None of the above necessarily creates a new product, but each variable has the potential to define, shape or influence the creation of a new product. The Test Market. No matter how perfect the new product development system, no matter how clever the new products team, no matter how esoteric the research techniques, and no matter how creative the advertising agency, the new product and its marketing elements are not likely to be perfect at the point of test market entry. This means that success, or failure, often depends upon how quickly and competently new products and marketing elements are modified and refined as the test market unfolds. One of the surest ways to kill a new product is an unrealistic introductory budget.
New products tend to lose money at first.
The first proposed test market budget, therefore, usually shows the new product will lose money. Upper management does not like projects that lose money. The new products team increases the size and number of test markets to increase sales volumes, to achieve economies of scale. The budget numbers now look better, but not good enough for upper management. So, the new products team increases the projected share of market until the budget is acceptable to upper management.