NEW PRODUCT

DEVELOPMENT AND TEST

MARKETING

12/01/09 HITESH SONKAR MBA MARKETING 1

 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

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Product HITESH SONKAR MBA MARKETING 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
 By
 Attribute Listing
 Forced Relationship
 Problem Analysis- Customer Complaint analysis
 Brainstorming
 Mind Mapping
 Reverse assumption Analysis


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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?

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8 HITESH SONKAR MBA MARKETING 12/01/09
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Testing
Step 3. Concept Development &
 Concept Testing
P u rp o s e s o f c o n c e p t Data collection methods
t e s t in g : include:
nDetermine nFocus group discussion
customer attitude towards the
nSurvey Research
product concept or idea.
qNot very easy
nMeasure customers’ reaction towards the
qQuestions are to be
product’s attributes, e.g.. packaging,
color, size, etc.. formulated
carefully to
nPredict the trial rate of the intended
capture and
product effectively
nprovide guidance on how the concept communicate the
might be improved or re-defined. 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:
Sales
Sales && Profit
Profit Goals
Goals
12/01/09 Marketing
Marketing Mix
HITESH SONKAR MBAStrategy
Mix Strategy
MARKETING 11
12 HITESH SONKAR MBA MARKETING 12/01/09
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Step 5 Business Analysis
 Step 6 Product
Development
 Quality Function Deployment (QFD)


 List of Desired Customer Attributes

(CAs)generated by M.R
 Turn them to Engineering attributes(EAs)


 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

 Predictive Research Tool

 Market Potential


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 Types
Standard
Standard
Test
TestMarket
Market Controlled
Controlled
Full Test
TestMarket
Market
Fullmarketing
marketing
campaign AAfew
in
campaign fewstores
storesthat
thathave
have
in a smallnumber
a small number agreed to carry new
agreed to carry new
ofof products
representative productsfor
foraafee.
fee.
representative Controlled shelf
Controlled shelf
cities.
cities. position
position

Simulated
Simulated
Test
Testmarket
market
Test
Testininaasimulated
simulated
Shopping
Shopping
environment
environment
totoaasample
sampleofof
Consumers.
Consumers.

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 Test Markets: some major
decisions
 How many cities?


 Which cities?


 Length of test?


 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
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technique.
HITESH SONKAR MBA MARKETING 18
 Typical Information
Gathered
 Awareness level;

 Purchase and repurchase rate;

 Users’ experience with the product;

 Users’ perception of the product;

 Users’ profile and lifestyles;

 Reasons for not using products;

 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


 When: First Entry, Parallel Entry, Late

Entry
 Where?
 To whom?
 How?

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 


 Thank you

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