WHAT IS PRODUCT DEVELOPMENT

Product development

Product development includes a number of decisions, namely, what to manufacture or buy, how to have its packaging, how to fix its price and how to sell it, In case of a manufacturing organization, the production department will develop and produce products on the advice of the marketing department because it is the marketing department which knows better the requirements of the customer. In case of purely trading organization, the purchase department will procure those products as are suggested by the marketing department. The work of product planning and development will be performed by the marketing department itself.

Product development process

  New product development consists of the creation  of new ideas, their evaluation in terms of sales potentials an profitability, production facilities, resources available, designing and production testing and marketing  of the product,. The main task of the product planners is to identify specific customer needs and expectations and align company’s capabilities with the changing market demand. In each of these stages, the management must decide:

(a) Whether to more on to the next stag, (b) to abandon the product, or (c) to seek additional information.

    Whatever may be nature of operation of a concern, product, planning and development is necessary for its survival and growth in the long-run. Every product has a life-cycle and it becomes obsolete after the competition of its life-cycle., Therefore, it is essential to develop new products and' alter or    improve the existing ones to meet the requirements of customers.   

One of the most common product planning problems relates with additional of new products to the existing product line. Addition of new products involves generation of new' product ideas, appraisal of various possibilities, economic analysis, product development, product testing, test marketing and developing markets. Another important problem of product planning is modification-­or elimination of existing products. The need for continuous modification of the product is great because society's needs are 'always changing and improved products must be introduced to fulfill them. All products have certain deficiencies as they are the result of a great many compromises. The perfect product has yet to be made. Research makes possible the reduction of these deficiencies and brings about improved products.

STAGES IN NEW PRODUCT development

        Product development does not just happen, it bas to be planned. Dynamic Firms plan their innovations for five to ten year in advance.  They have a definite idea of exactly what product developments they want and what new products they will need to cater to the demands of their customers. Experience has shown that those firms which are most successful .in developing marketable products are the ones which have formally recognized the function of product planning and development. The function of planning and developing new products involves six stages.

(i) Generation of New Product Ideas: 

The product planners must visualize new product ideas" Ideas may be contributed by professional designers, scientists, customers, sales force, dealers, competitors,  etc.  Ideas may also come from brainstorming sessions of management. It may be noted that the source of ideas is not as important as the firm's system for stimulating new ideas and then acknowledging them and reviewing them promptly.

        New product ideas may come from company's research and development department, managers, salespersons, consumers or industrial users, mid­dlemen, company suppliers of raw material governmental agencies, com­pany competitors and their ,products, trade associates, private research organizations, inventors, exhibits and, trade fairs, wholesaler's and  retailer’s advertising agencies, commercial laboratories and trade journals, etc. Ideas may also come from "brainstorming”, sessions of management suggestions from employees, engineers, and other outside' sources of both solicited and unsolicited. Consumers', complaints or dissatisfaction can also be the source of new ideas. The consumers are said to be one of the sources. As would be clear from the observation made by Cannon and Wichert, "A meat packer began producing onion soup at the suggestion of a, company executive's wife. A pottery manufacturer produced a new vase after 'viewing museum exhibit. A producer of office machinery developed an envelope opening device as a result of thorough examination of a wholesaler's catalogues and several interviews with office managers. A chemical firm began manufacturing a detergent after extensive laboratory research.

(ii) Detailed Study of New Product Ideas: 

The ideas generated at the first stage are examined to eliminate those which have no potential or which are capable of making any significant contribution to the marketing objec­tives; the ideas should be screened properly because any idea passing this stage would cost the firm both money arid time. This involves evaluating the company's capabilities with respect to scientific knowledge and technical skills in terms of possible new products and product improvements. The basic idea is to find out which ideas warrant further study. The screening should be rigorous enough to eliminate poor stuff, but not so rigorous as to eliminate potential good possibilities. The list of information required in evaluating new product possibilities should be' drawn up-in such a way as to throw some light on the profit possibilities, the risk arid cost of capital involved.

(iii) Commercial Feasibility. 

The product planners evaluate the nature and importance of market needs and appraise the extent to which present - products fulfill them. They evaluate new ideas in the light of the company’s capability with respect to scientific knowledge, technological skills and finan­cial resources. Only the most feasible and profitable ideas are picked up for further detailed investigation.

(iv) Product Development. 

This phase relates to actual development of the new product based on the product data evaluation system. A program is made for the proper development of the product. , First of all, precise description of the features of the proposed product should be studied. After this, selected consumers 'may be called upon to offer their comments on the proposed product. Decisions regarding branding, packaging, labeling, etc., are also made during this phase. When the product likes a tangible form, consumer testing can be done. Consumer testing will provide the ground for final selection of the product for mass production and 'distribution.

(v) Test Marketing. 

Test marketing is necessary to find out viability of marketing program for large-scale distribution. Before the product is widely distributed, it is tried in a selected market. It is also known as mini-market testing. Customers’ reaction may be noted and product may be improved further, if necessary.

Test marketing allows greater control over the new product. If there are defects in the product, it could be withdrawn from the market quickly without ­ any loss to the reputation of the firm. Test marketing is generally. done by consumer  goods companies rather than by industrial goods firms who usually tryout new products with selected customers or obtain general reactions by having their sales people demonstrate products when they make their rounds. The following precautious must be observed during the stage of test marketing:

(a) Don't confuse 'test-marketing ' with 'concept testing'. Test market­ing is supposed to test the complete plan, not simply the 'product concept'"

 (b) Don't test too early in the development program. Wait till the complete entry plan has been prepared.    

(c) Don't select test markets without careful study.

(d) Don't move in haste. Allow enough time to get results.

(e) Don't forget to have a control market. It is important for estimating' the impact of competitive efforts, personality. Etc.     

The possible benefits of test marketing areas under:

(i) It offers an opportunity to examine the product in a natural marketing environment to obtain a measure of its sales perfor­mance.

(ii) It can identify weakness in the product or in the overall marketing plan.

(iii) It helps the management to develop, a profile of potential cus­tomers and their purchasing habits.

(iv) It enables the marketing manager to evaluate, alternative marketing strategies.

 (v) It offers an opportunity to compare consumer reactions to the test product and competing product

(vi) Commercialization. After the test marketing gives green signal for the introduction of product in the national market, the firm may proceed to finalize all features of the product. The marketing department will launch a full fledged production promotion, campaign for mass distribution. Distribu­tion' channels will be chosen to make available the product wherever it is demanded. After this, the life cycle of the product will start and the marketing manager will adopt different strategies during different stages of the product life cycle to maximize sales volume. Necessary improvements in the product may also be introduced as and when necessary in the light of changed customer requirements and innovations in technology.      

Each of the above stages becomes progressively more expensive in terms of money and scarce manpower. But once the produce idea passes through these stages and careful analysis has been .done at each stage, the chances of product failure will be reduced considerably.

 

Tag: Product Life cycle, Product development, product development Process, MBA marketing, Product development cycle, Product development ideas