New Product Development And Test Marketing

NEW PRODUCT DEVELOPMENT AND TEST MARKETING

12/01/09

HITESH SONKAR MBA MARKETING

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Outline      

NPD N P D Process Test Marketing Uses of Test Marketing Types of Test Marketing Guidelines for Designing Market Tests

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NPD 

Why?  Poor Sales/Failure of current Product Range  Complaints about its Product  According to Product Life cycle stages 

Ways of Carrying it out:  By adapting, modifying, magnifying, minimizing, substituting, or combining the existing features of a product  Different Quality Versions of the existing Products  Additional Models and sizes of the existing Product HITESH SONKAR MBA MARKETING 12/01/09 3 

R1 – R15: new product development by adopting

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New Product Development Process       

Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization

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N P D Process Step 1. Idea Generation 



Systematic Search for New Product Ideas from     

Internal sources Customers Competitors Distributors Suppliers

      

Attribute Listing Forced Relationship Problem Analysis- Customer Complaint analysis Brainstorming Mind Mapping Reverse assumption Analysis

By

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Step 2. Idea Screening  

Process to spot good ideas and drop poor ones Criteria  Market

need?  Offers Value?  Development Time & Costs?  Manufacturing Costs?  Rate of Return?  How can it be distinctively marketed?  12/01/09

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Step 3. Concept Development & Testing

Concept Testing P u rp o s e s o f c o n c e p t t e s t in g :

Data collection methods include:

nDetermine

nFocus

customer attitude towards the product concept or idea. nMeasure customers’ reaction towards the product’s attributes, e.g.. packaging, color, size, etc.. nPredict the trial rate of the intended product nprovide guidance on how the concept might be improved or re-defined.

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group discussion nSurvey Research qNot very easy qQuestions are to be formulated carefully to capture and effectively communicate the spark of an idea. nDemonstration

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Questions to ask the customers:      

Communicability and believability Need Level Gap Level Perceived Value Purchase Intention User, Purchase Occasions, Purchasing Frequency

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Step 4 Marketing Strategy Statement Formulation Part Part One One -- Overall: Overall:

Target Target Market Market Planned Planned Product Product Positioning Positioning Sales Sales & & Profit Profit Goals Goals Market Market Share Share

Part Part Two Two -- Short-Term: Short-Term: Product’s Product’s Planned Planned Price Price Distribution Distribution Marketing Marketing Budget Budget

Part Part Three Three -- Long-Term: Long-Term: 12/01/09

Sales Sales & & Profit Profit Goals Goals Marketing Mix HITESH SONKAR MBAStrategy MARKETING Marketing Mix Strategy

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Step 5 Business Analysis

Step 6 Product Development 

Quality Function Deployment (QFD)

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List of Desired Customer Attributes (CAs)generated by M.R Turn them to Engineering attributes(EAs)

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Physical Prototypes Customer tests: Alpha and Beta Testing

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Some Prototypes

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Market Testing  

“Controlled experiment, done in a limited but carefully selected part of the market, whose aim is to predict the sales or profit consequences, either in absolute or relative terms, of one or more proposed marketing actions”

 

Managerial Control Tool:  Evaluation of Alternative Marketing Variables Reduce the commercial risk

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Predictive Research Tool

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Market Potential

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Types Standard Standard Test TestMarket Market

Controlled Controlled Test TestMarket Market

Full Fullmarketing marketing campaign campaign in a small in a smallnumber number ofof representative representative cities. cities.

AAfew fewstores storesthat thathave have agreed to carry new agreed to carry new products productsfor foraafee. fee. Controlled shelf Controlled shelf position position

Simulated Simulated Test Testmarket market Test Testininaasimulated simulated Shopping Shopping environment environment totoaasample sampleofof Consumers. Consumers. 12/01/09

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Test Markets: some major decisions 

How many cities?

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Which cities?

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Length of test?

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What Information to be collected?

 

What action to take? Trial Rate/ Repurchase rate

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Approaches to measure performance of the test product 

Three Approaches: Testing against a standard product  Test Product --> brand leader  Horse Racing Alternative e.g. LML Freedom  Several test products are developed for testing against one another to determine which one attains the highest level of consumer acceptance.  Testing against a historical standard  Test product --> Performance of a successful product which may not be involved in the test. A seldom used HITESH SONKAR MBA MARKETING 18 technique. 

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Typical Information Gathered 

Awareness level;

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Purchase and repurchase rate;

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Users’ experience with the product;

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Users’ perception of the product;

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Users’ profile and lifestyles;

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Reasons for not using products;

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Market share.

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Designing Market Tests 

Guidelines:



 Market Test should be representative of the, whole market under consideration. Run it at least for a year. Control all your extraneous Variables as far as possible. Only One variable to be tested at a time.   

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Step 7 Commercialization  

Production and Marketing Highest cost incurred to the company

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  

When: First Entry, Parallel Entry, Late Entry Where? To whom? How?

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      

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Thank you

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