NPD STRATEGIES

9/3/20XX Presentation Title 1

 Classification of New Product
• Marketing Innovations-
Soft drinks in Tetra Pack, Maggi Noodles, Shrikhand
Change in packaging , branding, easy availability, etc rather
than any significant change in substance/ingredient of product
• Product Improvements
• Slight innovation on tech./design of existing pdts. Although
product category already existed in its primitive form. Mainly
targeting new class of buyers.
• 100 cc engine(TVS –SUZUKI 100 CC engine), radial tyres etc
• Technological Innovations
• Innovation at technological level like PC, ANDROID ,Whatsapp,
wechat
9/3/20XX etc.. Changes consumption
Presentation Title pattern 2
Importance of NPD
• Meeting the changes in consumer demand

• Making New Profits

• Combating Business environmental threats

• The source of competitive advantage.

• Provides long term financial return on investment

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Cont..
• Utilizes existing production and operation resources to an
optimum level

• Capitalizes on research and development.

• Provides opportunities for reinforcing and changing

strategic direction

• Leverages marketing and brand equity ,they enhance

corporate image they affect human resources.
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New Product Development Process
• Idea Generation
• Idea Screening
• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
New Product Development Process
Step 1. Idea Generation
Systematic Search for New Product Ideas
Sources of Idea Generation
•Internal sources
•Customers
•Competitors
•Distributors
•Suppliers
 5 step Idea generation method
• Idea Germination-The seeding stage of the new idea (Recognition)

• Preparation- Conscious search for Information and knowledge

(Rationalization)

• Incubation- Subconscious assimilation of the information(Fantasizing)

• Illumination- Recognition of the idea as feasible (Realization)

• Verification- Application or test to prove that idea is valuable (Validation)

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Methods
• Brainstorming
• Reverse Brainstorming
• Focus Group
• Check List
• Problem Inventory Analysis
• Synectics
• Information from Publications
• Seminars & Conferences
• Discussions with people

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New Product Development Process
Step 2. Idea Screening
• Process to spot good ideas and drop poor ones
• A DROP-error occurs when the company dismisses an otherwise good idea.
• A GO-error occurs when the company permits a poor idea to move into
development and
commercialization.

Criteria
• Market Size
• Product Price
• Development Time & Costs
• Manufacturing Costs
• Rate of Return
New Product Development Process
Step 3. Concept Development & Testing

1. Develop Product Ideas into

Alternative
Product Concepts

2. Concept Testing - Test the

Product Concepts with Groups
of Target Customers

3. Choose the Best One

New Product Development Process
Step 3. Concept Development & Testing
• A large food-processing company gets the idea
A powder to add to milk to increase its nutritional value and taste.
1. Who will use this product?
Infants, children, teenagers, young or middle-aged adults, or older
adults.
2. Second, what primary benefit should this product provide?
Taste, nutrition, refreshment, energy?
3. Consumption Time -when will people consume this drink?
Breakfast, midmorning, lunch, mid-afternoon, dinner, late
evening?
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Concept 1. An instant breakfast drink for adults who want a quick
nutritious breakfast without preparation.

Concept 2. A tasty snack drink for children to drink as a midday

refreshment.

Concept 3. A health supplement for older adults to drink in the late

evening before they go to bed.

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• Each concept represents a category concept that defines the
product's competition.

• An instant breakfast drink would compete against eggs, breakfast

cereals, coffee and pastry, and other breakfast alternatives

• A tasty snack drink would compete against soft drinks, fruit juices,
and other thirst quenchers.

• Suppose instant-breakfast-drink concept is finalized .

• Instant powdered product would stand in relation to other breakfast

products
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• Use two dimensions of cost & preparation
time to create a product-positioning map
for the breakfast drink.

• An instant breakfast drink offers low cost

and quick preparation. Its nearest
competitor is cold cereal or breakfast
bars.
• Its most distant competitor is bacon and
eggs.

Product concept → Brand Concept.

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• Brand positioning map
How much to charge and how much
calorific must the drink be?

Concept Testing
• Concept testing involves presenting the
product concept to target consumers and
getting their reactions.

• The concepts can be presented symbolically

or physically

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 Final Concept Example

• A powdered mixture that is added to milk to make an instant

breakfast that gives the person all the needed nutrition along with
good taste and high convenience.

• The product would be offered in three flavors (chocolate, vanilla,

and strawberry) and would come in individual packets, six to a box,
at Rs 400 a box.

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New Product Development Process
Step 4. Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share

Part Two - Short-Term:

Product’s Planned Price
Distribution
Marketing Budget

Part Three - Long-Term:

Sales & Profit Goals
Marketing Mix Strategy
The target market
families with children who are receptive
to a new, convenient, nutritious, and
inexpensive form of breakfast.

Product Positioning
The company's brand will be positioned
at the higher-price, higher-quality end
of the instant-breakfast-drink category.

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• Sales profit Goals/ and Market Share
The company will aim initially to sell
500,000 cases or 10 percent of the
market, with a loss in the first year not
exceeding Rs1.3 million.

• The second year will aim for 700,000

cases or 14 percent of the market, with
a planned profit of Rs 2.2 million.
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• Price
The product variants -chocolate, vanilla, and strawberry, in
individual packets of six to a box, at a retail price of
Rs400 / box. There will be 48 boxes per case, and the case
price to distributors will be Rs18000.

• Distribution
First 2 months, dealers will be offered 4+1 case scheme
Free samples will be distributed door-to-door.
Coupons for Rs 20 off will appear in newspapers.
The total sales promotional budget will be Rs 2.9 million.

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 Marketing Budget
• An advertising budget --- Rs 6 million ---
split 50:50 between national and local ads.
• The advertising execution concept will
revolve around a small boy who drinks
instant breakfast and grows strong.

• During the first year, Rs100,000 will be

spent on marketing research to
buy store audits and consumer-panel
information to monitor market reaction and
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buying rates.
• The company intends to win a 25 percent market share and realize an after-
tax return on investment of 12 %.

• Price will initially be set at a high level and lowered gradually to expand the
market and meet competition.

• The total promotion budget will be boosted each year about 20 percent, with
the initial advertising-sales promotion split of 65:35 evolving eventually to
50:50. Marketing research will be reduced to Rs 60,000 per year after the
first year.

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New Product Development Process
Step 5. Business Analysis

Business Analysis Review of Product Sales, Costs,

and Profits Projections to See if they Meet Company Objectives ---- breakeven analysis

If No, Eliminate
Product Concept

If Yes, Move to
Product Development
 Step 6- Product development
• The job of translating target customer requirements into a working prototype is
helped by a set of methods known as quality function deployment (QFD).

• The methodology takes the list of desired customer attributes (CAs) generated by
market research and turns them into a list of engineering attributes (EAs) that the
engineers can use.
• For example, customers of a proposed truck may want a certain acceleration rate
(CA).
• Engineers can turn this into the required horsepower and other engineering
equivalents (EAs).
A major contribution of QFD is that it improves communication between marketers,
engineers, and the manufacturing people.
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• The R&D department will develop one or more physical versions of
the product concept.

• Its goal --- Find a prototype that embodies the key attributes
described in the product-concept statement, that performs safely under
normal usage and can be produced within the budgeted manufacturing
costs.
• Developing and manufacturing a successful prototype can take days,
weeks, months, or even years

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New Product Development Process
Step 7. Test Marketing

Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.

Simulated
Test Market
Sales Wave Research
Test in a simulated
shopping environment
to a sample of
consumers.
PRODUCT LAUNCH

• When
First mover
Parallel entry
Late entry
• Where
• To whom
• How

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Phases of Product Launch

• Prelaunch
• Announcement
• Beachhead
• Growth

Methods of Launch
• National Launch
• Rolling Launch
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 Hard Launch

• A hard launch is a way of launching a fully-baked product to a wide audience.

• To make a splash, raising awareness and generating excitement about the new
offering.
• Hard launches include a full marketing effort and they take a lot of time to
implement.
• LAUNCHING a market-ready, bug-free product

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A soft launch
• Launch to a smaller, restricted market.

• Goal of a soft launch is to get the product out to collect feedback and
performance data that will inform continued development.

• With a soft launch, your product must include at least a core feature
set that solves your target customer’s primary pain point.

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 Benefits of a Hard Launch

• Faster revenue gains

• Competitive advantage

• Easier marketing

• Publicity

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Benefits of a Soft Launch

• Get early feedback

• Test product strategies

• Cost-effective

• Maintain interest

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