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Customer needs and preferences are changing everyday in addition to the constant launching of new competitor products. So how can businesses attract their target market in such a dynamic environment?
One solution to this dilemma is New Product Development (NPD) which can be the best way to stay ahead of the game and engage the consumers of a company’s brand. Although NPD is a difficult process and can involve a lot of time and money, the rewards can be significant. Here are 8 simple recommended steps for successful NPD:
- Idea Generation: Get an in-depth analysis of the business environment that the company is tackling including market trends. This information can give rise to new concepts that can potentially set the business apart from its competition. A company needs to know what’s happening with their rivals before it decides to dive into the industry.
- Screening the Idea: Think about the new products that competitors are launching and how much market share they could potentially acquire. Identifying the benefits that end consumers expect can help determine whether or not it is feasible to enter the market. Evaluate the idea and decide to move forward or revert back to generating concepts.
- Concept Tests: An important step of the process is to test the concept or idea. This involves determining if the consumer understands the product or if they would actually need the product or service that a business is planning to develop. A good concept test can give significant insight into what consumers are thinking about the proposed idea from a firm.
- Business Analytics: Another essential element of NPD is building a system of input and output metrics to provide feedback during the process. If the idea is feasible according to the system the business has developed then it is worth exploring. Don’t try and create a product or service that won’t give the business the results it wants.
- Beta / Marketability Tests: It’s time to really put the new product or service to a test. Conduct private test groups, implement beta trials, and develop test panels to get essential feedback into what the market thinks about what the company is offering. These valuable insights can reveal last minute improvements that are needed before launching the new product.
- Product Development: Now that the company knows what its target consumer needs, it is time to finalise any alterations to the production or marketing process before launching and going commercial. Make sure everything is covered, don’t fall short on promises that are made to customers.This can affect the business’ brand.
- Commercialisation: At this point, the new product is finally out in the market. You’ve made it! Now it is time to think about supporting the product and its path to success. Distribution channels and advertising need to be tailored in accordance to the company’s target market and their specific requirements. Do just enough to keep the audience interested, but do not overload them.
- Post Launch: Questions around pricing and improvements are going to come up during this stage so make sure the business has a plan in place. They will also get a chance to explore different selling strategies as their product ages. There will be continuous opportunities for differentiation as consumers may change their habits and preferences over time. Businesses can tackle this problem with an effective market research plan.
Research also matters in New Product Development.
The NPD process may be straightforward, but capturing and evaluating the data necessary to make informed decisions is not. Thus, when bringing new products to the market, businesses have a high chance of failure if they don’t have the proper insights. According to Marketing Week three out of four new FMCG product launches fail within the first 12 months!
Let’s look at Pepsi for example. In 1989, the company launched Pepsi A.M,. attempting to target the breakfast soda drinker. However, Pepsi failed to conduct proper market research. Although the company believed there would be a large enough audience of breakfast drinkers, consumers did not take to the new product and in one year it was off the shelves.
Truly understanding what the market wants is imperative for NPD to succeed. Given that developing a new product may represent a significant investment for any business, it is essential to do some homework to achieve a positive return. Thorough research to better understand what a company’s target market wants will aid businesses to successfully enter the market.
What does the target market need? Where and when would they buy it? How much would they pay for the new product? These are essential questions that need answering before launching a new product. Know the customers, communicate with them and keep them engaged with the business brand.
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