New Product Development

Product• A product is anything that can be offered by the

market to the customer to satisfy needs and wants.

• A product is a combination of

-Physical attributes

-Subjective attributes

Product

Tangible Intangible

New Product Development

IntroductionA new product is any product which is perceived by the customer as being new.

Reasons for NPD

• Change the consumer

needs

• Technology

• Good Image

New-Product DevelopmentStrategy

Acquisition

Research & Development

Categories Of New ProductBOOZ, ALLEN & HARMILTON have

identified 6 categories of new products, such as:

1: New to the world.

2: New to the product lines.

3: Additions to the existing product line.

4: Improvements & revisions of existing products.

5: Repositioning.

6: Cost reductions.

New Product Failures

• Only10% of new products still on the market and profitable after 3years.

• Failure rate for industrial products as high as 30%.

• Why?

• Overestimation of market size

• Design problems

• Incorrectly positioned, priced, or advertised

• Pushed despite poor marketing research findings

• Development costs Competition

Process Of New Product Development

New Product Development Process

Step 1- Idea Generation

New product ideas come from interacting with

various groups & from using creativity generation

techniques like BRAINSTORMING, etc.

External Sources

Customer Questions & Complaints

Distributor Feed backs

Compotators activates e.g. their Ads as a clue

Internal Sources

R&D Cell

Employees feed backs

Step 2: Idea Screening

• Purpose - To drop poor ideas as early as possible.

• Thus an idea committee is formed to classify the proposed ideas into 3 categories:• Promising

• Marginal

• Rejects

Selection Decision Outcomes

Accept Reject

Successful

Unsuccessful

Correct

Decisions

Reject

Errors

Accept

Error

Correct

Decision

Step 3: Concept Development & Testing

A concept is an elaborated version of a product idea expressed in

meaningful consumer terms.

Example: Following concepts can came across:

Concept 1: Fruit Juice For Young & Grown Ups As A Funny Thirst

Quenching Item.

Concept 2: Fruit Juice For Children As A Health Supplements.

Concept 3: For Adults As A Nutritional Energy Supplements.

Step 4: Business Analysis

Main aim- To find out whether the product satisfies the company objective or not..

Analysis

Profit

CostSales

Step 5: Prototyping & Market TestingThe product idea can be translated into

technically & commercially feasible product????

Major Testing

Alpha Testing

Beta Testing

Step 6: Technological Implementation

Involves-

• the technological relevance of

current technologies

• the firm’s knowledge &

experience of the techniques

• manpower in handling those

technologies etc.

Step 7: CommercializationCompany takes decision like to go in for large scale

production

marketing of the new product.

The important factors to which strategists should focus here are:

Market entry timing period.

Whether to lunch the product in a single locality, a region, several regions, nationally or internationally, i.e. geographic strategy.

To whom the new product should target for i.e. targeting & segmenting.