INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process

<< INTERNATIONAL MARKETING MIX – PRODUCT POLICY:Issues in labeling, Pricing, Distribution

PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing, >>

International Marketing MKT630

Lesson # 41

INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS

In business and engineering, new product development (NPD) is the term used to describe the

complete process of bringing a new product or service to market. There are two parallel paths involved

in the NPD process : one involves the idea generation, product design, and detail engineering ; the other

involves market research and marketing analysis. Companies typically see new product development as

the first stage in generating and commercializing new products within the overall strategic process of

product life cycle management used to maintain or grow their market share.

Categories of new products:

· Six categories of new products in terms of their newness to the company and to the market

place:

New-to-the-world products

· new products that create an entirely mew market

New product-lines

· new products that allow a company to enter an established market for the first time

Additions to existing product-lines

· new products that supplement a company's established product lines (package sizes, flavors,

so on)

Improvements or revisions to existing products

· new products that provide improved performance or greater perceived value and replace

existing products

Repositioning

· existing products that are targeted to new markets or new market segments

Cost reductions

· new products that provide similar performance at lower cost

Issues in new product development:

The companies need the development of original products, product improvements, product

modifications & new brands on a consistent basis to survive competition but most new products fail.

· New-product failure

nearly 80% of new packaged consumer goods & line extensions fail

nearly 33% of new industrial products fail at launch

· New successful products

are unique superior products

· higher quality, new features & offer higher value

have well-defined concept

· by carefully defining and assessing the target markets, product requirements & benefits

To remain successful companies must continuously develop new products - but the odds weigh heavily

against success. The solution lies in strong new-product planning

Successful new products are the ones;

that have relative advantage

have compatibility with other technology and distribution systems

124

International Marketing MKT630

allow trialability / divisibility for buyers to try and learn

can be judged through observation

just right in terms of complexity of technology and use

offer value for the price

The new product development process:

Successful new product development process consists of eight major steps;

1. Idea generation:

systematic search for new-product ideas

internal sources

customers

competitors

distributors

suppliers

others

2. Idea screening:

to spot good ideas and drop poor ones

- is the product truly useful to consumers & society

- availability of market

- does it mesh well with company's objectives & strategies

- do we have the people, skills & resources to make it succeed

- does it deliver more value to customers than competing products

- is it easy to advertise and distribute

- availability of technology

- availability of raw materials

- risk exposure, profitability, cost/benefit

- government priority

- any other factor

- CRITICAL SUCCESS FACTOR

3. Concept development & testing

product concept is a detailed version of the new-product idea stated in meaningful consumer

terms

concept development - a new product idea is developed into alternative product concepts

concept testing - calls for testing new-product concepts with groups of target customers

4. Marketing strategy development

describe target market

planned product positioning

planned sales & market share

& profit goals for first few years

5. Business analysis

a review of the sales, costs & profit projections for a new product to find out whether these

factors satisfy the company's objectives

sales forecast

estimation of costs & profits

125

International Marketing MKT630

6. Product development

7. Test marketing - in realistic market setting

8. Commercialization (launch)

Introducing new products to the world markets:

Waterfall Model:

- Global phased roll out new products tickle down in a cascade like manner.

Sprinkler Model:

- Simultaneous worldwide entry.

- Growing prominence of universal segments.

- Concerns about competitive pre-emption in the foreign markets.

The waterfall strategy of segmentation entry is preferable over the sprinkler model when ;

The lifecycle of the products is relatively long

Non-favorable conditions govern the foreign market, such as:

· Small foreign markets (compared to home market)

· Slow growth

· High fixed cost of entry

Weak competitive climate exists in the foreign market, because of such things as

· Very weak local competitors

· Competitors willing to cooperate

· No competitors

Superior quality can reduce a customer's life-cycle ownership costs, enhancing customer loyalty, repeat

buying, and word-of-mouth advertising ISO 9004 suggests the roles that marketing should play:

Take the lead in establishing quality requirements for the company by determining customer

needs and communicating them throughout the company

Translate customers needs into specifications including performance and sensory characteristics,

installation configuration, statutory and technical standards, packaging and quality standards

Set up an information system to monitor customer satisfaction and dissatisfaction, and feedback

such pertinent information to facilitate design and manufacturing changes

Develop early warning systems to spot performance problems with new-product introductions;

continuously monitor product performance against quality specifications such as reliability and

safety, and track and analyze customer complaints so that corrective action can be taken in design

and manufacturing

126

Table of Contents: