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INTRODUCTION
Product development means making changes inthe size, design, color, shape, characteristics, packing
etc. of the product. It may include addition of a new
product line, addition of a new product item in a
particular product line, elimination of existing product
or product line & changes in the size, color, design,
packing, characteristics, and prices of the product &
discontinuation of the unprofitable item or product
line.
A new product is any product which is perceived by
the customer as being new.
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REASONS FOR NEW PRODUCTS
There are at least 3 reasons for which new
products should be developed.
1st, new products become necessary for meetingthe changes in consumer needs.
2nd, new products become necessary for making
new profits.
3rd, new products become necessary for combating
environmental threats.
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CATEGORIES OF NEW PRODUCTS
BOOZ, ALLEN & HARMILTON have identified 6 categoriesof 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.
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FACTORS OF NEW PRODUCT DEVELOPMENT:
New product development is a continuous function ofmarketing management in the present day highly competitiveenvironment. In the process of new product development, acompany should keep in mind the following considerations:
Adequate market demand.
The product should fit into companys present marketstructure.
The idea should fit into the companys presentproduction structure.
The product should fit as per the financial resourcesavailable.
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NEW PRODUCT DEVELOPMENT PROCESS
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STEP 1:IDEA GENERATION
The new product development process starts
with the search for ideas. Consumers problems arethe most fertile ground for the generation of newproduct ideas. New product ideas come frominteracting with various groups & from usingcreativity generation techniques likeBRAINSTORMING, SYNECTICS etc.
i
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STEP 2: IDEA SCREENING
The purpose of screening stage is to drop poorideas as early as possible. Thus an idea committee
is formed to classify the proposed ideas into 3
categories, such as: promising, marginal & rejects.
Every promising idea is kept together for rigorous
screening by product evaluation committee.
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STEP 3:CONCEPT DEVELOPMENT & TESTING
A concept is an elaborated version of a product ideaexpressed in meaningful consumer terms. Example: a leading softdrink company, if wants to add a new product, i.e. fruit juice to itsproduct lines, then the 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.
From the above 3 concepts, the 1st one looks to be attractive& promising.
After the product concept has been developed, the stage isnow set for testing them. It is here the prospective consumerunderstand the product idea. Here whether they are receptivetowards the idea & their willingness to try out such product istested.
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STEP 4: BUSINESS ANALYSIS
This stage will decide whether from financial as
well as marketing point of view, the project is beneficial
or not. The projects overall impact on the corporations
financial position with & without the new product areestimated & compared.
Here management needs to prepare sales as well
as cost & profit projections to determine whether they
satisfy company objectives.
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STEP 5: PROTOTYPING & MARKET TESTING
At this stage the company will determine whether
the product idea can be translated into technically &
commercially feasible product. Its goal is to find aprototype that consists the key attributes described in
the product concept & that performs safely under
normal use & conditions and that can be producedwithin the budgeted cost.
Here the companies conduct 2 types of majortestings, such as: ALPHA TESTING & BETA TESTING.
ALPHA TESTING: testing within the firm to see itsfunction.
BETA TESTING: It includes listing a set of customers to usethe prototype & give feedback.
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MARKET TESTING:
The product here is actually tested in the selected
market segments. Based on the outcomes of the test
marketing, the marketer lunches large scalemanufacture of the new product. It is a controlled
marketing experiment to decide the soundness &
feasibility of fully fledged marketing of the product.
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At this stage the company takes decision to go in for large scale production &
marketing of the new product. Various marketing strategies are employed by
the company at this stage, when it starts commercialization of a new product
idea.
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.
COMMERCIALISATION
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NEW PRODUCT FAILURE
Faulty product idea
Distribution related problems
Poor timing of launch
From the outset, the Nano had many problems. Firstly, the cars manufacture was
delayed .
Instead of selling the Nano openly, Tata introduced a lottery booking system.
In mid-2010 there were widely published reports about the Nano catching fire. The
reputation of the car was tarnished.
The large number of initial orders led to overconfidence. Significantly, Tata failed toput in place an effective advertising strategy, meaning that when sales dwindled, the
company had no plan to reach its potential customer base
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CONCLUSION
Every year millions of rupees are being spent on R&D fornew products development. Such a huge investment is
necessary as new products are the only means of survival of afirm.
New product development provides a number of
advantages to the enterprise. It helps in producing goods & services of best quality.
It helps in providing maximum customer satisfaction, because itis developed in the view of customer specification.
It helps in expanding the market of the products of theenterprise.
It helps in achieving stability in product demand.
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