Product Development

Design

Once product concepts have been developed and screened, it is time for R&D to design and craft new products from the chosen concepts. Consumer requirements need to be translated into engineering and manufacturing parameters that are measurable and controllable. Engineering needs to make trade-offs so that the product can best satisfy the diverse needs of consumers at a price they are willing to pay.

This process of designing and testing of products is covered in detail in the next chapter, Product Design.

Marketing Mix

In addition to the product, other elements of the marketing mix also need to be developed and aligned to form a holistic, well-coordinated marketing strategy. These elements include:

• Target definition
• Naming
• Positioning
• Packaging
• Pricing
• Trade emphasis and placement in store

Consumer research can help to explore, develop and refine the marketing mix. This research takes the form of a two or three-stage sequential series of group discussions, referred to as marketing mix clinics.

In the first stage of group discussions, a broad range of options around each element of the marketing mix are explored and prioritized. Consumers participating in the group discussions help to evolve and further develop the stronger ideas. Subsequent stages of group discussions are used to refine and optimize the marketing mix.

Validation

Once the product prototypes are ready and the marketing mix is finalized, a pre-launch validation is called for. This provides for a sales estimate of the new product prior to launch, and is used by management to make the “go/no-go” decision. Besides volume forecasting, validation techniques also provide diagnostic insights on how to improve the marketing mix and optimize performance.

Methods commonly used for validation purposes include simulated test markets (STM) and controlled store tests (CST). STMs are particularly popular with FMCG categories and their use is growing within consumer durables.

Alpha and Beta Testing

Exhibit 9.16   Product failure can cause extensive damage to brand equity and company reputation, as was the case with Samsung when the Galaxy Note 7 was recalled after heating of the batteries caused some of the phones to catch fire and explode.

In a number of businesses, product prototypes need to be tested by real customers. This is usually a two-stage process. Initial laboratory tests conducted by individuals within the company are referred to as alpha tests. The next stage called beta testing or field testing is at customers’ workplace in real usage conditions. Beta testing is the terminology used in the IT sector; manufacturing industries call it field testing.

The feedback after each stage of testing is used to fine tune the new product and iron out any issues.

Test processes need to be thorough to minimize the costs and consequences of in-market failure. The importance of this is highlighted by the numerous well-publicised incidents of product failures such as the Galaxy Note 7 shown in Exhibit 9.16.

Beta testing also needs to be managed without compromising product security, to contain the risk of revealing details of the new product to competitors.