1. Read text 5 and speak on the product development. Text 5. Phases of New Product Development

Before a new product is introduced, it goes through seven phases.

1. Idea Generation. Idea generation involves looking for product ideas that will help a firm achieve its objectives. Although some organizations get their ideas almost by chance, firms trying to maximize product-mix effectiveness usu­ally systematically generate new-product ideas. Ideas may come from marketing managers, researchers, engineers, competitors, advertising agencies, management consul­tants, private research organizations, or customers.

2. Screening. During screening, ideas that do not match organiza­tional resources and objectives are rejected. At this stage, firms must ask whether they can develop and market a product. Management may reject a good idea because the company lacks needed skills and abilities. The largest number of product ideas is rejected during the scree­ning phase.

3. Concept Testing. Concept testing is a phase in which a small group of potential buyers is presented with a product idea through a written or oral description (and perhaps a few drawings) to determine their attitudes and initial buying intentions regarding the product. An organization can test one or several concepts of the same product. Concept testing is a low-cost means for an organization to determine con­sumers' initial reactions to a product idea prior to invest­ing considerable resources in product research and deve­lopment. Product development personnel can use the re­sults of concept testing to improve product attributes and product benefits that are most important to potential customers. The types of questions asked vary considerable depending on the type of product idea tested. Examples of typical questions are the following:

— Which benefits of the proposed product are espe­cially attractive to you?

— Which features are of little or no interest to you?

— What are the primary advantages of the proposed product over the one you currently use?

— If this product were available at an appropriate price, how often would you buy it?

— How could this proposed product be improved?

4. Business Analysis. Business analysis provides a tentative outline of a product's position in the marketplace, including its probable profitability. During this stage, the firm considers how the new product, if it were introduced, would affect the firm's sales, costs, and profits. Marketing personnel usually work up preliminary sales and cost projections at this point, with the help of R&D (research and development) and production managers.

5. Product Development. In the product development phase, the company must find out first if it is technically feasible to produce the product and then if the product can be made at costs low enough to justify a reasonable price. If a product idea makes it to this point, it is transformed into a working model, or prototype.

6. Test Marketing. Test marketing is the limited introduction of a product in several towns or cities chosen to represent the inten­ded market. Its aim is to determine buyers' probable reac­tions. The product is left in the test markets long enough to give buyers a chance to repurchase the product if they are so inclined. Marketers can experiment with adverti­sing, pricing, and packaging in different test areas and can measure the extent of brand awareness, brand switching, and repeat purchases that result from alterations in the marketing mix.

7. Commercialization. During commercialization, plans for full-scale manu­facturing and marketing must be refined and completed, and budgets for the project must be prepared. In the early part of the commercialization phase, marketing management analyzes the results of test marketing to find out what changes in the marketing mix are needed before the product is introduced. The results of test marketing may tell the marketers, for example, to change one or more of the product's physical attributes, to modify the distribution plans to include more retail outlets, to alter promotional efforts, or to change the product's price. Pro­ducts are not usually introduced nationwide overnight. Most new products are marketed in stages, beginning in selected geographic areas and expanding into adjacent areas over a period of time.

8. Why do Products Fail? Why does a new product fail? Mainly because the pro­duct and its marketing program are not planned and tested as completely as they should be. For example, to save on development costs, a firm may market-test its product but not its entire marketing mix. Or a firm may market a new product before all the «bugs» have been worked out. Or, when problems show up in the testing stage, a firm may try to recover its product development costs by push­ing ahead with full-scale marketing. Finally, some firms try to market new products with inadequate financing.