Why do firms create new products?
- adapt to changing customer needs
- managing risk through diversity
- adapt to fashion cycles and trends
- avoid market saturation
steps in new product development
- idea generation
- concept testing
- product development
- market testing
- product launch
- evaluation of results
How do companies generate ideas?
- customer feedback
- competitor analysis
- market research
what is concept testing?
presenting ideas to potential customers for feedback
benefits of concept testing
- reduce risk
- customer-focused
what is product development?
create prototype and test for feedback
types of testing in product development
- alpha
- beta
what is alpha testing?
internal by employees
what is beta testing?
real-world testing by selected customers
types of market testing
premarket tests
test marketing
what is premarket test?
feedback and surveys
what is test marketing?
mini product launch, monitor sales and feedback
what is product launch
introduce product to whole market
elements of product launch
- financial resources
- coordination of marketing mix
product life cycle stages
- introduction
- growth
- maturity (saturation)
- decline
What happens in the introduction?
- low sales
- financial losses
- high cost per customer
- few competitors
- no profit to cover cost of R&D
what happens in growth?
- sales increase
- lower cost per customer
- more profit
- more competitors and customers
what happens in maturity (saturation)?
- peak sales
- lowest cost per customer
- high profit
what happens in decline
- falling sales
- cost per customer is low
- profits decrease
- number of competitor decreases
