of the business analysis stage is to determine the financial aspects of the new product introduction. Specific financial criteria are normally utilized for this analysis.
Business managers make use of the following major tools (capital budgeting techniques, pay back period and average rate of return) in carrying out business analysis on new product.
In other words, the economic viability of the product concept is assessed by looking at projected sales costs and profits (or losses) in the few years of operation. First tie sales have to be estimated and if the product is a frequently purchased item, replacement sales should be estimated also. If a second market analysis is conducted at this stage of the process, it would provide useful insight into the extent of demand for the product.
Furthermore, this stage involves determining cost of production and marketing which of course, have to depend on whether the company is starting new product line. Production costs include both fixed and variable costs whereas marketing cost include both distribution, advertising, sales promotion and sales force expenses. All this, is done to enable the company ascertain the total cost.
Other stages before product development are referred to “Concept Test”. Product ideas which have survived the screening and business analysis i.e. (idea evaluation) steps must now be analyzed further. Usually, this involves some research and development (R&D) and engineering – to design and develop the physical part of the product. He process may have several cycles – building a model, testing it, revising product specifications based on the test before pilot plant production.
With actual models, it is possible to show potential customers how the idea has been converted into a tangible product using small focus groups, panels and larger surveys, marketers can lead to revision of product specifications for different markets.
After testing the tangible product, pilot production begins to be sure that the product can be produced economically. Thus product then goes into the market testing. Modern (1991, pp. 253 – 255) points out that product testing is the detailed testing and evaluation of prototypes and pre-production models.
The people selected for the testing process will be asked to respond to and evaluate the various characteristics and attributes of the product sample they are given. An attempt is also made to evaluate their likely “intention to buy” when the product is compared with it’s competitors at a variety of suggested prices. After management is satisfy with the products functional performance, the product is ready to be given a brand name, packaging and a preliminary marketing programme to test it sin more authentic consumer setting.
This is the stage where the entire product and marketing programme is tried out first in a limited geographical area to determine if the product should be introduced to the national marketing. Test marketing is risky. It not only test ideas for the company but also give information to the competitors, but not testing is also dangerous too.
Several major objectives are accomplished by a market test. For one, it serves as a control function for management. The company can gain information and experience with the product before marketing it on a large scale. For another, market testing predicts sales for the product.
Furthermore, unit volume of sales are closely monitored during the market test; reactions to and evaluation of the product is sought from consumers, wholesalers and retailer including the financial and managerial resources of the firm, time pressure imposed by the competitors, and the innovativeness of he product itself.
Where the company is small and unknown, and the risk of a traditional market test is so high, such organization may utilize a mini market test. Developing a successful prototype can take days, weeks or even years. The laboratory scientists must not only design the required functional characteristics but must also know how to communicate physiological aspects through physical uses. When the prototypes are ready, they must be put through rigorous functional and consumer tests. The functional tests are conducted under laboratory and field conditions to make sure that the product performs safety and effectively.
—This article is not complete———–This article is not complete————
This article was extracted from a Project Research Work/Material Topic
“STRATEGIES FOR INTRODUCING A NEW PRODUCT IN THE MARKET
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