New Product Development
Sonali Saxena
Idea Generation
• Ideas for new products can be obtained from basic
research using a SWOT analysis (Strengths,
Weaknesses, Opportunities & Threats), Market and
consumer trends, company's R&D department,
competitors, focus groups, employees, salespeople,
corporate spies, trade shows, or Ethnographic discovery
methods (searching for user patterns and habits) may
also be used to get an insight into new product lines or
product features.
• Idea Generation or Brainstorming of new product,
service, or store concepts - idea generation techniques
can begin when you have done your OPPORTUNITY
ANALYSIS to support your ideas in the Idea Screening
Phase (shown in the next development step).
Idea Screening
• The object is to eliminate unsound concepts prior to
devoting resources to them.
• The screeners should ask several 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 Development and
Testing
• Develop the marketing and engineering details
• Investigate intellectual property issues and search patent
data bases
• Who is the target market and who is the decision maker
in the purchasing process?
• What product features must the product incorporate?
• What benefits will the product provide?
• How will consumers react to the product?
• How will the product be produced most cost effectively?
• Prove feasibility through virtual computer aided
rendering, and rapid prototyping
• What will it cost to produce it?
Business Analysis
• Estimate likely selling price based upon
competition and customer feedback
• Estimate sales volume based upon size of
market and such tools as the
Fourt-Woodlock equation
• Estimate profitability and breakeven point
Market Testing
• Produce a physical prototype or mock-up
• Test the product (and its packaging) in
typical usage situations
• Conduct focus group customer interviews
or introduce at trade show
• Make adjustments where necessary
• Produce an initial run of the product and
sell it in a test market area to determine
customer acceptance
Technical Implementation
• New program initiation
• Finalize Quality management system
• Resource estimation
• Requirement publication
• Publish technical communications such as data sheets
• Engineering operations planning
• Department scheduling
• Supplier collaboration
• Logistics plan
• Resource plan publication
• Program review and monitoring
• Contingencies - what-if planning
Commercialization
• 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
New Product Pricing
• Impact of new product on the entire product
portfolio
• Value Analysis (internal & external)
• Competition and alternative competitive
technologies
• Differing value segments (price, value, and
need)
• Product Costs (fixed & variable)
• Forecast of unit volumes, revenue, and profit
Husig, Kohn and Huskela (2005)
• Phase 1: Environmental screening or
opportunity identification stage in which
external changes will be analysed and
translated into potential business
opportunities.
• Phase 2: Preliminary definition of an idea
or concept.
• Phase 3: Detailed product, project or
concept definition, and Business planning
Strategies
• Product Modification:any substantial
change made to the attributes (size,
shape, colour, style, price, etc.) of a
product; modification of a product is
usually undertaken in an attempt to
revitalise it in order to increase
demand.
Contd…
• A product line extension is the use of an established product’s
brand name for a new item in the same product category.
• Product width : different category in which the company divide its
product e.g. HUL company has divided its product in 3 categories
i.e.
1. personal care............ponds, lux, sunsilk
2. house care..............surf excel, wheel, rin
3. food and beverages.......kissan, annapurna atta
• Product depth : under one product how many sub-products
company provides or how many varieties company have for that
product
e.g. sunsilk........1.dry 2. normal 3.oily hair
under dry sunsilk company provides in the range of 50, 100, 150
and also pink, blue, black
