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New Product Development

New product development (NPD) involves bringing new products to market through a systematic process. A new product can be innovative, an addition to an existing product line, or an improvement/revision of an existing product. The goal of NPD is to increase market share, appeal to new segments, diversify, or replace declining products. The NPD process includes idea generation, screening, concept development/testing, market strategy development, business analysis, product development, test marketing, and commercialization. Many new products fail due to not fulfilling needs, overestimating demand, design flaws, poor marketing, or competitive responses. Companies develop strategies to generate new product ideas and overcome challenges in the NPD process.

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170 views24 pages

New Product Development

New product development (NPD) involves bringing new products to market through a systematic process. A new product can be innovative, an addition to an existing product line, or an improvement/revision of an existing product. The goal of NPD is to increase market share, appeal to new segments, diversify, or replace declining products. The NPD process includes idea generation, screening, concept development/testing, market strategy development, business analysis, product development, test marketing, and commercialization. Many new products fail due to not fulfilling needs, overestimating demand, design flaws, poor marketing, or competitive responses. Companies develop strategies to generate new product ideas and overcome challenges in the NPD process.

Uploaded by

amdan srl
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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New product development (NPD)

• New product development (NPD) is the complete process of bringing


a new product to the market till its consumption & feedback from the
end user of the business chain through the systematic procedure &
parameter. It may be a Consumable product, service or idea.
What is a new product ?

• A product that opens an entirely new market.


• A product that adopts or replaces an existing product.
• A product that significantly broadens the market for an existing
product.
• An old product introduced in a new market.
• An old product packaged in a different way.
• An old product marketed in a different way.
Types of new product
• Innovative products
• New product lines – to allow the firm to enter an existing market
• Addition to product line – to supplement the firm’s existing product
line
• Improvements and revisions of existing product
• Repositioned products – existing products targets at new market
• Cost reduction new product that provide similar performance at
lower cost
Examples of new products
• electric vehicles, ipod, smart phones, modern medical equipment.
• Hidden Cameras. Smile, you're on Candid Camera! ...
• Rainbow Flatware. ...
• Bio Magnetic Ear Stickers for Weight Loss. ...
• Reusable Straws. ...
• Wooden Alarm Clock. ...
• Baby Feather Wings. ...
• Dimmable Vintage Edison Light Bulbs. .
New product can be used to
• Increase/defend market share by offering more choice or updating
older products
• Appeal to new segments
• Diversify into new markets
• Improve relationship with distributors
• Maintain the firm’s reputation a leading edge company
• Even out peaks and troughs in demand
• Make better use of the organization's resources
Why develop New Product ?
• To create stars and cash cows for the future
• To replace declining product
• To take advantage of new technology
• To defeat rivals
• To maintain/increase market share
• To keep up with rivals
• To maintain competitive advantage
• To fill gap in the market
Key success factors in New Product Development

• Operating Philosophy
• Organization Structure
• The Experience Effect
• Management Style
Challenges in New Product Development New
Product development
• Challenges fall into three major categories:-
I. Definition of product specifications.

II. Time and resources issues.

III. Interactions of the Product Development group with the rest of the company.
How to overcome these Challenges??
• Assess the projects financial value before the development starts.
Prioritize projects according to clear criteria.
• Let Marketing professionals define the target market and specify the
product upfront.
• Involve all the functions of the companies at the product selection
stage.
• Align project targets and resources.
New Product Development Strategy
• How do companies develop and market new products?
Come up with own ideas.
Brand new products
Product improvements & modifications
Acquire companies, patents, licenses.
New-Product Failures
• Only 10% of new consumer products succeed in the long run.
• Why do most products fail?
– Don’t fulfil a real need or want
– Overestimation of market size
– Design problems that compromise functionality
– Incorrectly positioned, priced or promoted (4 P’s)
– Pushed despite poor marketing research findings
– Development costs go over budget
– Competitive response
New product planning
• This is the strategic stage
• The firm assesses
• It current product portfolio
• Opportunities and threats
• The firm then determines the type of product which would best fit in
with the corporate strategy
New product development
• New product development is a process which is designed to develop,
test and consider the viability of products which are new to the
market in order to ensure the Growth or survival of the organisation.
Stages in New product development
• Idea Generation
• Idea Screening
• Concept development and testing
• Market strategy development
• Business Analysis
• Product development(proto type)
• Test marketing
• Commercialization
Idea Generation
• Idea generation is continuous, systematic search for new product
opportunities. It involves delineating sources of new ideas and
methods for generating them.
• Ideas for new products can be obtained from basic research using a
SWOT analysis (OPPORTUNITY ANALYSIS), Market and consumer
trends, company's R&D department, competitors, focus groups,
employees, salespeople, corporate spies,
Idea Screening
• The object is to eliminate unsound concepts prior to devoting resources to them.
• The screeners must ask these questions
• Will the customer in the target market benefit from the product?
• What is the size and growth forecasts of the market segment/target market?
• What is the current or expected competitive pressure for the product idea?
• What are the industry sales and market trends the product idea is based on?
• Is it technically feasible to manufacture the product?
• Will the product be profitable when manufactured and delivered to the
customer at the target price?
Concept testing
• Concept testing present the consumer with a proposed product and
measure attitudes and intention at this early stage of development.
• Concept testing of prototypes can help avoid costly mistakes.
Market Strategy Development
• Outlines the planned price, distribution strategy, and marketing
budget for the first year.
• Describes the long-run sales and profit goals and marketing-mix
strategy over time.
• Describe the market’s size, structure, and behaviour, the planned
product positioning, and the sales, market share, and profit goals for
first few years. Includes development of three part strategy plan
Business & Financial Analysis
• Estimate likely selling price based upon competition and customer
feedback
• Estimate sales volume based upon size of market
• Estimate profitability and breakeven point
Product Development
• Develop concept into physical product prototype.
• Large jump in investment – “point of no return”.
• Test and refine prototype until product passes consumer and legal
scrutiny.
Test Marketing
• Test marketing involves placing a product for sale in one or more
selected areas and observing its actual performance under the
proposed marketing plan
Commercialization
• Commercialization involves implementing a total marketing plan and
full production
• Launch the product
• Produce and place advertisements and other promotions
• Fill the distribution pipeline with product.
• Critical path analysis is most useful at this stage.
Assignment
• Brief on how to develop your own new product.
Thank you

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