Product Development

As marketing experts we are continually asked, “Can you give us some ideas for a new product, a new development, a new game?” Our answer is simple – listen to the customer, and follow the marketing process.

At SMS we define marketing as the quantitative and qualitative process of identifying and fulfilling customer needs. A new product has a greater chance to succeed if it resonates with customers and fulfills their needs. So how does the process work?

Where are ideas generated?

New product ideas come from many sources.

There are countless examples of successful new products that have been developed by each of these sources. An example of a new product developed by an inventor is Tetris, the all-time most successful electronic game. Of course, the game would not have been possible without the technological development of the computer.

Underarm deodorant is an example of consumer research product development. For centuries people were spraying themselves with perfume to cover body odor. Consumer frustration with this process was conveyed through marketing research. Marketing managers working with R&D developed a new category – the deodorant category.

However, just getting a new idea does not lead to success. “Build it and they will come” is simply too expensive an option.

New Product Concept Test

The marketing process requires each new product to be tested prior to production. This not only helps minimize the financial risk (the research cost is usually less than two percent of the potential new product development costs), but also optimizes ROI since this process helps fine-tune the product.

A concept test starts with a consumer description of the planned new product. In some cases, a model or an artist’s rendition of the product is included. It is important to clearly state the features and benefits of the product.

Concept testing usually starts with focus groups. If the product is proven successful, a quantitative survey is undertaken. The quantitative survey may be executed by phone, in person, or through the Web. The survey outcome will include as a minimum:

  1. Likelihood to buy new product
  2. Likes and dislikes, needed adjustments
  3. Expected distribution channels
  4. And at times, pricing acceptance measurement

Modeling Future Success

Based on the quantitative data, SMS models the results utilizing the Everett M. Rogers “Diffusion of Innovation”model.

This model provides marketing experts with the ability to more accurately forecast consumer acceptance of new products. SMS also recognizes that the research is based on full consumer awareness of the product, and in reality, building product awareness can be more difficult. SMS will therefore also review with the client the media market, the planned investment, calculate the level of awareness that will be achieved after introduction, and thus help complete a financial model and ROI.

Post-Launch Measurement

The marketing process requires not only pre-testing the potential product, but also measuring its performance after introduction. Depending on the product’s life cycle, post-measurement can be undertaken within three months, six months or a year after launch. Annual measurement should be undertaken on all new products. The research methodology utilized is known as Awareness, Trial, and Usage study. Such measurements help fine-tune the product, as well as its advertising, targeting, distribution, and other important factors.

Client Testimonials

SMS did a great job in leading Hawai‘i Tourism Authority’s evaluation development process…including identifying input, output and outcome measures to track progress toward HTA’s strategic goals. SMS also provided steps to guide us in integrating the evaluation process into our overall operations and planning. Our staff was actively engaged in the process and tracking the measures will ensure a focus on driving towards outcomes.

— Leslie Dance, former VP Marketing
Hawai‘i Tourism Authority

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