**2.1. New product development process**

**1.3. Components of a product**

14 Product Lifecycle Management - Terminology and Applications

of a school is imparting knowledge.

**2. New product development**

use any of the following ways to get a product, among others.

Nigeria (AMCON) by Skye Bank Plc.

*1.3.1. Core product*

*1.3.2. Tangible product*

*1.3.3. Augmented product*

and checkout.

In product development discourse, marketers should understand the key components that make up any product, be it a good or service. The import of this is that it will enable companies to know what to incorporate in their product in order to produce a good and acceptable product. Products have three main components; the core, tangible, and augmented services.

The core product constitutes the unique selling propositions of the product or service. It connotes the key benefits that a customer is looking for in a given product. Core product provides satisfaction to the customer, thereby becoming the main reason for producing and buying the product. It is an intangible attribute that is built in the product. For example, the core of a robot is performance through artificial intelligence; that of aspirin is pain relief, while the core

This is a product component that can be seen, touched, and identified. In most cases, it is the tangible product that makes the core product tangible and ready for repeated purchases, especially packaging, brand names, marks, or symbol and distinctive coloring. For example, the colors of Chelsea and Manchester football clubs of England are blue and red, respectively.

This is the support package that completes a total product offering such as after-sales service, warranty, delivery, and installation. At this level, the marketer prepares an augmented product that seeks to exceed customer expectations. For example, the hotel can include remotecontrolled TV, 24/7 free Wi-Fi internet service, fresh flower, room service, and prompt check-in

Product managers only manage the brands produced and introduced into the market. This goes to show that a company has to first develop a product or follow any legal means to acquire a product in order to sell it to the target market. For this reason, it may not be out of place if we appraise the ways through which a company obtains a product. A company can

**i.** Merger with other company, such as the one between Nigerian Breweries and Conso-

**ii.** Acquisition of an existing company or brand, such as 7Up and Pepsi; Coca-cola and Limca as well as acquisition of Mainstreet Bank limited from Asset Management Company of

lidated Breweries, which increases the product portfolio of both companies.

New product development (NPD) is a complete process of creating and bringing a new product to market. New product development is the process of exploiting market opportunity by turning it into a product or service available for sale. A good understanding of customer needs and wants, the competitive environment and continuous practices, and strategies to better satisfy the customer requirements and increase their market share regulate development of new products. The notion of new product needs to be explained here. By and large, the newness of a product depends on what the customer or target market consider as new. For this reason, a new product can be an invention (entirely new which does not exist before), innovation (new to the company but existing in the industry), or product modification (changing the package, size, design and other features). There are eight steps involved in new product development namely:


**1. Idea generation**: It is the act of getting as many ideas as possible. Ideas for new products can be obtained from customers, sales representatives, employees, distributors, company's research and development department, competitors, focus groups, or brainstorming. Lots of ideas are generated about the new product and out of these ideas some are implemented. Idea generation or brainstorming of new product, service, or store concepts usually begins when market opportunities are identified so as to support your idea screening phase.

product in order not to expose it to competitors who can easily see and imitate it to come

Product Development and Management Strategies http://dx.doi.org/10.5772/intechopen.80345 17

**8. Commercialization**: This is the final stage of the development process in which the new product will be launched or born. Once it is introduced, it is no longer under the company's control but that of the market. Here a company has to decide on when, where, and how to introduce the product. The timing of the launch is critical as it can make or mar the product's success. For example, launching a new ice-cream during cold season is a wrong timing. The place or venue of launching should also be strategic and closer to the target market. Similarly, a company has to decide on how it can launch the product. There are two main options here namely waterfall and sprinkler approaches. In waterfall approach, a company decides to commercialize it at once in the whole market, which is, introducing it to the whole Nigerian market at a go for instance. The other option is to launch it gradually from one section to another up to the time that the whole market is covered, thus using sprinkler technique. However, the choice of an option depends on the nature of the

In addition, to make its commercialization successful, a company should produce and place an effective promotion to create awareness after ensuring that the products are adequately distributed throughout the market. This is because it will be counterproductive for a company

Nevertheless, it is important to note that these steps may not be followed religiously as some stages may be eliminated or done concurrently in order to reduce the time that the new product development process takes. There are two types of new product development strategies namely proactive and reactive product development strategies. Most leading companies in the industry see new product development as a *proactive* process, where resources are allocated to identify market changes and seize upon new product opportunities before they occur. Conversely, a *reactive* strategy is adopted by follower and strong challengers in which nothing is done until problems occur or the pioneer company introduces an innovation. And because product development process typically requires both engineering and marketing expertise, cross-functional project teams are usually formed to execute the task. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management or project manager as the case may be. Thus, the path to develop successful new products points out three key processes that can play critical role in product development. They are talking to the customer, nurturing a project culture, and

The key to successful new product introduction is its acceptance by the customers and this is determined by the adoption process. Adoption process is a series of stages by which a consumer decides to adopt a new product or service. In today's competitive world, a consumer is faced with a lot of choices from a number of competing products. A consumer often passes through five stages in deciding to adopt or accept an innovation from awareness to adoption.

up with their own version sometimes even quicker and better than the initiator.

market, company's resources and level of competition in the market.

to promote a product that cannot be found in the market by potential buyers.

keeping it focused [4].

**2.2. New product adoption process**

These stages are briefly explained below.


product in order not to expose it to competitors who can easily see and imitate it to come up with their own version sometimes even quicker and better than the initiator.

**8. Commercialization**: This is the final stage of the development process in which the new product will be launched or born. Once it is introduced, it is no longer under the company's control but that of the market. Here a company has to decide on when, where, and how to introduce the product. The timing of the launch is critical as it can make or mar the product's success. For example, launching a new ice-cream during cold season is a wrong timing. The place or venue of launching should also be strategic and closer to the target market. Similarly, a company has to decide on how it can launch the product. There are two main options here namely waterfall and sprinkler approaches. In waterfall approach, a company decides to commercialize it at once in the whole market, which is, introducing it to the whole Nigerian market at a go for instance. The other option is to launch it gradually from one section to another up to the time that the whole market is covered, thus using sprinkler technique. However, the choice of an option depends on the nature of the market, company's resources and level of competition in the market.

In addition, to make its commercialization successful, a company should produce and place an effective promotion to create awareness after ensuring that the products are adequately distributed throughout the market. This is because it will be counterproductive for a company to promote a product that cannot be found in the market by potential buyers.

Nevertheless, it is important to note that these steps may not be followed religiously as some stages may be eliminated or done concurrently in order to reduce the time that the new product development process takes. There are two types of new product development strategies namely proactive and reactive product development strategies. Most leading companies in the industry see new product development as a *proactive* process, where resources are allocated to identify market changes and seize upon new product opportunities before they occur. Conversely, a *reactive* strategy is adopted by follower and strong challengers in which nothing is done until problems occur or the pioneer company introduces an innovation. And because product development process typically requires both engineering and marketing expertise, cross-functional project teams are usually formed to execute the task. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management or project manager as the case may be. Thus, the path to develop successful new products points out three key processes that can play critical role in product development. They are talking to the customer, nurturing a project culture, and keeping it focused [4].

#### **2.2. New product adoption process**

**1. Idea generation**: It is the act of getting as many ideas as possible. Ideas for new products can be obtained from customers, sales representatives, employees, distributors, company's research and development department, competitors, focus groups, or brainstorming. Lots of ideas are generated about the new product and out of these ideas some are implemented. Idea generation or brainstorming of new product, service, or store concepts usually begins when market opportunities are identified so as to support your idea screening phase.

**2. Idea screening**: It is the process of screening the ideas generated in order to do away with those ideas that are not consistent with the company's objectives and resources. This is with a view to eliminate ideas that are not feasible, viable, and acceptable. Many organizations use different criteria in screening the ideas, but in general, screeners often look at the

**3. Concept development and testing**: The ideas that pass through the screening stage are then developed into concept on paper stating clearly the marketing and engineering details of the product. In essence, the concept will indicate the target market for the product, its benefits, features, and attributes as well as the planned proposed selling price for the product. Similarly, concept should contain the estimated cost of producing the product and its perceived competing brands in the chosen market. When the concept is developed, it has to be tested by asking a number of prospective customers to evaluate the idea based

**4. Business analysis**: This stage of the new product development process is geared toward evaluating the overall cost, sales revenue, and profit potentials of the contemplated product idea. This is achieved through such analysis as industry's market potential, market size and growth rate, sales forecast and demand estimation, as well as the estimated profitability, and break-even point for the target product. The main purpose of this analysis is identifying those ideas that are apparently feasible and financially viable. Ideas that are

**5. Marketing strategy development**: The most viable ideas that scaled through the previous stages can be used as good candidates for marketing strategy development. In its basic form, this stage calls for formulating the product, pricing, distributing, and promotion strategies to be used in marketing the proposed products when it is introduced. It is pertinent to note that these strategies should be flexible such that it can be modified to conform

**6. Product development**: It is at this stage that the actual or physical prototype of the successful idea will be produced. For example, if a company is producing an auto car it will produce a car prototype-like toy car containing all the features and designs specified in the concept development stage. If it is a service, a complete service package will be developed

**7. Test marketing**: Here, the company will test the product (and its packaging) in typical usage situations by conducting focus group customer interviews, dealer research or test it at trade shows to determine customer acceptance or otherwise. The company can use the outcome of the test to make adjustments on the planned marketing strategy where necessary. However, a company has to be extra careful in test marketing its planned new

viability, feasibility, and acceptability of the ideas at hand.

on its feasibility and marketability.

16 Product Lifecycle Management - Terminology and Applications

not viable can also be dropped at this stage.

to the dynamism of the environment.

ready for test marketing.

The key to successful new product introduction is its acceptance by the customers and this is determined by the adoption process. Adoption process is a series of stages by which a consumer decides to adopt a new product or service. In today's competitive world, a consumer is faced with a lot of choices from a number of competing products. A consumer often passes through five stages in deciding to adopt or accept an innovation from awareness to adoption. These stages are briefly explained below.


or low entry barriers. Otherwise, it may even die at this stage. This happened with Fanta blackcurrant soft drink brand of Nigerian Bottling company makers of Coca-cola which died

Product Development and Management Strategies http://dx.doi.org/10.5772/intechopen.80345 19

**Growth stage**: The growth stage is the next phase of the "S" shaped product life cycle. The growth here means increased sales of the product because it is widely accepted by the target market. As the sales rise, the market will also grow and revenues will now upset the initial cost of developing and launching the product resulting to profit generation. To maintain the growth momentum, a company has to emphasize brand preference in its promotion rather than brand awareness.

**Maturity stage**: When sales stabilize and market is saturated the maturity stage sets in. This is probably the most competitive time for most products and businesses. Companies here need to consider the strategy of product modifications, market expansion, or marketing mix modification, which might give them a competitive advantage. The aim here is to get more customers for the product. Organizations usually like to maintain their products in this stage

**Decline stage**: This stage is characterized by steady decrease in sales and profit in the market. This may be because the product has lost its appeal with the customers or presence of better products in the market or the product becomes obsolete, and therefore needs further improvements. Companies do not like this stage because of its adverse consequences and will do everything possible to avoid it. However, for some products this stage is inevitable, and as a result, measures should be put in place to either resuscitate the product or phase it out of the market. In general, the main objective of the product life cycle stages is to enable product managers to know how they can enhance the performance of the products within the context

Some products follow the idealized S-shaped life cycle as explained above, while others follow some patterns depending on how they are managed in the market by the company. This

in order to enjoy the cash inflows from the market, but it is very difficult to manage.

immediately after introduction.

**Figure 1.** Product life cycle stages. Source: [5].

of the company's business strategies [6].

*2.3.1. Product life cycle patterns*

**5. Adoption**: Based on the outcome of the trial process, this is where the consumer finally decides to adopt the product. It is expected that the customer will continue to buy the product repeatedly based on the satisfaction he/she derives from using the product or service. Otherwise, the process might end in rejection.

#### **2.3. Product life cycle and its stages**

Products are like human beings, they spend their life in the market. Some stay longer in the market, while others have a shorter life span. However, unlike human beings whose life is in the hands of God, the life of a product is controlled by the company and its market. It depends on whether it is adopted or rejected by the target market. Therefore, because companies know that the products they sell all have a limited lifespan, majority of them invest heavily on new product development in order to make sure that their businesses continue to grow. By and large, the product life cycle has four very clearly defined stages, each with its own characteristics [4]. These stages are introduction, growth, maturity, and decline stage (**Figure 1**) [5].

**Introduction Stage**: Once a product is launched in the market, it enters into the introduction stage. This is the first stage in an ideal product life cycle. It is characterized by high promotion and intensive distribution especially for fast moving consumer goods (FMCG). These marketing activities often lead to increase in costs at the initial stage particularly for a company with a pioneering status which has to spend a lot to create awareness. It is at this stage that the product is formally born and it enters the competitive field in the market. This goes to show that once in a market, the product's life is determined by the market forces and the ability of the company to manage the product successfully in the market. Thus, if the product is accepted in the market, it will attract other competitors to the market if the market has no

**Figure 1.** Product life cycle stages. Source: [5].

**1. Awareness**: This is the step where major marketers spend a huge sum of money to create awareness about their innovation. This can be done through intensive advertising campaigns, aggressive selling, use of consumer and dealer sales promotion, and e-marketing

**2. Information search**: Following the dissemination of adequate information about the product, buyers in the market will be aware of the product and will look for more information in order to know it better. People search for information from company adverts, dealers,

**3. Evaluation**: Here, the prospective buyer uses the information obtained to compare different product features and benefits such as price, performance, quality, availability, or

**4. Trial**: It is usually done on products with low unit value and higher degree of divisibility. For technical products and other bigger assets, marketers use demonstration to enhance its trialability. This is, however, difficult in services as services are generally intangible in nature. However, service marketing managers do find ways of offering trial packs to users, but it is easier in product marketing through sales promotional activities like giving out

**5. Adoption**: Based on the outcome of the trial process, this is where the consumer finally decides to adopt the product. It is expected that the customer will continue to buy the product repeatedly based on the satisfaction he/she derives from using the product or

Products are like human beings, they spend their life in the market. Some stay longer in the market, while others have a shorter life span. However, unlike human beings whose life is in the hands of God, the life of a product is controlled by the company and its market. It depends on whether it is adopted or rejected by the target market. Therefore, because companies know that the products they sell all have a limited lifespan, majority of them invest heavily on new product development in order to make sure that their businesses continue to grow. By and large, the product life cycle has four very clearly defined stages, each with its own characteristics [4]. These stages are introduction, growth, maturity, and decline stage (**Figure 1**) [5].

**Introduction Stage**: Once a product is launched in the market, it enters into the introduction stage. This is the first stage in an ideal product life cycle. It is characterized by high promotion and intensive distribution especially for fast moving consumer goods (FMCG). These marketing activities often lead to increase in costs at the initial stage particularly for a company with a pioneering status which has to spend a lot to create awareness. It is at this stage that the product is formally born and it enters the competitive field in the market. This goes to show that once in a market, the product's life is determined by the market forces and the ability of the company to manage the product successfully in the market. Thus, if the product is accepted in the market, it will attract other competitors to the market if the market has no

communication.

sales agents, and other consumers.

18 Product Lifecycle Management - Terminology and Applications

**2.3. Product life cycle and its stages**

durability. All this is an attempt to make rational decision.

free samples, contests, premiums, discounts, etc.

service. Otherwise, the process might end in rejection.

or low entry barriers. Otherwise, it may even die at this stage. This happened with Fanta blackcurrant soft drink brand of Nigerian Bottling company makers of Coca-cola which died immediately after introduction.

**Growth stage**: The growth stage is the next phase of the "S" shaped product life cycle. The growth here means increased sales of the product because it is widely accepted by the target market. As the sales rise, the market will also grow and revenues will now upset the initial cost of developing and launching the product resulting to profit generation. To maintain the growth momentum, a company has to emphasize brand preference in its promotion rather than brand awareness.

**Maturity stage**: When sales stabilize and market is saturated the maturity stage sets in. This is probably the most competitive time for most products and businesses. Companies here need to consider the strategy of product modifications, market expansion, or marketing mix modification, which might give them a competitive advantage. The aim here is to get more customers for the product. Organizations usually like to maintain their products in this stage in order to enjoy the cash inflows from the market, but it is very difficult to manage.

**Decline stage**: This stage is characterized by steady decrease in sales and profit in the market. This may be because the product has lost its appeal with the customers or presence of better products in the market or the product becomes obsolete, and therefore needs further improvements. Companies do not like this stage because of its adverse consequences and will do everything possible to avoid it. However, for some products this stage is inevitable, and as a result, measures should be put in place to either resuscitate the product or phase it out of the market. In general, the main objective of the product life cycle stages is to enable product managers to know how they can enhance the performance of the products within the context of the company's business strategies [6].
