Scribd
Upload
15 views38 pages

Topic-12-New Product Development

The document discusses the importance of New Product Development (NPD) as a critical aspect of product policy within a company's overall strategy. It outlines various types of new products, reasons for their failure, and strategies to improve success rates, including strong customer orientation and effective planning. Additionally, it details the stages of NPD from idea generation to launch, emphasizing the need for thorough market testing and final checks before product introduction.

Uploaded by

johndavidreyes767
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
15 views38 pages

Topic-12-New Product Development

The document discusses the importance of New Product Development (NPD) as a critical aspect of product policy within a company's overall strategy. It outlines various types of new products, reasons for their failure, and strategies to improve success rates, including strong customer orientation and effective planning. Additionally, it details the stages of NPD from idea generation to launch, emphasizing the need for thorough market testing and final checks before product introduction.

Uploaded by

johndavidreyes767
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 38

NEED FOR NEW

PRODUCT
NEED FOR NEW PRODUCT
New Product Development (NPD) is strictly part of product
policy, but it is so important that it is treated separately. It
should, however, be seen very much within the context of the
company’s overall strategy.
Wide Spectrum of New Product
1.Totally new innovation.
2.New technology applied to an existing product.
3.New form of an existing product.
4.Improved technology or combination of technologies.
5.New model.
6.Product new to this market but existing elsewhere.
7.Product new to this company.
REASONS FOR
FAILURE
Organizational Barriers to Successful Innovation:
(1)Top management isolation
(2)Intolerance of fanatics
(3)Short time horizons
(4)Accounting practices
(5)Excessive rationalism
(6)Excessive bureaucracy
(7)Inappropriate incentives
Reasons for New Product Failure
(According to Quinn, 1985)
Lack of meaningful product uniqueness.
Wrong timing
Action by competitors
Product performance = technical or cost
Lack of product champion/internal politics
Poor price/value performance
Poor planning
 Poor Price/Value Performance

 3 out of 4 successful products are better than competition in some


way, and
 4 out of 5 failures are the same as or worse than competition.
 Poor Planning, including:

 Positioning
 Segmentation
 Budgeting
 Market understanding
 Poor research
 Over-enthusiasm
IMPROVING THE
STRIKE RATE IN
NEW PRODUCT
DEVELOPMENT
Quinn (1985) Recommended The Following Actions to
Avoid New Product Failure:
1)Strong need orientation of customers and consumers.
2)Toleration of experts and fanatics.
3)Long-time horizons.
4)Low early costs.
5)Multiple approaches.
6)Flexibility and quickness.
7)Incentives for successful innovators.
8)Availability of capital.
Research suggests that companies with a “successful
record in New Product Development tend to:

1.Introduce a unique superior product


2.Have market knowledge and marketing proficiency
3.Have technical and production synergy and proficiency
4.Avoid dynamic markets with many new product introductions
5.Be in large, high-need growth markets
Research suggests that companies with a “successful
record in New Product Development tend to:
6. Avoid introducing a high-priced product with no economic
advantage
7. Have a good product/company fit with respect to managerial and
marketing resources
8. Avoid competitive markets with satisfied customers
9. Have a strong marketing communications and launch effort
10. Have a market-derived idea with considerable investment
behind it
Most NPD Models have a series of stages such as this:
I. Idea Generation
II. Screening
III.Physical Development
IV.Communications Development
V. Market Testing
VI.Final Checks
VII.Launch
IDEA GENERATION
 Is a creative process businesses use to generate new
ideas, whether they are tangible or intangible. It involves
gathering ideas, research, testing, and editing or revising.
One Japanese company received
6.4 million ideas a year, an
average of 80 per employee, and
70% of these ideas were
implemented.
A similar American
company had 5 ideas per
employee, of which 30%
were implemented.
P. Drucker (1985), suggested that there are a number
of general sources of new opportunities:
Within the company/industry
Outside the company/industry
Within the company/industry:
 Unexpected occurrences
 Incongruities
 Process needs
 Industry and market changes
Outside the company/industry:
 Demographic changes
 Changes in perception
 New knowledge
New Knowledge
At a more detailed level, new ideas may be sought from the
following sources:

(1)Employees
(2)Inventors (direct and through brokers and patents)
(3)Trade publications
(4)Gurus/industry experts
New Knowledge
At a more detailed level, new ideas may be sought from the
following sources:
(5) Social trends
(6) Other countries
(7) Consumers and customers
(8) Market research
(9) Specialist agencies/consultants
SCREENING
 The screening may be qualitative or quantitative.
Screening Criteria
(1)The Market
(2)The Product
(3)Competition
(4)The Company
(5)Financial return
 The Market
 Potential size in launch year
 Growth prospects next 5 years
 Susceptibility to economic fluctuation
 The Product
 Consumer distinction
 Consumer appeal
 Competition
 Competitive advertisers
 Own-label competition
 Price flexibility
 The Company
 Product compatibility
 Company strength
 R&D
 Production
 Distribution
 Sales force motivation
 Financial return
 Estimated gross profit margin
 Marketing investment
 Capital investment
PHYSICAL AND COMMUNICATION DEVELOPMENT
A Successful New Brand must be:
 Salient to people’s needs, want and desires.
 A totality, a blend of physical product and
communications.
 A unique blend of appeals – to the senses, to reason and
the emotions.
MARKET TESTING
 Concepts are tested with consumers. Early versions of the
product are tested on panels, perhaps in several variants,
packaging may be tested separately, the name and
advertising approach are probably tested – in other
words, every aspect of the new brand is tested with
representative samples consumers, and the whole
marketing mix may be subjected to simulation (using
some research measures and a computer model) or
actual test marketing is a test area before the final launch.
FINAL CHECKS
 Before a new product is actually launched., there should
be a final, formal stage at which all the important issues
are subject to a last check.
General Checklist Suitable for a Consumer Goods Firm:
1.Legal clearance
2.Customer approval
3.Production feasibility and costs
4.End-user check
 Legal clearance
• Trademark and copyright
• Name, pack design
• Content regulations
• Claims, advertising, promotion
 Customer approval
• Direct product profitability (DPP), space management
• Effect on category profit
• Terms
 Production feasibility and costs
• Pilot runs
• Costing checks
 End-user check
• Does it work?
LAUNCH
 Launching a product is whether to go all-out for the
whole market, or to test the water in one area or segment
first.

 Launching a new product/brand


is that it should be properly
planned.
The End

19

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy