Managing New Products: Ideas to Strategy 165
Concept Testing
Concept testing involves presenting the product concept to appropriate target con-
sumers and getting their reactions. The concepts can be presented symbolically or
physically. However, the more the tested concepts resemble the final product or expe-
rience, the more dependable concept testing is. In the past, creating physical proto-
types was costly and time-consuming, but computer-aided design and manufacturing
programs have changed that. Today firms can design a number of prototypes via com-
puter and then create plastic models to obtain feedback from potential consumers.^8
Companies are also using virtual reality to test product concepts.
Many companies today use customer-driven engineeringto design new products.
Customer-driven engineering attaches high importance to incorporating customer
preferences in the final design. National Semiconductor uses the Internet to enhance
its customer-driven engineering by tracking what customers search for on its Web site.
Sometimes, says the company’s Web services manager, it is more important to know
when a customer did not find a product than when he did. That helps National
Semiconductor shrink the time needed to identify market niches and create new
products.^9
Marketing Strategy Development
After testing and selecting a product concept for development, the new-product man-
ager must draft a three-part preliminary marketing-strategy plan for introducing the
new product into the market. The first part will describe the target market’s size, struc-
ture, and behavior; the planned product positioning; and the sales, market share, and
profit goals sought in the first few years. The second part will outline the planned
price, distribution strategy, and marketing budget for the first year. The third part will
describe the long-run sales and profit goals and marketing-mix strategy over time. This
plan forms the basis for the business analysis that is conducted before management
makes a final decision on the new product.
Business Analysis
In this stage, the company evaluates the proposed new product’s business attractiveness
by preparing sales, cost, and profit projections to determine whether these satisfy com-
Figure 3-9 Product and Brand Positioning