New Product Planning

Product Life Cycle Analysis for B2B and B2C Products

George · November 10, 2018 ·

Product Life Cycle Analysis B2B B2C Products

Boost Your Revenues and Profits with a Product Life Cycle Analysis.

Most marketing executives are by now familiar with the concept of the product life cycle and product life cycle analysis.

Evaluating the performance of the product portfolio provides management with information to guide product strategies of new products, product modifications, and product elimination.

As you read through this article and product life cycle examples 2021, think about how they apply to your situation. Product life cycles are shrinking.

The article will cover:

What is the product life cycle
Product life cycle stages
What are the 5 stages of product life cycle
Product life cycle management
Product life cycle examples
Product life cycle diagram
Product life cycle theory
A product life cycle pdf

What is the product life cycle?

The product life cycle is an essential concept in marketing. Does it describe the stages a product goes through from when it was first thought of until it finally is removed from the market?

The strategic analysis of existing products requires tracking the performance of the products in the portfolio, shown in Exhibit 1.

Marketing management must establish the parameters and levels of performance for gauging product performance. The life cycle analysis of a product helps you determine what the next steps are in its journey.

The final decline stage of the product life cycle might lead to retirement or product upgrade. That is why the product life cycle analysis is so critical.

These may include both financial and non-financial factors. The demand and cost interrelationships among products, an information system is needed.

A system like marketing analytics platforms to measure how well a particular product is doing.

Marketing analytic systems provide that help and include companies like Adobe Analytics, Google, and Cherwell Software. These systems can help evaluate your products in the mix. These systems are essential for both B2B and B2C companies.

The purpose of the tracking system is to maintain a product review process that will spot problem products. Marketing management can use analytic reports to help select a strategy for eliminating the problem.

Corrective actions may include adding new products, cost reduction, product Improvement, marketing strategy changes, or product elimination.

I used several methods to perform a strategic analysis of our product portfolio. Product life cycle analysis, product portfolio analysis, and positioning analysis will be discussed.

It will explain the kinds of information used in analyzing product performance and identifying product strategy options.

Make it Easier to Plan Your Marketing Strategy and Improve Results.

The right marketing tools make it easier to plan your marketing strategy and improve results.

Download The Marketing PLanning Tool

Product Life Cycle

If you’ve read some of my posts before then you will understand the product life cycle. However, let me explain it again.

So, before we get too far into the discussion it’s important that you understand what the product life cycle is. Products, like people, move through life cycles.

The product type or a variant of interest should correspond to a defined market need. Life cycle analysis can also focus on a market segment within a product market.

Sales began when the product is introduced and increased over time. Profits initially lag behind sales since heavy introductory expenses often exceed sales during the initial stage. Industry sales and profits decline after the product reaches maturity.

Often profits fall off before sales.

The product life cycle portrays the sales history of a typical product by following an S-shaped curve.

The curve is typically divided into four stages known as introduction, growth, maturity, and decline.

Introduction Stage. This stage has a period of slow sales growth as the product is introduced in the market. Early adopters are the first to buy. Profits are inconsistent in the stage because of the heavy expense of product introduction.
Growth Stage. This stage shows rapid market acceptance and profit improvement.
Maturity Stage. The period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased marketing outlays to defend the product against the competition.
Decline Stage. The period when sales show a downward trend and profits decline.

Product Life Cycle Analysis

The product life cycle has several major stages and includes introduction, growth, maturity, and decline.

The important strategic issue in product life cycle analysis include:

Determining the length and rate of change of the product lifecycle.
Identifying the current product life stage and selecting the product strategy that corresponds to that stage.
Anticipating strategic threats and finding opportunities for changing and extending the product life cycle.

Rate of Change

The length of product life cycles is becoming shorter for many products. Microbrands are popping up every day like Casper Mattresses and Kylie Cosmetics, which have become overnight successes. There are, of course, wide variations in the length of the product life cycle stages for particular products.

Determining the rate of change of the product life cycle is important. Marketing management must adjust its marketing strategy to correspond to the changing conditions.

In short and rapidly changing product life cycle requires modifying marketing strategies in a dynamic environment. For example, the product life cycle for computers is relatively short.

In a few years, the product moved from its introduction into the growth stage, and now it is moving toward maturity. Fast movement through the product life cycle also creates the need to alter the cycle and/or introduce new products.

Stages and Strategy Identification

Now we focus on the product life cycle (PLC). The product life cycle portrays distinct stages in the sales history of a product.

Corresponding to these stages are distinct opportunities and problems with respect to marketing strategy and profit potential. By identifying the stage that a product is in, or maybe headed toward, companies can formulate better marketing plans.

The product life cycle stage of the product has implications regarding all aspects of targeting and positioning.

An analysis for selecting strategies for different situations, including the product life cycle stage of the product is critical. As the product move through the PLC strategy zones can be defined for each stage.

The strategy guidelines indicate the changing focus of marketing strategy over the product life cycle.

It is not always clear where our product is positioned in its product life cycle at a specific point in time. Analysis of the growth rate, sales trends, time since introduction, the intensity of competition, pricing strategies, end competitor entry or exit information is useful in positioning analysis.

Identifying when the product has moved from growth to maturity is more difficult than determining other stage positions. Also important is the analysis of industry structure and competition in estimating when a product has reached maturity.

Product Life Cycle Planning Model

Predicting the sales revenue of a product and identifying the factors that influence the shape and amplitude of the volume projections are important. A product life cycle model is used for short and long-range planning for both B2B and B2C businesses.

The model was designed for evaluating new product development projects. This modeling approach appears useful for predicting the product life cycle of an existing product as well. Estimating the timing and magnitude of the turning points of a successful product introduction is perfect for this model.

The product life cycle model determines sales volume by combining estimates of original purchases and replacements. Original purchases are forecasted using three predictor variables:

Consumer need
Number of competitors
Amount of advertising and promotional effort

Replacement estimates are a function of the products:

Useful life, the percent of owners who will replace it
The trade-off of repair versus replacement
Or the level of the initial purchases.

The validity test of the model predictions against actual product life cycles indicates a close correspondence between product life cycle shapes.

Tired of being overwhelmed and worried you’ll never grow your business?

Get Our Best Kept Secrets to Help You Grow Your Business.

YES – I Want To Join

Product Portfolio Analysis

The strategic analysis of the product portfolio determines if each product is measuring up to marketing management’s minimum performance criteria.

An assessment of the strengths and weaknesses of the product relative to other products in the portfolio is reviewed as well. A comparative analysis of products can be done with the grid method.

Portfolio grids show the differences among products. An analysis of performance factors may include the following:

Sales fluctuations
Profit contribution
Barriers to entry
The extent of capacity utilization
The nature of technology
Responsiveness of sales to price, promotional activities, service levels, and other influences
Alternative production and process opportunities
Environmental considerations

Several of these factors may be included in the product life cycle analysis. the great analysis can also compare competing brands of a particular product.

This type of analysis may be useful when brands are targeting different market segments. However, the market attractiveness dimensions of the grid will be constant across all brands targeting the market.

Positioning Analysis

Perceptual Maps offer powerful analysis tools for assessing products. The map is developed by obtaining preference information on a set of competing brands or companies from a sample of buyers.

Various product attributes are used, and the results are summarized in a two-dimensional preference map.

Competitive mapping analysis offers useful guidelines for strategic product positioning. The analysis can relate buyer preferences to different brands and indicate possible brand repositioning options.

The new product opportunities may also be identified through the analysis of preference maps. Positioning studies overtime can measure the impact of repositioning strategies.

Other Product Analysis Methods

Other product analysis methods include research studies that identify the relative importance of product selection criteria to buyers and rate brands against these criteria.

These techniques are useful in indicating brand strengths and weaknesses. Industry analysts (e.g., IDC and Gartner) and industry trade publications also publish market share and other brand performance data.

Product rating services such as those offered by Consumer Reports also provide useful evaluations of brands and products.

Online reviews can tell a lot about a product. Websites like G2Crowd and Capterra are great resources I use all the time.

Wrap Up

Products and markets have life cycles that call for changing marketing strategies over time. Every new product follows the product life cycle. It passes through the stages of emergence, accelerating growth phase, declining growth, maturity, and decline.

Companies must try to anticipate new add product attributes that the market wants. Profits go to those who introduced new.

Search for customer value benefits for new attributes can be based on empirical work, intuition, or needs hierarchy reasoning. successful marketing comes through creativity visualizing the market’s evolutionary potential. and this is where product portfolio analysis can be used for the product life cycle.

When was the last time you did a product life cycle analysis?

We’re listening.

Have something to say about product life cycle analysis? Share it with us on Facebook, Twitter or LinkedIn.

General FAQ’s

What is the product life cycle analysis?

The product life cycle analysis is a technique used to plot the progress of a product through its life span. The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the market. The life cycle has four stages – introduction, growth, maturity, and decline. While some products may stay in a prolonged maturity state, all products eventually phase-out of the market due to several factors, including saturation, increased competition, decreased demand, and dropping sales.

Why is a product life cycle analysis important?

The product life cycle is an essential concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market.

What is the purpose of the product life cycle?

The product life cycle is a necessary process in the management of any product and revolves around the introduction, growth, maturity, and decline stages. For emerging businesses, the product life cycle concept is an ideal tool that enables marketers to forecast future sales and plan new marketing strategies.

2021 Product Life Cycle Examples?

Example of the Product Life Cycle 2021
Introduction Electric self-driving cars. Electric self-driving cars are still at the testing stage, but firms hope to sell to early adopters. Watch VW ID.4, Bollinger B1 / B2, Ford Mustang Mach-E, Audi Q4 e-tron , and Q4 Sportback e-tron.
Growth Electric cars. For example, the Tesla Model S is in its growth phase.
Maturity Ford Focus and Honda Accord.
Decline Diesel cars.

How New Product Testing Fits Into the New Product Development Process

George · November 7, 2018 ·

New product testing is often required within the new product development process.

New product testing is essential for any product.

Guidelines for marketing strategies depend on the new product being developed. The new product requires a complete targeting and positioning strategy.

Product modification only needs a revised communication strategy to convey to target buyers information on the benefits offered by the improved product.

Regardless of how new the product actually is, the review and assessment of the product’s entire marketing strategy can help avoid problems and identify opportunities.

Your product or services must be tested and adapted to mark conditions. But do this with data. You can plug benchmark, expected, and real-time data into your reports.

How do you measure your sales pipeline by-product now? How about any digital transactions like website visitors? Conversion ratio by sales stage?

sales pipeline stages marketing funnel — Matrix Marketing Group

Marketing Decisions

Use test and product evaluation efforts conducted before product development often provide important information for designing a new product marketing strategy.

Such information includes potential buyer characteristics, product features, advantages over competing products, usage relations, feasible price range, and communication needs.

It is important to begin developing a marketing strategy as soon as possible in the process of new product planning since several activities must be completed. Marketing strategy analysis and planning should be initiated during product development.

Coordination activities such as packaging, product information, colors, materials, and product safety, must also be coordinated between engineering, manufacturing, and marketing.

Market Targeting

Selection of the market target(s) for the new product range from offering a new product to an existing target to identifying a new group of potential buyers.

A review of all prior marketing research for the new product may yield useful insights into targeting opportunities. It may also be necessary to test market the product before finalizing the market targeting strategy.

Positioning Strategy

Positioning must be resolved during the marketing strategy development stage. Product strategy regarding packaging, named selection, size, and other aspects of the product must be decided on. If new channels of distribution are used, the firm must develop a channel strategy.

Management must also formulate a pricing strategy. Research on price may be necessary to gain feedback on buyers’ responsiveness to alternative price levels.

The company needs to develop an advertising and sales promotion strategy, and testing of advertisements may occur at this stage. Finally, The Firm must select a personal selling strategy, including necessary salesforce training and adjustment in selling efforts.

Market Testing Options

Market testing can be considered after the product is fully developed. Provided that the product is appropriate for market testing. Market testing often gauges a response to the new product and test one or more positioning strategies.

Test marketing is popular for many consumer non-durable products such as food, health, and beauty aids. In addition to conventional test marketing, less expensive alternatives are available.

The following testing elements are explained:

Simulated test marketing
Scanner based test marketing
Conventional test marketing
Testing Industrial Products
Factors and test marketing
Selecting test sites
Length of the test
External influences
Interpreting results

Simulated Test Marketing

Marketing analysts can implement this test method by recruiting shoppers at a shopping center.

The consumer is asked to read an advertisement for the new product and get a sample to take home. Follow-up telephone interviews evaluate the consumer’s experience with the new product.

Test conducted over a 90-day period can be quite useful and weeds out failures, but they are less useful in predicting Market success. Simulated test marketing can be conducted much faster than conventional test marketing.

It is far less expensive it is not as visible to the competition. The product is not advertised and is not available in stores.

Simulated test marketing includes the following steps:

Recruiting participants for the test– either a general audience or a more specific group of respondents.
Securing background information– usually awareness, usage, attribution, and demographic data.
Exposing test participants to information regarding the new product and attempting to create interest in the product by representing its primary value proposition.
Determining the reaction to the test product before use in assessing the determinants, if any, to trial.
Determining the reaction to the test product after use and assessing the determinants, if any, to repurchase.

Scanner Based Test Marketing

This test method (scanner testing) is less artificial than simulated testing and is less expensive than a conventional test. The participants receive an identification card to show two participating store cashiers.

Purchases are electronically recorded and transmitted to a central data bank. Cable television and enables controlled advertising tests.

Companies can use scanner testing to evaluate various aspects of the marketing strategy, including what kind of advertising attracts different people.

Conventional Test Marketing

This form of testing puts the product under actual market conditions in one or more test cities. It is used for frequently purchased consumer products. Test marketing uses a complete marketing program, including advertising and personal selling. Product sampling is often an important factor in launching a new product in the test market.

The product is marketed on a commercial basis in the test cities, and test results are then projected to the National or Regional target market. Because of its high costs, conventional test marketing represents the final evaluation before full-scale market introduction.

A test can cost more than $1 million. Companies sometimes decide not to test the market in order to avoid competitor awareness, eliminate testing costs, and accelerate introduction.

Testing Industrial Products

Market testing is appropriate for various industrial products. Test sites may need to include more than one or two cities to cover the test sufficiently. The testing company has substantial control of an industrial product test since it can use direct mail, email marketing, and personal selling.

The relatively small number of customers also makes it easier to target marketing efforts. The product should have the characteristics necessary for testing. It should be producible in test quantities, relatively inexpensive, and not subject to extensive buying-centered influences throughout the company.

Factors and Test Marketing

The basic purpose of test marketing is to protect how the new product will perform during full-scale commercialization. Many factors are important in testing, like selecting good test sites, determining the length of the test, controlling for external influences on the test, and interpreting results.

Selecting Product Testing Sites

The test site should have the market and environmental characteristics of the commercial target market. Since no site is perfect, the objective is to find a reasonable match between the test and the commercial market.

Each test city should be isolated from the other city, contain people generally comparable to the target market profile. These cities should also have a representative media mix, offer research and audit services, providing a diversified socio-economic cross-section of people, and exhibit no unusual environmental characteristics.

Length of the Test

The length of the test is important in obtaining valid test results. Manufacturers need 10 months to be reasonably sure that market share data are representative. The market test can sometimes take over one year. I’ve seen some micro-brands being test marketed with Facebook ads and Instagram ads and can take as little as 30 to 60 days with valid results.

External Influences

The most troublesome external factor that may affect test market results is the competition that does not operate on a normal basis.

Competitors may attempt to drive test market results awry by increasing or decreasing their marketing efforts. It is also important to monitor the test market to identify other unusual influences during the test period. Unusual economic conditions may affect test results for some products.

Interpreting Results

Various conditions are important in interpreting test results. In addition to the length of the test and external factors, the nature and composition of the results should be analyzed. Determining the characteristics of the buyers provides important information for targeting.

Repeat purchase data are essential to determine whether the product will be repurchased. Several new product models are available for analyzing test market data and predicting commercial market success.

New Product Models

Analytical models have been developed for predicting sales and market share from test market data. Some newer models also consider the effects of marketing mix components. The dimensions of product newness in repeat purchases provide a basis for classifying available models.

The models fall into two categories:

First purchase models designed to predict the cumulative number of new product try overtime.
Model design to protect the repeat purchase rate of those buyers who have tried the product.

The latter type combines an inappropriate first purchase model with a repeat purchase model. A brief overview of the customer adoption process for new products sets the stage for an examination of the two types of models.

Customer Adoption Process

Research concerning the adoption of innovations indicates that:

New product adopters follow a sequence of stages in their adoption process
Their characteristics vary according to how soon they adopt the product after the introduction
Adoption findings may be a value in new product planning

The adoption stages are awareness, interest, evaluation, trial, and adoption. By identifying and targeting such early adopters, companies may be able to accelerate the adoption of a new product. Early adopters also tended to draw from a variety of information sources and are more cosmopolitan than later adopters.

First Purchase Models

The concept of these models is a diffusion of the new product into the market. The models generate a life cycle sales curve using a mathematical model with a number of parameters. The parameters are estimated based on the experiences of similar products, consumer pretest, or early sales results. The range of models extends from a simple exponential curve using market potential in the rate of penetration as parameters, to more complex, multi-stage models.

Repeat Purchase Models

A wide variety of consumer and industrial new products are non-durables that are repurchased on a regular basis. Several repurchase models have been developed for projecting sales of these products and for evaluating marketing program positioning strategy combinations. The assessor model illustrates this class of models.

This model evaluates the new product before test marketing but after decisions have been made regarding positioning strategies. Management can use this information with direct behavior and attitude data from the laboratory and used tests, to generate market share predictions and diagnostic information.

Trial/repeat and attitude models are built into assessors. The model uses two approaches to estimate the brand’s market share. This is a key feature. The use of laboratory facilities in the simulated shopping experiment is also innovative.

Model applications like assessors are expensive, but they cost a small fraction of a market test or full-scale commercialization. Considering the stakes involved in the introduction of a new product, the use of modeling to reduce risk is likely to expand in the future.

Selecting a Model

The choice of a test market model should be matched to the specific new product planning situation possibilities range from sales projections to marketing mix variable analysis.

Commercialization

Management may prefer to introduce its products one at a time to assure complete attention to and control over the introduction. Introducing new products requires a sequence of decisions including a complete marketing plan, coordinated introduction activities of all business functions, and monitoring and control over the product launch.

The Marketing Plan

The commercialization stage (also called the go-to-market stage) requires a complete marketing strategy. The strategy should indicate actions, responsibilities, and deadlines. It should be discussed with various people responsible for the introduction, including salespeople, sales managers, and managers and other functional areas such as production, distribution, finance, and human resources.

An important decision a new product introduction is the timing and geographical scope of the launch. The options range from a national market introduction to an area by area rollout. The national introduction is a major endeavor, requires a comprehensive implementation effort.

Some companies prefer to introduce the product on a stage-by-stage basis. This reduces the scope of the introduction and enables management to adjust marketing strategies based on experience gained in the early stages of the launch. One limitation of the rollout approach is that it allows competition more time to develop and introduce competing products.

Monitoring and Control

Real-time tracking of new product performance at the commercialization stage is important standardized information services are available for monitoring sales of products such as food, health, beauty aids, and prescription drugs.

Information is collected through store audits, consumer dairy panels, and scanner services. Special monitoring studies may be necessary for products that are not included in standardized information services.

Management should include product performance standards in the new product plan to evaluate how well the product is performing. Performance targets often include profit contribution, sales, market share, in return on investment objectives.

It is also important to establish values for objectives that indicate unacceptable performance. Regular measures of customer satisfaction are also important gauges of market performance.

Management can designate zones for new product performance, such as above expectations, acceptable, below expectations, and unacceptable. An organization must prepare to drop a new product if it is apparent that unacceptable performance will continue.

Wrap Up

Development and testing change the product from a concept to a prototype. Product development transforms a concept into one or more prototypes. Used testing gain users reactions to the prototype.

Manufacturing development determines how to produce the product in commercial quantities. Marketing strategy development begins during or at the completion of the product development stage.

They complete marketing strategy must be formulated for a totally new product. Product line additions, modifications, and other changes require less extensive development of marketing strategy.

Completion of product and marketing strategy development moves the process to the market testing stage. At this point management must obtain some form of user reaction to the new product, providing marking testing is feasible.

Testing options include simulated test marketing, scanner bass test marketing, and conventional test marketing. Testing of industrial products is less expensive than testing consumer products although frequently purchased non-durables can be tested.

Commercialization completes the planning process, moving the product towards sales and profit performance objectives. The successful product may fail due to faulty implementation. Execution is critical.

What are your product development and testing procedure look like? Want to join the conversation connect with us @mmgtweets. And don’t forget to share this with a friend.

Sources for New Product Ideas: Screening, Evaluating, and Business Analysis for New Opportunities

Sabine Wolf · November 5, 2018 ·

The product development process started with new product ideas.

Finding promising new product ideas is the starting point in the new product development process for idea generation. New product ideas trigger planning for new products.

New ideas of product ideas are the lifeblood of many product development teams. You will how to create new product ideas to grow your business and keep up with new trends.

If you are an entrepreneur or know someone you have worked with. They are a different breed and have different skills than say an equivalent in an enterprise organization.

This digital marketing agency in Denver, Colorado has been helping entrepreneurs and skunkworks projects with new product development, research, product launches, and go-to-market plans.

How to create new product ideas?

New product ideas for products come from various sources. Limiting the search for new product ideas to internal research and development activities is far too narrow an approach for most companies.

Sources of new product ideas include company employees, customers, competitors, outside inventors, acquisitions, and channel members.

Learn how startups generate new product ideas and launch products.

As new ideas come to the front, new product launch ideas start to gel. The new product launch ideas that don’t exist will either be shelved or canned.

The idea is evaluated as it moves through the process, and new product planning expenses accumulate. There are many internal and external sources of new product ideas. New products may require testing.

Ideas can be generated by information search, marketing research, research and development, incentives, and acquisition.

How would you like a source and process of the best new product ideas?

I’ll be discussing the screening, evaluation, and business analysis to help determine if a new product concept is sufficiently attractive to justify proceeding with development. Including stages in the new product development process with examples.

Sources of Product Ideas

New product ideas come from many sources. Limiting the search for new product ideas to internal research and development activities is far too narrow an approach for most companies.

Sources of new product ideas include company employees, customers, competitors, outside inventors, acquisitions, and channel members. Both solicited and spontaneous ideas may emerge from the sources, and some even occur by accident.

Procter & Gamble’s Ivory soap was a result of an accident. Manufacturing over-mixed the ingredients in the manufacturing process creating air bubbles in the soap, causing it to float. Customers love it!

The essential issue that management must face is how to establish a program for generating and evaluating ideas that will meet the needs of the company. Several questions must be answered in developing such a program:

Should ideas searches be targeted or open-ended?
Should the search for new product ideas be restricted to those ideas that correspond to the mission, target market, and the company’s strategy?
How extensive and aggressive should the company idea search activities be?
Should search being an active or passive function within the firm?
Where will responsibilities for new product ideas search be placed
How will new product planning activities be directed and coordinated?

My research findings indicate that financial performance is higher for high-technology companies that have proven competence in their products.

Companies that focus their product strategy perform much better over a long time span than those that did not. These findings came from a study of 246 products across 26 small and medium-sized companies.

For most companies, the idea search program should be aligned with the corporate mission and objectives.

While some far-out new product ideas may change the future of a company, more often, open-ended ideas search the disparates resources and misdirected efforts.

It is impossible to generalize about the other three questions since they depend on many factors.

Factors like size and type of company, technologies involved, new product needs, resources, management preferences, and corporate capabilities. Top management should develop a plan for idea generation that will satisfy the company’s requirements.

Many new product ideas start with customers, particularly ideas for industrial products.

The use of a lead user analysis offers promising potential for the development of new industrial products. Lead users are those companies whose existing needs and requirements anticipate marketplace needs.

The approach is to try to identify these market leaders and analyze their needs to improve the productivity of new product development and product markets that change rapidly.

The objective is to satisfy the lead user’s needs, thus accelerating new product planning. Both industrial and consumer buyers are useful sources of new product ideas.

Methods of Generating Ideas

Several alternatives for generating ideas are shown in Exhibit 1. Typically a company uses more than one of these options.

Search for new product ideas

new product ideas small business product roadmap

Systematic monitoring of various information sources may be helpful in identifying new product ideas. New product idea publications and online sources are available from companies that wish to sell or license and ideas they do not wish to commercialize.

New technology information is available through computerized search services. New sources may also yield information about the new product activity of competitors.

Many trade publications contain new product announcements. Marketing management must identify the relevant search areas and assign responsibility for a search to an individual or group.

Kickstarter and Indiegogo provide a good area to look for new ideas as well.

Marketing Research

The survey of product end-users can be useful in identifying needs that new products can satisfy. One useful technique to identify and evaluate a new product concept is the focus group, which can be used for both consumer and industrial products.

A small group of 8 to 12 people is invited to meet with an experienced moderator to discuss new product ideas. Idea generation might start with a discussion of product requirements for some product use.

Subsequent focus group sessions can evaluate product concepts formulated to satisfy the needs identified in the initial session. More than one focus group can be used at each stage in the process. Focus groups may include channel members and company personnel as well as customers.

Another consumer research technique that may be useful in generating new product ideas is the advisory panel. These groups are selected to represent the target market of the company.

For example, a producer of computer accessories would include computer users on the panel.

Companies in various industries including telecommunications and pharmaceuticals are using customer advisory groups. These groups provide insight and evaluate new and existing products.

Internal and External Department

The company’s research and development generate many new product ideas. New product ideas may also originate from development efforts outside the company.

Sources include inventors, private laboratories, research universities, and small high-tech firms.

The Ultimate Sales Funnel Calculator

Do you feel like you don’t have enough time? The sales funnel calculator will help you organize your business and get more leads.

Get the sales CalculatoR.

Other Idea Generation Methods

Incentives may be useful to glean new product ideas from employees, marketing middlemen, and customers. The amount of the incentive should be high enough to encourage submission.

The company should also guard against employees leaving the company and developing a promising idea elsewhere. For this reason, many companies require employees to sign a nondisclosure agreement.

Consumer product funds are an interesting concept for generating new products, developing them, and moving their ideas and to commercialization.

While the objective of consumer product funds is to provide a return to investors, corporate participants may gain access to new products without the high cost of internal development.

However, critics of the funds argue that small venture firms do not have the experience to successfully plan and introduce new products. There’s also the possibility that two or more corporate investors will try to compete for a promising new product or perhaps the entire company.

Finally, acquiring other firms offer a way to obtain new product ideas. This strategy may be more cost-effective than internal development and can substantially reduce the lead time required for new product planning.

Idea generation identifies one or more product concepts to be screened and evaluated. And an idea for a new product must be transformed into a defined product concept.

The complete product concept is a statement about selected anticipated product attributes that show how they will yield selected benefits relative to other products or problem solutions already available.

For example, the pump toothpaste dispenser (attribute) offers a simple and quick alternative (benefit) tube.

SCREENING, EVALUATING, AND BUSINESS ANALYSIS

Evaluating new ideas is essential for new product planning. Assume that a successful new product specifies criteria for commercial success (e.g., sales, profit contribution, and market share).

Two risks are involved in the evaluation as shown in Exhibit 2.

If the level of risk for rejecting an idea is set too low, then too many ideas will be developed that later must be rejected. Moving too many ideas too far into development and testing is an expensive mistake.

Management must establish a screening and evaluation procedure that will kill unpromising ideas as soon as possible. While keeping the risk or rejection of good ideas at an acceptable level.

Expenditures buildup from the idea stage to the commercialization stage, or as the risk of developing a bad new product decline as more and more information is obtained about the product and the market. Thus, the best screening procedure is one that is not too tight.

The objective is to eliminate the least promising ideas before too much time and money are invested in them. The tighter the screening procedure, the higher the risk of rejecting a good idea.

Based on the specific factors involved, management should have established a level of risk appropriate for the situation.

A new product idea should be evaluated regularly as it moves through the new product planning stages.

Ideas may be rejected at any stage. Even though the objective is to eliminate the poor-risk relatively early in the planning phase before major product development expenditures occur.

The evaluation techniques appropriate to each stage in the planning process are matched to the evaluation task.

Screening for new product ideas

An idea for a new product should receive an initial screening to determine that strategic fit in the company. Two important dimensions should be evaluated:

The strategic capability of the idea
The commercial feasibility of the venture

The purpose of screening is to eliminate ideas that are not compatible or feasible for the company. These assignments or somewhat subjective since management must establish how narrow or wide the screening boundary should be.

For example, the management of two otherwise similar companies might have very different missions and objectives.

Thus, an idea that involves a new product market area that could be strategically compatible in one company is not in another. The dimensions on which management evaluates ideas/concepts/products included all key management areas.

Some firms develop screening procedures using scoring and rating techniques for the factors shown in Exhibit 2. The result is a score for each idea being screened. Management can set ranges for passing and rejecting. The methods are effective only if managers agree on the relative importance of the screening factors.

Product Evaluation

The boundaries between idea screening, evaluation, and business analysis are not clearly drawn. Some firms combine two of the evaluation stages. Nevertheless, the distinction seems appropriate.

After completing the initial screening, the ideas that survive are subject to a more comprehensive evaluation.

Several of the factor shown in Exhibit 2 may be evaluated in greater depth, including the buyer’s reaction to the proposed concept. Concept tests are useful in evaluating and refining new product ideas.

Product Concept Testing

The objective of concept testing is to obtain a reaction to the new market concept from a sample of potential buyers before the product is developed.

The product concepts are presented to the test participants in various forms, such as a written description, a drawing, a model, or a package.

Typically, a statement of a concept is part of the testing procedure. The statement should be brief, consisting of one or two paragraphs. Bias must be avoided in the wording of the statement.

When designed and implemented, the concept test offers a very useful means of evaluating a product idea very early. The cost of concept testing is reasonable, given the information that can be obtained. There are some important cautions.

The test, at best, is a very rough gauge of commercial success. Since the actual product and a commercial setting are not present, the test is somewhat artificial.

The concept test is probably most useful in signaling very favorable or unfavorable product concepts. It also offers a basis for comparing two or more concepts.

A requirement for concept testing is that the product can be expressed as a concept. Moreover, the participants also have the experience and capability to evaluate it.

Product Concept Selection

The completion of the evaluation stage should yield one or more concepts for business analysis. In general, consumer products firms spend a higher percentage of time on screening and evaluating ideas than industrial product firms.

The time devoted to the actual development of the new product is greater for industrial goods companies than for consumer goods companies.

Business analysis for new product ideas

The business analysis estimates the commercial performance of the proposed product, obtaining an accurate financial projection depends on the quality of the revenue and cost forecast.

Business analysis is normally accomplished at several stages in the new product planning process. The first assessment is conducted before the product concept moves into the development stage. Financial projections are refined at later stages.

Revenue forecasting

The newness of the product, the size of the market, and competing products influence the accuracy of revenue projections. For SaaS computer software, estimates of total market size can usually be obtained from industry information.

Several industry associations publish in the industry forecast. Industry and financial analysts such as Gartner, IDC and, Forrester provide great industry information as well. The more difficult task is estimating the market share that is feasible for new product entry.

Sales of new-to-the-world products are very difficult to forecast. One approach is to identify the potential size of the target market and then estimate the new product rate of market penetration.

For example, the sales forecast for electric cars could be based on the percentage of penetration in the conventional gas-driven car market over a specified time.

Cost estimation for new product ideas

Several types of costs or encountered in the planning and commercialization of new products. One way to categorize the cost is to estimate them for each stage in the new planning process. The cost increases rapidly as the product concept moves through the process.

The cost for each planning stage can be further divided into functional categories (e.g., marketing, research and development, and manufacturing). Executive experience in new product planning should be able to generate reasonable cost estimates.

Profit Projections for New Products

Several types of profit projections can be used to gauge a new product’s financial performance. Those appropriate for new product business analysis include Breakeven computation, cash flow, return on investment, and profit contribution.

Breakeven analysis is useful to show how many units of a new product must be sold before it begins to make a profit. Management can use the break-even level as a basis for estimating the project feasibility.

Senior management must determine the appropriate level of time for projecting sales, costs, and profits. Policy guidelines may be specified. For example, the product may be required to recoup all costs within a certain time period.

Business analysis estimates should take into consideration the estimated flow of revenues and cost over the time span used in the analysis. Typically, new products incur a higher cost before they start to generate revenues.

Other Considerations for New Product Ideas

Several issues must be considered in the business analysis of a proposed product concept. First, management should formulate guidelines for the financial performance of new products. These can be used to accept, reject, or further analyze the product concept.

Another issue involves assessing the amount of risk. This factor should be included either in financial projections or as additional consideration beyond the financial estimates.

Finally, the possible cannibalization of sales from existing products should be estimated. New products that are substituted for existing products often cannibalize sales.

EXAMPLES OF NEW PRODUCT IDEAS

Ring Video Doorbell
A Solar-Powered Camping Tent
The Biolite Camping Stove
Ultra-Ever Dry Waterproof Coating
PaperKarma: The Junk Mail-Eliminating App
Senz: The Stormproof Umbrella
Justick: An Electro-Adhesive Bulletin Board

Wrap Up for Ideas for Products

The new product development process starts with a search for new ideas. The search should not be casual. Senior management should define the products and markets to emphasize.

It should state the new product objectives, whether it is cash flow, market share domination, or some other objective. It should state how much effort should be devoted to developing original products, modifying existing products, and copying competitors’ products.

The purpose of idea generation is to create a number of ideas. The purpose is to reduce the number of ideas to an attractive, practicable few.

Organizations are recognizing the necessity and advantages of developing new products and services. Their more mature and declining products must be replaced by newer products.

New products, however, can fail. The risk of innovation is as great as rewards.

The key to successful innovation lies and developing better organizational processes for handling new product ideas and developing sound research and decision procedures at each stage of the new product development process.

How do you and your organization handle new product ideas?

Remember why you are doing this. Is it to drive new demand or address a missing solution. You still need to make revenue. Here’s a simple sales funnel for you to use.

We’re listening.

Have something to say about new ideas for products? Share it with us on Facebook, Twitter, or LinkedIn.

And don’t forget to share this with a friend.

Are you not getting the results you had hoped for with your current marketing agency?

Let the experts at Matrix Marketing Group help you generate more web traffic, convert more leads, and close more sales.

We provide a full array of digital marketing services, including SEO services, content marketing, social media, PPC advertising, and website design services. These digital marketing services are typically paired with customer relationship management and marketing automation platforms.

For more information, check out our marketing services or book a meeting here to schedule a free consultation to discuss your needs and requirements.

Grab Your Copy Today

Learn How to Get More Out of Your Marketing

Cut the guesswork from marketing planning by setting an objective behind every dollar. Cut the guesswork from your marketing planning with prescriptive action plans.

Learn More

General FAQ’s

What are the sources for new product ideas?

There are many internal and external sources of new product ideas. Ideas can be generated by information search, marketing research, research and development, incentives, and acquisition.

How do I search for new product ideas?

Systematic monitoring of various information sources may help identify new product ideas. New product idea publications and online sources are available from companies that wish to sell or license and ideas they do not want to commercialize.

What are some alternative sources for new product ideas?

Incentives may be useful to glean new product ideas from employees, marketing middleman, and customers. The amount of motivation should be high enough to encourage submission.

How to create new product ideas?

Below are 7 ways you can come up with new product ideas.
1. Solve an existing problem for people.
2. Find out what’s the current hot trend.
3. Improve a product that is already on the market.
4. Create a new niche for a current product.
5. Add on to an existing product.
6. Reincarnate an older product.
7. Ask your current customers.

New Product Planning: How to Reduced Your Time To Market

George · November 4, 2018 ·

The new product planning process reduces time to market and drives new revenue streams.

My research and experience with new product planning and control suggest a gap between innovation and commercialization results from a lack of formal processes and effective talent management strategies.

You need a new product development process that can handle products from cradle to grave.

New product launch planning and your go-to-market strategy will be essential for a successful product launch.

New product planning pharmaceuticals can take years where a new iPhone is spun up in months. The product life cycles are shrinking.

If you are developing new products, a new product progresses through a sequence of stages from introduction to growth, maturity, and decline is required.

This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix.

You have to have everyone on the same page with marketing product planning, purchasing the inventory, and building the product for the target market.

The process of product planning development should be defined with all the elements of the product planning process.

The new product market offers the organization an opportunity to expand its revenue streams. But before you jump, you need to be sure that you have done your research, market research.

This article will review the product planning process, objectives of product planning, elements of product planning, product planning strategy with product planning example [product planning pdf].

New Product Planning Process

New product launch planning will require you to manage a lot of moving parts. Your go-to-market strategy will make your product launch a success or bust. It’s a lot of work.

Both startups and mature companies must find the next star while the cash cows feed to resources to develop new products.

New product planning is essential for most companies because of its contribution to the growth and prosperity of the company. Planning for new products demands strategic activity.

New products, when matched with the customer needs, offer opportunities for a company to strengthen its position in existing product markets and moving to new ones.

We will dive into the new product planning process with examples and a new product development flowchart.

New Product Planning answers the following questions:

What features should you prioritize for the new product development?
What is our product launch planning process?
Why is product planning important to a business?
How many stages are in my product planning and development process?
How will you determine the price points for your product?
Do we need outside suppliers for manufacturing?
What are your goals for new-customer adoption, revenue, profit, and market share?

The product planning definition: Product planning is the process of producing a product idea and a set of tasks until the product is introduced to the market. Additionally, a small company must have an exit strategy for its product in case the product does not sell or is wildly successful.

The Product Planning Process is the continuous process of identifying and connecting market requirements that define a product’s feature set. Product planning serves as the basis for decisions about price, distribution, and promotion.

There are product planning software and product planning template. I suggest if this is your first time going through the process, start there. Don’t reinvent the wheel.

When it comes down to your new product launch you will want to know how many leads and sales your new product will generate. Down this handy leads calculator so you can plan better.

Tired of being overwhelmed and worried you’ll never scale your business?

Cut the guesswork from marketing planning by setting an objective behind every dollar.

YES – I Want The Marketing PLanning Tool

If we look at Apple we can see that initially started with computers. The leader of the organization, Steve Jobs introduced a long line of new products with a disciplined product strategy process.

These new products were line extensions of their existing products. In Apple’s recent “i” line, there is the iMac, iPod, iPad, and iPhone.

New products are critical to the survival and prosperity of Apple. Do you think it helped Apple?

In this post, I’ll examine the planning of a new product, beginning with the discussion of customer needs analysis, the relationship between customer satisfaction and quality function deployment, and product planning process steps.

There are software product planning platforms on the market but be sure that they match your process.

For some companies, it’s better to use this software product planning product because it helps define the process with product planning templates.

Customer Satisfaction and the New Product Planning Process

Customer Satisfaction New Product Planning Process

New product introductions are classified according to the following factors: (1) newest to the market; and (2) newest to the company.

Six categories of new products are defined as follows:

New to the world of products: New product concepts and new products that create an entirely new market.
New product lines: New products that, for the first time, allow a company to enter an established market.
Additions to existing product lines: New products that supplement accompanies established product lines.
Improvements and revisions of 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 market segments.
Cost reductions: New products that provide similar performance at a lower cost.

Typically, a company’s new product program includes items in all or most of the six categories. Totally new products account for only 10% of all new product introductions.

New product planning is based on customer needs analysis. Even new-to-the-world product ideas should have some relationship to needs that are not being met by existing products.

Corporate Business Strategies

The business mission, objectives, and product strategy should determine the product market areas of interest to marketing management. Business purpose and scope set important guidelines for new product planning.

These areas should not be selected only by research and development management. The entire management team should consider product opportunities and establish priorities to guide new product planning.

Customer needs analysis provides important information for determining where competitive advantage can be gained by developing new products.

Each product the company should be defined and analyzed. The analysis should include market segment identification and evaluation to determine which segments offer new product opportunities to the company.

Extensive analysis of existing and potential customers and competition is vital to effective new product planning.

Identifying Customer Satisfaction Opportunities

The objective is to identify gaps and customer satisfaction that may offer opportunities for product innovation. The gaps are determined by comparing the customer’s expectations about the product and supporting the service’s actual performance.

Customer satisfaction analysis identifies opportunities for:

New product planning
Improvements in existing products
Improvements and production processes
Improvements and supporting services

The product planning process can also be used to guide the planning and improvement of products, processes, and support services. Many new product activities of companies do not involve totally new products.

By focusing on product planning on actual and potential buyers, the entire company is involved in customer satisfaction. This market-guided approach to product planning helps to avoid a mismatch between products and customer needs.

Tired of being overwhelmed and worried you’ll never grow your business?

Get Our Best Kept Secrets to Help You Grow Your Business.

YES – I Want To Join

Customer satisfaction measurement starts with a product-market frame of reference. The analysis may include generic, product type, and market levels. The market segment analysis is often necessary to identify specific customer needs and competitive opportunities.

The objective is to identify gaps between the buyer’s requirements and how well they are being satisfied. A large gap may offer new product opportunities.

Buyer satisfaction is evaluated by using various product and service attributes to express buyers’ preferences and comparisons of competing brands. The analysis may include preference mapping and other techniques

I’ve discussed this in past blog posts. The objective is to identify the important preference dimensions for the buyers in the product market and specific market segments.

Opportunities for new and improved products are identified by major preference gaps for attributes that are important to buyers.

Quality Function Deployment (QFD)

Quality Function Deployment is a management system for new product planning that assures that customer needs to drive the product design and production processes. The system was developed in Japan in the early 1970s. QFS provide several benefits:

Product objectives based on customer requirements are not misinterpreted at subsequent stages.
Marketing strategies or sales points did not become lost or blurred during the translation process from marketing through planning and execution.
Critical production control points are not overlooked– everything necessary to achieve the desired outcome is understood and in place.
Better efficiency is achieved.

An important part of QFD is developing inter-functional teamwork among the marketing staff, design engineers, and manufacturing. The entire process is centered on customer needs.

QFD is a comprehensive analysis of the planning process. The objective is to translate customer requirements into final product characteristics that are deployed throughout the company’s design, production, and marketing product launch.

The primary analysis technique is the use of a two-way matrix relating to customer requirements and product characteristics.

Success Criteria

Exhibit 1 indicates the factors that contribute to the success of new products. It is based on responses from more than 700 manufacturers of over 13,000 new products introduced during a five-year period.

The study found some differences between industrial and consumer products companies, as well as across different Industries.

Technological superiority is considered more important by industrial products companies.

While top management support is important for consumer durable and non-durable companies. The study also found that the importance of these factors varies by the type of new products being developed.

In my experience companies that successfully launch new products display the following characteristics:

Operating Philosophy. These companies are committed to growing through internally develop new products and follow a formal new product planning process. Tight idea screening practices were used.
Organizational Structures. The formal new product planning structure is located in the engineering department but provides for close coordination between the marketing functions.
The Experience Effect. With increased new product experience, companies and prove new product profitability by reducing the cost per introduction.
Management Styles. There is an effect of matching management style to immediate new product development needs. Management is willing to adjust its style to keep up with changing conditions.

Product Planning Process Flowchart

A new product does not have to be a high technology breakthrough to be successful. It must provide customer satisfaction.

I typically look for a product-market fit that takes place when you have evidence that your products and services are creating customer value and getting traction in the market.

Making and launching new products like Apple requires systematic planning to coordinate the many decisions, activities, and functions. The major stages in the planning process are shown in Exhibit 2.

Each planning stage is examined and related. This shows the importance of a coordinated program of new product planning.

There are two key considerations in new product planning:

Generating a stream of new product ideas that will satisfy management’s requirements for new products.
Establishing procedures and methods for evaluating new product ideas as they move through the planning stage.

Customer needs analysis should drive the planning process.

Deciding Which Customer Needs to Target

New products provide an important strategic capability for achieving corporate and business unit objectives. Thus, it is important that businesses formulate guidelines for new product planning.

Marketing management must decide the product markets and market segments in which to compete.

These decisions become important guidelines for the new product planning process. This can be seen in Exhibit 2 (seen above). Customer satisfaction analysis determines opportunities for new products and processes.

Organizational Structure for New Product Planning

New product planning includes various business functions. How to organize for new product planning has been widely debated for several decades. Many product management systems have been developed and implemented.

And they all have deficiencies, yet there is agreement among managers from successful firms that the new product planning process requires a coordinated effort throughout the organization. The objective is to plan and coordinating new product opportunities.

Important concerns include where to place responsibility and how to organize for new products. The major organizational alternatives are:

Committee
Product planning managers or brand managers
New product department
Venture teams

At Ohmeda, I was involved with the pulse oximeter, an off-site location for new products and we called it “Skunk Works.” This is an example of a venture team.

New Products Committee

This organizational structure is widely used because it involves the various functional interest in new product planning without creating an organizational unit.

This approach is flexible and a coordinating mechanism for a particular project or on a continuing basis. Committees may be formed at the top-level management for decision-making purposes.

Or at operating levels for coordinating or special-purpose assignments, such as screening new product proposals.

By using the committee system, companies avoid establishing a permanent, full-time organizational unit. This has several advantages. Limitations of the committee system may include a lack of authority, coordination difficulties, and a lack of full-time monitoring.

The key factor in the success of a new product committee is the chairperson. This person must be effective in moving the committee toward its signed objectives.

The selection of committee members is also important. Those chosen should be able to successfully interact in and contribute to the group.

New Product Planning Manager

This organizational form consists of an individual, sometimes assisted by one or a few additional people.

The manager is responsible for planning and coordinating various business functions for the new product. In most cases, a product manager is a staff person.

They do not have authority for the overall product planning activities but may coordinate activities. A product manager usually has a background and experience in research and development, engineering, or marketing.

The product manager of major new products may report to an SBU manager or corporate executive. It is important to know that product managers’ titles and range of responsibilities vary widely across companies.

New Product Development Process

This organizational form places new product planning responsibilities in a formal department.

Two versions may be found:

A separate department to give new products attention, push, focus, and drive;
The product manager cluster, which consists of a manager responsible for a group of product managers. The departmental approach provides a strong base of support for new product planning. But other departments may create internal frictions.

Organizational structure is required for the new product development planning process

Venture Team and New Products

This approach requires the creation of an organizational unit to perform some or all of the new product planning functions:

A venture team is a separate division or specially incorporated company created specifically for new products and new business ideas.

Venture teams offer many advantages, including flexibility and quick response. They provide functional improvement and full-time commitment, and they can be disbanded when appropriate.

Team members may be motivated to participate in a project that offers possible job advancement opportunities.

Selecting the most appropriate type of organization must take into account the characteristics and needs of a specific organization.

A study of 276 firms found the new product department to be the most popular, followed by the brand manager, and the new product committee.

Since so many factors are involved, it is impossible to generalize about the new product organizational structure. The company needs some type of organizational mechanism.

Wherever responsibility is placed, new product planning, strategic planning, and marketing strategy should be closely coordinated.

Wrap-up on the New Product Planning Process

New product planning is a vital strategic activity in all companies. Companies that are successful in new product planning follow a formal new product planning process.

Guided by effective company structures for managing new products. Experience helps them to improve new product planning over time. Their management styles are responsive to new product planning needs.

Steps in new product planning include:

Strategy development
Idea generation
Screening and evaluation
Business analysis
Product development
Marketing strategy development
Market testing
Commercialization (often known as go-to-market)

What is your new product planning process and is it documented? Your new product planning strategy should be guided by a new product planning roadmap.

We’re listening.

Have something to say about the new product planning process? Share it with us on Facebook, Twitter or LinkedIn.

Are you not getting the results you had hoped for with your current marketing agency?

Let the experts at Matrix Marketing Group help you generate more web traffic, convert more leads, and close more sales.

For more information, check out our marketing services or book a meeting here to schedule a free consultation to discuss your needs and requirements.

General FAQ’s

What is new product planning used for?

Making and launching new products like Apple requires systematic planning to coordinate the many decisions, activities, and functions. The major stages in the planning process are shown in Exhibit 2. Each planning stage is examined and related. This shows the importance of a coordinated program of new product planning.

Why should I do new product planning?

New product planning is essential for most companies because of their contribution to the growth and prosperity of the company. Planning for new products demands strategic activity.

How do I start a new product planning process?

New product planning is essential for most companies because of their contribution to the growth and prosperity of the company. Planning for new products demands strategic activity. New product introductions are classified according to the following factors: (1) newest to the market; and (2) newest to the company.

How do I target specific customers and markets?

New products provide an important strategic capability for achieving corporate and business unit objectives. Thus, it is important that businesses formulate guidelines for new product planning.
Marketing management must decide the product markets and market segments in which to compete.