Managing Existing Products

Marketing strategies developed for initial product introduction almost certainly need to be revised as the product settles into the market.  While commercialization may be the last step in the new product development process it is just the beginning of managing the product.  Adjusting the product’s marketing strategy is required for many reasons including:

• Changing customer tastes
• Domestic and foreign competitors
• Economic conditions
• Technological advances

To stay on top of all possible threats the marketer must monitor all aspects of the marketing mix and make changes as needed.  Such efforts require the marketer to develop and refine the product’s marketing plan on a regular basis.  In fact, as we will discuss in a later section of this tutorial, marketing strategies change as a product moves through time leading to the concept called the Product Life Cycle (PLC).  We will see that marketers make numerous revisions to their strategy as product move through different stage of the PLC.

Step 4. BUSINESS ANALYSIS

At this point in the new product development process the marketer has reduced a potentially large number of ideas down to one or two options.  Now in Step 4 the process becomes very dependent on market research as efforts are made to analyze the viability of the product ideas.  (Note, in many cases the product has not been produced and still remains only an idea.)  The key objective at this stage is to obtain useful forecasts of market size (e.g., overall demand), operational costs (e.g., production costs) and financial projections (e.g., sales and profits).  Additionally, the organization must determine if the product will fit within the company’s overall mission and strategy.  Much effort is directed at both internal research, such as discussions with production and purchasing personnel, and external marketing research, such as customer and distributor surveys, secondary research, and competitor analysis.

Step 5. PRODUCT AND MARKETING MIX DEVELOPMENT

Ideas passing through business analysis are given serious consideration for development.  Companies direct their research and development teams to construct an initial design or prototype of the idea.  Marketers also begin to construct a marketing plan for the product.  Once the prototype is ready the marketer seeks customer input.  However, unlike the concept testing stage where customers were only exposed to the idea, in this step the customer gets to experience the real product as well as other aspects of the marketing mix, such as advertising, pricing, and distribution options (e.g., retail store, direct from company, etc.).  Favorable customer reaction helps solidify the marketer’s decision to introduce the product and also provides other valuable information such as estimated purchase rates and understanding how the product will be used by the customer.  Reaction that is less favorable may suggest the need for adjustments to elements of the marketing mix.  Once these are made the marketer may again have the customer test the product.  In addition to gaining customer feedback, this step is used to gauge the feasibility of large-scale, cost effective production for manufactured products.

Step 1. IDEA GENERATION

The first step of new product development requires gathering ideas to be evaluated as potential product options. For many companies idea generation is an ongoing process with contributions from inside and outside the organization. Many market research techniques are used to encourage ideas including: running focus groups with consumers, channel members, and the company’s sales force; encouraging customer comments and suggestions via toll-free telephone numbers and website forms; and gaining insight on competitive product developments through secondary data sources. One important research technique used to generate ideas is brainstorming where open-minded, creative thinkers from inside and outside the company gather and share ideas. The dynamic nature of group members floating ideas, where one idea often sparks another idea, can yield a wide range of possible products that can be further pursued.

Step 2. SCREENING

In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to isolate the most attractive options. Depending on the number of ideas, screening may be done in rounds with the first round involving company executives judging the feasibility of ideas while successive rounds may utilize more advanced research techniques. As the ideas are whittled down to a few attractive options, rough estimates are made of an idea’s potential in terms of sales, production costs, profit potential, and competitors’ response if the product is introduced. Acceptable ideas move on to the next step.

Step 3. CONCEPT DEVELOPMENT AND TESTING

With a few ideas in hand the marketer now attempts to obtain initial feedback from customers, distributors and its own employees. Generally, focus groups are convened where the ideas are presented to a group, often in the form of concept board presentations (i.e., storyboards) and not in actual working form. For instance, customers may be shown a concept board displaying drawings of a product idea or even an advertisement featuring the product. In some cases focus groups are exposed to a mock-up of the ideas, which is a physical but generally non-functional version of product idea. During focus groups with customers the marketer seeks information that may include: likes and dislike of the concept; level of interest in purchasing the product; frequency of purchase (used to help forecast demand); and price points to determine how much customers are willing to spend to acquire the product.