Identifying an opportunity in the market and realising that it can serve the buyers better than the already existing offerings in the market gives direction for new product development. For example, a need of having a device that can give access to the internet on a large screen which is not bulky and simple resulted in the emergence of iPads and Tablets. After identifying the needs and wants of the target customers, an organisation is better prepared to create a new product for the target market. It is the job of the marketers to study and collect as much information as possible and work closely with the research and development team to create a new product. If an organisation fails to tap the existing opportunity, competitors will take advantage and create that product.

New product development can be done by two ways. First, by producing the product within the organisation, and secondly, by outsourcing and signing contract with other independent firms to manufacture the product.

Products in which benefits are not perceived by target customers tend to fail in the market. Studies show that new products launched in market fail at an alarming rate. There could be several reasons for failure, like over estimation of market size, incorrect positioning, incorrect marketing mix strategy, incorrect estimate of production cost, better and low price offering by the competitor, etc. Most of the product ideas are variations in existing products. New products can mean original products, product improvements, product modifications and new brands that a firm develops through its own R & D team.
One CEO of a fortune 500 company said that organisations should strive to make their own products obsolete to ensure their new product is way ahead of rival organisations and meets the ever increasing expectations of the customers.

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Developing a new product is a key to organisations survival in the ever changing marketing environment. Some organisations set a price limit while others focus on adding value, and making the existing product better than before with price factor coming at latter stage. Depending on the organisations size and past experience, the new product development process may vary. We will look at the commonly accepted process-

1) New product strategy – studies have shown that more than 75% of the companies formally treat strategy as the first step in New Product Development. (Marketing Management; Cravens, Hills, Woodruff, A.I.T.B.S. Publishers and Distributors, 2002, pg. 335). The corporate strategy and objectives give guidelines for new product development by assessing organisational expertise and external opportunities. The SWOT analysis gives inputs for emerging markets and emphasis is given to the threats and opportunities. The same are aligned with the strengths and weaknesses of the organisation. This gives direction as well as boundaries to the top management for new product development.

2) Idea generation – major sources for idea generation include employees, customers, competitors, distributors, entrepreneurs and suppliers. Customer surveys are important when developing a new product. Imagine a customer giving an input to seller who is making a custom made shoe. The feedback will eventually result is a shoe that meets the customers need exactly. By direct observation or conducting a brainstorming session with potential customers, organisations get an insight into the buying behaviour, needs, and wants of the target market. Customers are a source of ample information that can be utilised for adding new product features, etc. Internal employees, R & D team members too can be source of ideas. The organisation should encourage ideas by rewarding employees. Close observation of competitor product, and their acceptance in the market also helps in idea generation. Besides this, inputs from the suppliers, sales representatives, distributors, and retailers who serve the competitor also contribute largely to idea generation. Entrepreneurs, university students and inventors are also source of ideas of new inventions outside the organisation. Companies can sign contracts and help them financially or employ them for their ideas or concepts. The organisation should have a designated manager or idea committee to compile ideas from different sources.

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Customers learn about new products, try them, and buy or reject them. There are five stages that adopters of new products exhibit –

1) Awareness – the prospect becomes aware of the new product but doesn’t has details about it.

2) Interest – the prospect seeks information about the product and wishes to explore the benefits of the product.

3) Evaluation – the prospect considers the benefits and is inclined to try it.

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From a marketing perspective, a buyer buys to satisfy a need, and benefit from it. Product is anything that is offered to satisfy or benefit a buyer with needs and wants which can be tangible as well as intangible. Products which are marketed include goods, services, events, people, ideas, information, places, properties and organisations. For a brief information on each of these, please refer sub-topic – Market, under topic Marketing Concepts.

Product – a product can have a tangible as well as intangible attribute or both. It is something of value to buyers and consumers which an organisation offers (hence sometimes referred as an offering). For example, the food we eat in a restaurant is a tangible product and the service from the staff there is an intangible product. A service offered by an insurance company, a Chartered Accountant are intangible products.

A product is anything that can be offered to a market to satisfy a need, want or demand. The product is a result of strategic decisions at the corporate level which has characteristics or attributes that a buyer wants. The quality, branding, packaging, labelling, and developing right warrantees, guarantees are part of the entire bundle of the product that an organisation offers.Product includes all the services, both before and after its sale. It carries with it a “satisfaction factor” that is tangible as well as intangible like utility and psychological satisfaction of owning the product.

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A product can be grouped into three levels basis the meaning it holds for different people.

1) Level 1 forms the basic benefits a product offers. The same product can deliver different benefits to different people. A same motor bike can deliver benefit of transportation while for another person, it could be a status symbol.

2) Level 2 refers to the product attributes like style, quality, packaging, branding, etc. For example, Harley Davidson or Royal Enfield offers style, quality, etc. which adds to the basic satisfaction of owning a bike.

3) Level 3 is the extended product which includes the benefits that surpass the benefits a product offers. These include after sales service, warranty, free installation or delivery, etc. The marketers try to exceed the expectations of the buyer.

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The product life cycle proposes that a product goes through a life cycle like humans go through different stages of life. The product life cycle begins once a product is introduced into the market and it ends when a product is finally phased out, abandoned or becomes obsolete. These stages help marketers understand and manage the product acceptance and market share in the market.
The life cycle consists of four stages – introduction, growth, maturity, and decline. Not all products go through these four stages. For example, there are products that never get accepted in the market and are withdrawn from the market.

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An organisation has to continuously evolve to create and modify an offering to stay in the market. With time, consumer preferences change and if an organisations fails to meet the needs and satisfy the wants of the target market, its products will become outdated. For example, Nokia had to face severe challenges and had to be sold off as customers were offered a better offering that exceeded their expectations. It continued with its ‘symbian’ operating system while majority of the consumers preferred ‘android’ and ‘apple’ operating systems. Nokia since losing majority of its market share had been striving to regain that lost position by introducing phones with Windows Operating system and also android operating system on some of its phones.

Basis the market feedback and sales of its products, an organisation adds new products to its product mix or discontinue production of a product.

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A product from an organisation should be uniquely placed in the mind of customers amidst competition. Positioning is done to ensure the product stands out, and sells better than the competition. The key question that a marketer should address is, “Why should buyers purchase our product instead of another?For example, ask a person about a smart phone offered by Samsung and Apple. We will get different answers for both these brands. Every individual will have a different image of the product and it is the job of the marketers to influence the positioning of the products in target markets to influence sales.

Marketers try to create unique identity of the product by several ways. This can be done through appropriate promotion highlighting –

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We have defined Market as an institution or a mechanism allowing buyers and sellers to make exchanges. It has a Place concept which refers to a convenient meeting place for buyers and sellers for making exchanges. It emerges into an Area where two or more individuals have unmet needs, have products for exchange and there is a mode of communication. For example, business via internet, stock market where face to face meet is not necessary. Market is also interpreted under Demand Concept which refers to the total demand. The buyers are willing to pay for the product to satisfy their need.

We all know that the wants and demands of consumers are never the same. Each person will react differently to price, advertising, product features. Organizations cannot make all kind of products that meet wants and needs of all the consumers in the market. It will be very difficult to serve them effectively and efficiently amidst competition.

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1) Mass Marketing involves targeting all the buyers in the market using same marketing mix to influence buying. The organisations believe that the buyers will exhibit same buying behaviour for their product and marketing program (marketing mix, 4P’s). This strategy is more likely followed in new markets than in mature markets where competition exists. In these markets, the buyers have not developed any variation in needs and wants.

Mass market strategy is cost effective as market research doesn’t involves understanding various potential customers. The organisation implements the same marketing mix and product development strategies for the market. This leads to attractive profits by taking advantage of economies of scale. There is no special attention to specific needs of the buyers.

Its features –
• Mass Production
• Mass distribution
• Mass promoting the same product to all customers.

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