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Oct 23, 2018 | 0 comments

Oct 23, 2018 | Essays | 0 comments

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Idea Generation 3

Need or problem identification 3

Brain storming 3

Attribute listing 4

Idea Screening 4

Concept Testing 4

Marketing Strategy Development 5

Business Analysis 6

Product Development 6

Market Testing 6

 Simulated test marketing 7

 Sales wave research 7

 Controlled test marketing 7

 Test markets 7

Commercialization 8

Consumer Adoption 8

Findings 10

Understanding of the customer needs 10

Early entry into the market 10

Management support 10




There is a common misconception that arises when companies are looking into the innovation of new products. Commonly, majority assume that all that is required is the new product. There is however a process involved in the innovation of a new product before it is released into the market. Adhering to this process ensures success when it comes to production and marketing.

Idea Generation

The first step of the new product process is the formation of the idea. It is upon this idea that the company builds a set of workable plans. According to (Wessner 1999) there are several ways in which individuals can generate ideas within the company and through which a business can encourage the formation of ideas and these are:

Need or problem identification: where the business identifies a need in the market or a problem within the production system. A challenge is offered to employees and stakeholders to find ways through which the company can either resolve the problem or fill the need in the market.

Brain storming: this is whereby experts, employees and stakeholders come together to identify several ways in which they can make a difference in the industry and/or market. Each idea is recorded and tested for viability.

Attribute listing: often the business itself has several ideas already in storage. In this case, the ideas are tested for viability; their pros and cons listed and researched into with the purpose of identifying which of the ideas is the most suitable for the company.

Idea Screening

With all the ideas in place, it is important to screen and test each one of the idea in order to ensure that only viable and profitable ideas receive attention. Without idea screening, the company would be involved in haphazard product generation which could lead to great losses. Often managers face two risks within this step and these are: the drop error where a manager could easily dismiss or do away with an idea that would have turned out to be great. The risk here is that competitors who take up this idea go on to become profitable and income to the business is lost. The second risk is the go error, where managers authenticate and move on with an idea which is not good. The result is loss of income because the product is not well received in the market. All these risks can be mitigated by simple ensuring that proper research is carried out into the viability of the product and the exact needs it fills for the consumers.

Concept Testing

In this step the managers are looking to manage the following three risks:

Absolute product failure: where the product is poorly received in the market, costing the company serious losses. (Pinchot and Pellman 1999) cite a good example of coca colas strawberry cola which after a few months had to be pulled from the market completing costing the company an average of 1.7 billion dollars in production and distribution.

Partial product failure: which is where the company is able to recover some costs with the sales. However, the product does not generate any potential profits for the company.

Relative product failure: the company generates some profit from the sales, but these profits are a far cry from the estimates and expected profits.

The above three risks are often mitigated by engaging in concept testing, where the company engages average consumers in testing, to see the actual reaction that the product will have in the market. For example, the company maybe focused in developing a highly nutritious drink, whereas consumers are less interested in nutrition and more focused on taste. Using the ideas generated from the testing, the company can wither improve on the product, change the concept or do away with the concept completely.

Marketing Strategy Development

(Nolan 2011) states that too many times, businesses wait until it is too late to develop a marketing strategy for the product. As long as the concept is in place, the company must take steps to define the target population for the product that is the people or consumers whose needs best identify with the product. Secondly, the marketing mix and plan needs to be put in place in order to whet the appetite of the consumers. It is important to make consumers aware of the product ensuring that when it hits the market there s a ready market.

Finally, as stated by (Holmes 2002) research is conducted to ensure that the pricing strategy meets with both the needs of the company ad consumers. Majority of the manager’s focus on the need for profit, forgetting that sometimes consumers may not be willing to pay as much as one is asking for a particular product. On the other hand, considering the unique characteristics of the products, they may be willing and in fact expecting pay much more. A balance therefore needs to be generated in this stage which also covers the distribution process.

Business Analysis

This does not mean an analysis of the business itself, but just the business with regard to the new product. Commonly, managers often resort to a simple SWOT analysis. That is defining the strengths that the business has with regard to marketing and developing the product; in addition to any weaknesses that may generate from the product. Furthermore, analysis also covers the opportunities that come from the introduction of the new product and threats from competitions with regard to the same. An understanding of all these aspects makes it easier to generate a profit and sales analysis and projection form the product.

Product Development

Until this stage, the product has only existed as an idea. Majority of the tests have been in theory, once it is cleared through the business analysis actual production begins. However, businesses do not just begin producing and distributing the product, the first step is the production of a prototype. This ensures that the company understands the challenges that are involved in the production. Furthermore, it also allows for the company to understand exactly what is needed in items of manpower and assets that go towards the product. It can therefore be said that this step is concerned with ironing out the risks involved in the actual production. The prototype also has another advantage, it allows for market testing with the actual product to measure the chances of success with the product.

Market Testing

It is important to note that the consumers involved in the concept testing were only involved to improve and gauge the psychological reaction of consumers to the product. In this step, the company is involved in a more high risk actual testing. A control market is chosen, and a percentage of the product development costs allocated to the marketing of the product in this market. Dependent on the results of the actual market tests, the company can either continue with production or begin seeking alternatives for the product. Products that require high investments while at the same time exposing the company to high risks must be tested in the market preferably using several different markets to see the actual reaction before investing further. (Hopkin 2013 ) states that there are four methods of market testing which are available to the company and these are:

  • Simulated test marketing: where consumers are exposed to advertising and actual staged purchase decisions to see how they would react to the company product.
  • Sales wave research: consumers are first offered the new product to make use of it. Once this stage is complete, they are offered the same product for a price and those of the competition for a lower price to see how many times they will select the same product. This type of testing is important in a market where price cutting among the competition is rampant. It helps to determine whether consumers are interested in price or the quality of the product. It also helps in setting the right price for the product.
  • Controlled test marketing: this is similar to a laboratory testing except it is done in stores which are paid to carry the product. Various things are measured including the price, positioning and consumer reaction to the product. Over some time, the sales of the products are measured to determine the ideal circumstances under which sales can be achieved. Consumer’s attitudes towards the products are also measured.
  • Test markets: this is a more difficult procedure than all the rest although it yields more conclusive results. The products are put into a specific market, exposed to the suggested forms of advertising and proper or attractive shelving then tested to see the results of the same. With this form of testing, many things can be put under the test, and the reaction and sales are actual. The results are almost a true reflection of what one will find in the market.

The choice on which test to carry out is dependent on the product and company resources. Time is also a factor as some tests such as the test markets require ample time to produce good results. On the other hand the sales wave research often requires much less time.


With the results of marketing testing, the company could decide to go ahead with the production. In this case, there is need to determine the exact capacity that is required for production, the number of products to be produced and the nature of the investment required to generate success. This stage also includes branding. The first impression of consumers towards a new product is often lasting and difficult to overcome. Extensive investment must therefore be made towards ensuring that the product is presented to the consumer in a positive way. (Peter and Olson 1990) cite that in order to counter advertisements by competitors, brand the product properly and reach the consumer with the right message of the product, the company may spend at least 55% of income from the product in the first year. While this may seem extreme, it is important towards ensuring that success is reached in the market place.

Consumer Adoption

Adoption is the process by which the consumer elects not just to purchase the product but to become a regular user of the same product. Adoption is a process that takes time and which marketers need to be ingrained to so that they can understand how to influence the process to the advantage of the company. Just because sales in the first month after launching the product are high, does not mean that they will remain high unless consumers adopt the product. The decision to purchase a product is not equivalent to the decision to adopt the product. The process of adoption includes the following steps:

  • Becoming aware of the existence of the product through advertising and marketing. Awareness includes identifying ways in which such product could meet the consumer’s needs.
  • Interest: the consumer then develops interest in the nature and qualities of the products. They become attracted to the attributes the product is offering.
  • Evaluation: at this stage, the consumer measures what they will receive form the product, the things they may have to give up in order to experiences the product and the price they will pay for the same. They are basically deciding if the product is worth the cost and challenges they may have to encounter.
  • Trial: this is a vital stage because the consumer purchases the product, makes use of it and determines if what was advertised is the actual result. Should they be disappointed, they are likely to turn away not just from this new product but all products offered by the company.
  • Adoption: once the consumer has become satisfied with the results of the trial, they can elect to either return to former products or adopt the new product. This means that they continue purchasing the product for a while, eventually becoming loyal consumers. These are consumers who do not waver when it comes to the choice of a particular product. Loyalty is the aim of every company to ensure they have a ready market for their products at all times.


There are several factors that influence the success of the product process stated above and these include:

Understanding of the customer needs: the entire process is dependent on interpretation of the consumer needs. Each step is geared towards meeting a particular need of the consumer which will in turn ensure that a ready market is in place. If the needs of the consumer are misinterpreted, failure is imminent.

Early entry into the market: the process is also bound by time. A company cannot take years researching and making a decision with regard to a particular product. The company that brings a unique product to the market first often enjoys a good and strong market. Later entrants find that the company has already created a loyal base of customers which is difficult to take way. In addition the company creates a brand as the experts in that particular industry so that they can also dictate the price of products. This is the case with the soft drink industry where coca cola is often the first and sometimes only choice for consumers for generations.

Management support: innovation is difficult in a culture where creativity and risk is not encouraged. The innovation process is risky and may cost the company; however, the benefits that accrue from the same cannot be ignored. It is vital for management to support the process fully, encouraging investment and supporting the unique ideas generated from employees and other stakeholders (Samli 1995).


The entire process of product process of innovation is directed at creating loyal customers that is encouraging adoption of the new product. Adoption is influenced by the consumer‘s desire to try new products. There are markets dominated by particular products and in which consumers are less than willing to negotiate. This is especially the case when it comes to drugs where people are less willing to try drugs they do not know. Secondly, the company needs to be ware there are different rates of adoption of the new products. There are consumers who are fast and early adopters, immediately they experience they product they adopt. And there are laggards, those who continue testing the products for decades before adoption the same. Each of these consumers needs to be taken care of in the process of product development. Finally innovations needs to be simple, that is easy to understand and make use of otherwise consumers may become resistant towards the product. Complex products even in the field of technology have received less attention often being overtaken by much simpler products. The production process communicates to the consumer with each step, ensuring that the end product is compatible with the needs of the consumer.


Holmes, A. (2002). Risk Management. Oxford, U.K., Capstone Pub.

Hopkin, P. (2013). Risk Management. London, Kogan Page

Nolan, A. (2011). Business Innovation Policies Selected Country Comparisons. Paris, OECD.

Peter, J. P., Olson, J. C., & Peter, J. P. (1990). Consumer Behavior And Marketing Strategy. Homewood, IL, Irwin.

Pinchot, G., & Pellman, R. (1999). Intrapreneuring In Action A Handbook For Business Innovation. San Francisco, Berrett-Koehler

Samli, A. C. (1995). International Consumer Behavior: Its Impact On Marketing Strategy Development. Westport, Conn, Quorum Books.

Wessner, C. W. (1999). The Small Business Innovation Research Program Challenges And Opportunities. Washington, D.C., National Academy Press.


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