Companies have different ways of dealing with product development. Some companies have specific departments that handle all the duties related to new product development. Other companies such as Boeing use venture teams, which comprises of employees from different departments working together to ensure the success of new product in the market. The venture teams handle all aspects of product development including engineering, research and development, design, accounting, finance, and production. This quickens the time it takes to launch a product in the market, and it helps in saving costs (Lamb, Hair and MacDaniel 331). Test marketing enables the company to know whether the product will be successful once it is launched in the market.
Some companies find it necessary to develop a prototype first. However, this is not necessary in all cases of product development. Test marketing is crucial because it enables the company to know the areas that need improvement before full production begins. The company determines whether it will need to re-strategize on different marketing elements such as advertising, packaging, or the product content, based on the reaction from the consumers during test marketing. Companies assign a limited time for test marketing, and marketers have to ensure that they work within the assigned time frame. They need to select the areas where they will test their products carefully and consumers in the test area should reflect the company’s target market.
Once the company has decided to produce the product, the next step involves commercializing the product. This involves placing the product in the market, and it incurs the highest cost to the company (Kazmi 269). Therefore, the company needs to rectify any mistakes in the product to ensure that it does not incur any more expenses. Marketing helps in dealing with uncertainty and in building demand for the product. Commercialization includes ordering the materials and equipment for production, shipping the products, training the sales personnel, and advertising the product. This costs a lot of money for companies. For instance, the marketing budget for Gillette Mach3 in the first year was $300 million (Lamb, Hair and MacDaniel 333). Therefore, companies must be prepared to spend a lot of money for commercializing their products. Companies can simplify some of the processes, and this can help reduce the costs. For instance, marketing using social media has reduced advertising costs for companies.
It is vital to consider the element of time. Despite effective planning, the people involved in product development may encounter some hitches that may cause delays. Some products may end up taking more time than expected before they are launched in the market. For instance, Gillette took twenty-seven years to develop three shaving systems, and was only able to develop the Mach3 in 1998 (Lamb, Hair and MacDaniel 331). Companies need to ensure that they allocate adequate resources to ensure that they are able to complete the development of new products. Time planning is essential because it enables companies to minimize competition.
Companies that respond quickly to the customers’ needs gain a competitive advantage. Honda took advantage of this when it developed fuel-efficient cars for the American market (Maher, Stickney and Weit 122). This enabled it to know what the consumers wanted in their products. It also gave the company a chance to develop their products further and to correct any mistakes. The concept of time also includes the break-even time, which is the time that companies take to recover their investment. This begins immediately the company approves a project and starts working towards its development (Maher, Stickney and Weit 122).
Companies understand the importance of quality in ensuring the success of the new product in the market. Competition has increased, and this has made it necessary for companies to create high quality products that satisfy the customers’ needs. When marketing the products, marketers have to ensure that they emphasize the product features as they often distinguish the products from other products in the market. This is especially the case when companies are dealing with existing products. The more features a product has, the more likely that the product will succeed in the market. Knowing the right product features includes conducting thorough research to determine what the customers want, and what they might need in the future. Companies cannot realize the success of their products without guaranteeing product safety. The products have to be safe for consumers to use. Failure to observe safety might affect the performance of other products in the future.
Lack of research, bad timing for the introduction of the product, and product design problems are some of the reasons that contribute to failure of new products (Kazmi 259). Conducting research will enable the company to know whether the market is ready for the product at that particular time, and this will help the company to avoid making losses. In some cases, the design of a product entices the customers to purchase the product. This is especially the case if there are other similar products in the market. Customers can sometimes purchase products if they like the design. Other factors such as poor positioning of the product, low quality, and improper distribution channels will contribute to poor performance of the product in the market.
Kazmi, S. H. Marketing Management. New Delhi: Excel Books India, 2007. Print
Lamb, W. Charles, Joseph F. Hair and Carl D. MacDaniel. Marketing. New York: Cengage Learning, 2008. Print
Maher, W. Michael, Clyde P. Stickney, Roman L. Weil. Managerial Accounting: An Introduction to Concepts: An Introduction to Concepts, Methods and Uses. New York: Cengage Learning, 2011. Print