The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts.
Major Stages in New-Product Development
Idea generation, Ideascreening, Concept development and testing, Marketing strategy development, Business analysis, Product development, Test marketing, Commercialization
Inviting broad communities of people—customers, employees, independent, scientists and researchers, and even the public at large—into the new-product innovation process.
Screening new-product ideas to spot good ideas and drop poor ones as soon as possible.
A detailed version of the new-product idea stated in meaningful consumer terms
Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
Marketing strategy development
Designing an initial marketing strategy for a new product based on the product concept.
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives.
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.
The stage of new-product development in which the product and its proposed marketing program are tested in realistic market settings.
Introducing a new product into the market.
Customer-centered new-product development
New-product development that focuses on finding new ways to solve customer problems and create more customer satisfying experiences.
Team-based new-product development
An approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness.
Product life cycle (PLC)
The course of a product’s sales and profits over its lifetime.
A basic and distinctive mode of expression.
A currently accepted or popular style in a given field.
A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.
The PLC stage in which the company finds and develops a new-product idea
The PLC stage in which a new product is first distributed and made available for purchase.
The PLC stage in which a product’s sales start climbing quickly.
The PLC stage in which a product’s sales growth slows or levels off.
The PLC stage in which a product’s sales decline.
The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service.
Major pricing strategies
customer value-based pricing, cost-based pricing, and competition-based pricing
Customer value-based pricing
Setting price based on buyers’ perceptions of value rather than on the seller’s cost.
Offering the right combination of quality and good service at a fair price.
Attaching value-added features and services to differentiate a company’s offers and charging higher prices.
Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Experience curve (learning curve)
The drop in the average per-unit production cost that comes with accumulated production experience.
Cost-plus pricing (markup pricing)
Adding a standard markup to the cost of the product.
Break-even pricing (target return pricing)
Setting price to break even on the costs of making and marketing a product or setting price to make a target return.
Setting prices based on competitors’ strategies, prices, costs, and market offerings.
Pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met
A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged.
A measure of the sensitivity of demand to changes in price