How to Develop and Market New Consumer Products

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  • 0:05 It Starts with a Consumer Need
  • 0:32 New Product…
  • 1:23 Creating the New Product
  • 3:23 Selling the New Product
  • 5:55 Lesson Summary
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Lesson Transcript
Instructor: John McLaughlin
In this lesson, you will learn the six stages of the new product development process that companies use when they develop new consumer products. You'll also learn why it is important for companies that develop new consumer products to use this process.

It Starts with a Consumer Need

Vince the Vampire has a problem. After years of delivering pizza at night, he has just started his new day job delivering flowers. Like all vampires, Vince is very sensitive to sunlight and is having trouble reading the delivery addresses in the bright sun. Vince has tried everything to shield his eyes from the glare of the sun. His latest solution is to wear two pair of sunglasses, which eliminates the glare but has its drawbacks.

New Product Development Process

As luck would have it, one day Vince runs into the president of Cool Dude Shades. Vince explains the situation to him, and the president says he will try to help him with his problem.

All new consumer products start with a consumer need. In order for a new product to be introduced into the marketplace, it must first successfully pass through a six-stage process known as the new product development process. This is a six-stage process in which potential new products are evaluated. This process involves people from many different departments of the company that develop the new product. The potential new product can be terminated at any of these six stages if the introducing company finds that developing the new product is likely to be an unprofitable venture. The six stages of the product development process are...

Creating the New Product

Idea generation stage - This is when the creation of new product ideas takes place. This is the first stage of the new product development process. Once the consumer need has been identified, company scientists look for a solution that will solve this consumer problem. The president of Cool Dude Shades explains the problem to his research team: Vampires who must be out in the sunlight need a very strong sunshade to protect their sensitive eyes. After much trial and error, the scientists develop three possible solutions to this consumer problem: sunglasses with very dark lenses, a hat with an oversize brim, and a goggle with a dark mesh lens.

During the idea generation stage, a company comes up with multiple ideas to solve a consumer problem.
Idea Generation Stage

Next, the process moves to the idea screening stage, or the analysis of new product ideas. In this stage of the new product development process, marketers decide which ideas to develop further and which ideas to reject. Marketers also research products currently available in the marketplace that attempt to solve the same consumer problem. The executives at Cool Dude Shades find that no companies are currently marketing a sun shade for vampires. They eliminate the hat, which is out of the scope of their current production capabilities, but continue to consider the dark glass lens and the mesh lens as solutions to this consumer problem.

Once the company thinks they have some quality new product concepts, the concept development stage begins. This is when the company beings the testing of the new product ideas. In this stage, the potential products that remain are further developed and shown to potential consumers. The marketers at Cool Dude Shades show the two possible solutions to a test panel of vampires. The test panel finds that the dark glass lenses are effective at blocking the sunlight but are too difficult to see through. The goggles with the mesh lenses do an excellent job of blocking sunlight and allow for great visibility. The test panel of vampires seems genuinely excited about this potential new product.

Selling the New Product

Now, Cool Dude Shades moves into the market strategy stage. This is the stage when the company begins marketing the new product concept. Marketers identify their target market and determine the best way to promote their new product to this target market. The marketers determine how to effectively use each of the four 'Ps' of marketing: product, price, place, and promotion. The marketers at Cool Dude Shades learn that vampires like to wear the latest fashions and decide to run a full-page print ad in a variety of fashion magazines to introduce their new goggles. They determine the price for their new product and decide to sell them through their existing sunglasses retailers.

The new product concept is marketed during the market strategy stage.
Market Strategy Stage

If the company believes they have a product that meets the needs of their target market, they begin the product development stage. This is the stage where creating the new product concept happens. At this stage of the process, the new product is given a brand name and packaging is created. The new product is test-marketed in certain areas to gauge its acceptance by the target market. The marketers at Cool Dude Shades decide on a name for their new product - 'Goth Goggles.' They create a flexible case for the Goth Goggles and decide to test-market them in three cities in Arizona (where many vampires live and it is sunny most of the time).

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