new product development,plc,operations in npd
DESCRIPTION
TRANSCRIPT
WHY ALL THE COMPANIES ARE LOOKING TO DEVELOP A EXISTING PRODUCT OR INTRODUCING A NEW PRODUCT ?
# “ When the changes outside is better
than changes inside, the end is near ”.
# To make more profit.
# To expand their market.
NEW PRODUCT DEVELOPMENT
Definition:
Development of original products, product improvement, product modification, inventing new product through the firm’s own R&D efforts.
PROCEDURES OF NEW PRODUCT DEVELOPMENT
IDEA GENERATION
Internal source # Research and Development # employees
External source # customers # competitors # suppliers # distributers
IDEA SCREENING
Process to spot a good idea and drop poor ones
# Selecting an idea which is feasible and workable to develop.
# Online blogs may discuss customers
dissatisfaction with a certain product, which may provide ideas to inventors or a new product or service.
.
CONCEPT DEVELOPMENT AND TESTING
It provide full details of the new product’s idea. # Will it be practical and feasible?
# What benefits the product will provide ?
# How will consumers react to the product?
# What will it cost to produce it ? # Testing the concept by asking a number of
customers what they think of the idea
MARKET STRATEGY & DEVELOPMENT
A proposed marketing strategy will be written laying out the marketing mix strategy of the product, the segmentation, targeting and positioning strategy sales and profits that are expected.
BUSINESS ANALYSIS
The business analysis stage looks more deeply into the Cash flow the product could generate, what the cost will be, how much market shares the product may achieve and the expected life of the product.
PRODUCT DEVELOPMENT
At this stage the prototype is produced. The prototype will clearly run through all the desired tests, and presented to a selection of people made up of the target market segment to see if changes need to be made.
TEST MARKETING
Test marketing means testing the product within a specific area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed modified before national launch.
COMMERCIALIZATION
There are certain factors that need to be taken into account before a product is launched nationally. These include:
timing of the launch, how the product will be launched, where the product will be launched, will there be a national roll out or will it be region by region?
CONT…
Finally the commercialisation stage involves careful planning to maximise product success, a poor launch will affect product sales and could even affect the reputation and image of the new product.
PRODUCT LIFE-CYCLE STRATEGIES
# The Product Life Cycle (PLC) has Five
Stages. # Product development # Introduction # Growth # Maturity # Decline
PRODUCT LIFE CYCLE
Time
ProductDevelop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
PRODUCT LIFE-CYCLE STRATEGIES
Product development
Introduction Growth Maturity Decline
Begins when the company develops a new-product idea
Sales are zero Investment costs are
high Profits are negative
PLC Stages
PRODUCT LIFE-CYCLE STRATEGIES
Product development
Introduction Growth Maturity Decline
Low sales High cost per customer
acquired Negative profits Innovators are targeted Little competition
PLC Stages
MARKETING STRATEGIES:
INTRODUCTION STAGE
Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective
distribution Advertising – Build awareness among
early adopters and dealers/resellers Sales Promotion – Heavy expenditures
to create trial
PRODUCT LIFE-CYCLE STRATEGIES
Product development
Introduction Growth Maturity Decline
Rapidly rising sales Average cost per
customer Rising profits Early adopters are
targeted Growing competition
PLC Stages
MARKETING STRATEGIES:
GROWTH STAGE
Product – Offer product extensions, service, warranty
Price – Penetration pricing Distribution – Build intensive
distribution Advertising – Build awareness and
interest in the mass market Sales Promotion – Reduce
expenditures to take advantage of consumer demand
PRODUCT LIFE-CYCLE STRATEGIES
Product development
Introduction Growth Maturity Decline
Sales peak Low cost per customer High profits Middle majority are
targeted Competition begins to
decline
PLC Stages
MARKETING STRATEGIES:
MATURITY STAGE
Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive
distribution Advertising – Stress brand differences and
benefits Sales Promotion – Increase to encourage
brand switching
PRODUCT LIFE-CYCLE STRATEGIES
Product development
Introduction Growth Maturity Decline
Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition
PLC Stages
MARKETING STRATEGIES:
DECLINE STAGE
Product – Phase out weak items Price – Cut price Distribution – Use selective
distribution: phase out unprofitable outlets
Advertising – Reduce to level needed to retain hard-core loyalists
Sales Promotion – Reduce to minimal level
OPERATIONS OF NEW PRODUCT DEVELOPMENT
New Product Lines: They allow the business to enter a completely new market segment.
Additions to existing Product Lines: These are new items to the business, but they fit within an existing product line that the business already produces. They may represent a fairly new product to the market.
Repositioning: These are new applications for existing products. They involve the retargeting of an old product to a new market segment.
CONT…
Improvements and Revisions to Existing Products: These “not so new” products are replacements of existing product lines. These “new and improved” product lines are incremental innovations . Cost Reductions: designed to replace existing
product lines while providing similar benefits and performance but at significantly lower costs to the business.
Thank you