New Product development

Definition
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.

Definition
New product development (NPD) is the
complete process of bringing a new product or
service to market.
New product development may be done to
develop an item to compete with a particular
product or may be done to improve an already
established product.

Why New Products?

New product development is essential to any
business that must keep up with market trends
and changes.
Changing environment creates new demands
and needs

Product Development
Must be alert to quickly develop opportunities
Focus on markets or product categories
consistent with organizations objectives,
resources, capabilities and strengths
Securing a competitive advantage

New Product Categories

New to the world products

New product lines
Product line extensions
Improvements and revisions to existing
products
Repositionings
Cost reductions

NEW-PRODUCT DEVELOPMENT PROCESS

Idea Generation

Idea Screening
Concept
Development
& Testing
Marketing Strategy
Analysis
Business
Analysis

Product
Development

Test Marketing

Commercialization

Step 1
Idea Generation
New idea generation is the systematic search for
new product ideas
Sources of new-product ideas
Internal
External
9-8

Idea Generation
Internal sources refer to the companys own formal research and
development, management and staff, and intrapreneurial
programs
External sources refer to sources outside the company such as
customers, competitors, distributors, suppliers, and outside
design firms

9-9

Step 2
Idea Screening
Idea screening refers to reviewing new-product ideas
in order to drop poor ones as soon as possible
Drop Error: occurs when the company dismisses an
otherwise good idea.
Go Error: occurs when the company permits a poor
idea to move into development and
commercialization.

9-10

Step 3
Concept Development and Testing
Product idea is an idea for a possible product that the company
can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
Concept testing refers to new-product concepts with groups of
target consumers
9-11

Concept Development and

Testing:
1.Develop
1.Developaaworking
workingdescription
descriptionand
and
visualization
visualizationof
ofthe
theproduct
productidea
idea
and
andconcept.
concept.

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups
of
Target
Customers
of Target Customers

3.
3. Choose
Choosethe
theBest
BestOne
One

Step 4
Marketing Strategy Development
Marketing strategy development refers to the
initial marketing strategy for introducing the
product to the market

9-13

Marketing Strategy Development

Marketing strategy statement

Part 1:

Part 2:

Description of the target market

Product positioning, sales, market share, and profit goals
Price, distribution, and budget

Part 3:

Long-term sales, profit goals, and marketing mix strategy

9-14

Step 5
Business
Business Analysis
Analysis
Business
BusinessAnalysis
Analysis
Review
Review of
ofProduct
Product Sales,
Sales,Costs,
Costs,
and
and Profits
ProfitsProjections
Projectionsto
to See
See ifif
They
TheyMeet
Meet Company
CompanyObjectives
Objectives

IfIf No,
No,Eliminate
Eliminate
Product
ProductConcept
Concept
IfIfYes,
Yes,Move
Moveto
to
Product
Product Development
Development

Business analysis involves a review of the sales, costs,

and profit projections to find out whether they
satisfy the companys objectives

9-15

Step 6
Product Development
Product development involves the creation and testing
of one or more physical versions by the R&D or
engineering departments
Requires an increase in investment

9-16

Step 7
Test Marketing
Test marketing is the stage at which the product and
marketing program are introduced into more realistic
marketing settings
Test marketing provides the marketer with experience in
testing the product and entire marketing program
before full introduction

9-17

Marketing Strategy Development

When firms test market
New product with large investment
Uncertainty about product or marketing program
When firms may not test market
Simple line extension
Copy of competitor product
Low costs
Management confidence
9-18

Approaches to test marketing

Standard test markets

Controlled test markets
Simulated test markets

9-19

Standard test markets are small representative markets where

the firm conducts a full marketing campaign and uses store
audits, consumer and distributor surveys, and other measures
to estimate product performance. Results are used to forecast
national sales and profits, discover product problems, and
fine-tune the marketing program.

9-20

Controlled test markets are panels of stores that have

agreed to carry new products for a fee
Less expensive than standard test markets
Faster than standard test markets

Competitors gain access to the new product

9-22

Simulated test markets are events where the firm will

create a shopping environment and note how many
consumers buy the new product and competing
products. Provides measure of trial and the
effectiveness of promotion. Researchers can
interview consumers.

9-23

Step 8
Commercialization
Commercialization is the introduction of the new
product
When to launch
Where to launch
How to launch

9-25

Successful new product development should be:

Customer-centered
Team-centered
Systematic

9-26

Customer-centered new-product development

focuses on finding new ways to solve customer
problems and create more customer-satisfying
experiences
Begins and ends with solving customer problems
Team-based new-product development is a
development approach where company departments
work closely together in cross-functional teams,
overlapping in the product-development process to
save time and increase effectiveness
9-27

Team-based versus sequential new-product development

Team-based can increase tension and confusion
Team-based is faster and more flexible
Systematic new-product development is an
innovative development approach that collects,
reviews, evaluates, and manages new-product ideas
Creates an innovation-oriented culture
Yields a large number of new-product ideas

9-30