New Product Development

Developing and introducing a new product is often an expensive and time consuming process. There are several strategies available to a company that wishes to introduce a new product. The success of this product in the market place will greatly vary according to how this essential step is carried through.

The new product development strategy first depends on the competitive environment faced by the company. A strategy where a new product is introduced in an old market is called a product development strategy. On the other hand, if the new product is introduced in a new product in a brand new market, the strategy would be referred to as product diversification.

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The development process for a traditional product can be easily divided into 6 steps: Idea generation, Screening, Business Analysis, Development, Test Marketing, and Commercialization.
  1. Idea Generation – Suggestions from customers, sales force, R&D
  2. Screening – Evaluation of the product’s commercial potential
  3. Business Analysis – Assessing potential market share, growth rate & competitive market strengths
  4. Development – Creation of mock-ups, prototypes and finally final product by engineers.
  5. Test Marketing – Observation of consumer reaction
  6. Commercialization – Carrying out of marketing strategies

At the business analysis stage, a complete marketing plan would be needed to analyze and summarize the competitive environment that the product will be introduced in. A SWOT analysis might also be very useful.

It is important to also pay attention to the consumer adoption process in order to fully understand the success determining factors. Consumers usually go through a series of stages in deciding whether to purchase a product or not. Of course these stages vary in importance according to the type of purchase. We buy a car the same way than we buy a cell phone but the high involvement of the purchase might make it a longer decision. The 5 stages are:
  1. Awareness. First learn about a product
  2. Interest – Information seeking
  3. Evaluation – Consideration of the products benefits
  4. Trial – Trial purchase
  5. Adoption/Rejection – Adoption if satisfied by the trial purchase

Adopters can also be separated into different categories. The first users of a product are called ‘innovators’. Then come early adopters, early majority, late majority and laggards. These categories can also be used for the categorization of users of a free service like Wiki’s. Current users of Wiki’s probably belong to the early adopters’ categories.
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The rate of adoption of a new product or technology such as Wiki’s, depend on several factors. Examples of those are 1. relative advantage and 2. complexity. First, the relative advantage that the innovation brings to the user is critical. If a product is not far superior then the previous ideas, the chances of it being a success are slimmer. The complexity of the new technology is also a determining factor. To relate this point to Wiki’s, the more the technology’s usability factors like learnability and memorability will be improved, the more successful it will be.


Boone, Kurtz, McKenzie, Snow. Contemporary Marketing. 2006, Thompson Nelson