Q.
a) Using a residential property development as an example, discuss the various stages of new product development. (15 marks)
b) Explain the strategies used to introduce new property products into the market. (10 marks)
(25 marks, 2014 Q3)
A.
a) Different authors have different preference for the stages of new product development. Some of these stages are 8, some less, at 6 or 5. However, the stages start with an idea or concept, and end with the introduction or launch of the new product.
Some stages incorporate testing with prototypes and some without. It is probably due to the intrinsic condition of the product that some may not require or can never commence testing. For products easily movable, testing is possible during Work-in-Progress. Prototypes can be built for market testing, e.g. software programmes or consumer goods.
However, if the product is large or too costly to build and demolish, for example houses or infrastructures (bridges), rockets, product with specific requirements or adjustment on site, etc., it usually does with Concept Testing, rather than real product testing.
New Product Development Stages
Before a product can embark on its journey through the four product life cycle stages, it has to be developed.
New product development is typically a huge part of any manufacturing process. Most organizations realize that all products have a limited lifespan, and so new products need to be developed to replace them and keep the company in business. Just as the product life cycle has various stages, new product development is also broken down into a number of specific phases.
New Product Development
Developing a new product involves a number of stages which typically center around the following key areas:
The Idea: Every product has to start with an idea. In some cases, this might be fairly simple, basing the new product on something similar that already exists. In other cases, it may be something revolutionary and unique, which may mean the idea generation part of the process is much more involved. In fact, many of the leading manufacturers will have whole departments that focus solely on the task of coming up with ‘the next big thing’.
Research: An organization may have plenty of ideas for a new product, but once it has selected the best of them, the next step is to start researching the market. This enables them to see if there’s likely to be a demand for this type of product, and also what specific features need to be developed in order to best meet the needs of this potential market.
Development: The next stage is the development of the product. Prototypes may be modified through various design and manufacturing stages in order to come up with a finished product that consumers will want to buy.
Testing: Before most products are launched and the manufacturer spends a large amount of money on production and promotion, most companies will test their new product with a small group of actual consumers. This helps to make sure that they have a viable product that will be profitable, and that there are no changes that need to be made before it’s launched.
Analysis: Looking at the feedback from consumer testing enables the manufacturer to make any necessary changes to the product, and also decide how they are going to launch it to the market. With information from real consumers, they will be able to make a number of strategic decisions that will be crucial to the product’s success, including what price to sell at and how the product will be marketed.
Introduction: Finally, when a product has made it all the way through the new product development stage, the only thing left to do is introduce it to the market. Once this is done, good product life cycle management will ensure the manufacturer makes the most of all their effort and investment.
Thousands of new products go on sale every year, and manufacturers invest a lot of time, effort and money in trying to make sure that any new products they launch will be a success. Creating a profitable product isn’t just about getting each of the stages of new product development right, it’s also about managing the product once it’s been launched and then throughout its lifetime.
This product life cycle management process involves a range of different marketing and production strategies, all geared towards making sure the product life cycle curve is as long and profitable as possible.
Brief Summary:
[For a residential property development, the new product development can be as follows:-
New Concept - Bungalow with Swimming Pool to enhance 'Exclusivity'.
Research - Carry out research in the proposed area with surveys (primary research) or conduct secondary research with clubs which have swimming pool in the vicinity area. This can provide some information of swimming as a hobby. Secondary data can be obtained from sale of swimming trunks, goggles, etc. in the shopping area surrounding the proposed site.
Develop - 'Concept' visualization with graphics or model houses on display for 'conceptualization'. For example, type of structure, size of the pool and fencing, if any.
Testing - Put up a modal sample in shopping mall to get response from the public. Conduct email survey with graphics for potential clients. Conduct face-to-face interviews with families at the housing estate nearby.
Analysis - Study the response collected and come out with a conclusion. Analyse adjustments which are required, or even consider if the product is not feasible for market. At this stage, the product features, pricing, promotion channel and quantity to build would be determined based on the strategies of the company. For a developer with a large piece of land, the land cost may be lower. Hence, it may be still profitable to build in large numbers and sell at a relatively lower price range. On the other hand, if land is limited, the strategy would be limited units with high end quality and price.
Launch - Introduce the new product Bungalow with Swimming Pool to the market according to the best channel, price and features of the product. Continuous gathering of market feedback (market intelligence) to make further strategic plan for the new product.]
Ref:
Product Life Cycle Stages. New Product Development stages, available from
[x] own account.