new product developmet
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New Product Development ProcessContributed by Hax33bCIIT LahoreTRANSCRIPT
New Product Development Process
New Product Development Process
Presented to:
Sir Mohsin-ul-Mulk
New Product Development Process
Presented By:Haseeb Murtaza
Shoaib AsifMehmona Saeed
Muhammad Shahid
New Product Development Process
Presentation OutlineNew product definitionTypes of new productsNeed for new Product developmentNew product development processProduct life cycleCauses of New product’s failureExamples (Pakistan’s perspective)References
New Product Development Process
New products may be defined as
Any product, service, or idea not currently made or marketed by a company
OR
which the consumer may perceive as new.
New Product Development Process
New Product Definition
Types of new productsChanges to Augmented ProductsCore Product RevisionLine ExtensionNew Product LinesRepositionsCompletely New
New Product Development Process
New Product Development Process
Need for new ProductsTo keep maximum market shareTo retain customersCreate Competitive edge over competitorsRapid change in technologyHowever, firms must innovate in order to surviveTherefore, managing the new product development process is a key to a healthy organizationIn competitive markets, the best and strongest firms sustain growth throughthe introduction of new products andservicesto meet the changing needs of the consumers
New Product Development Process
Systematic Product Development Process:New product development process consists on the following stages
Idea GenerationIdea screeningConcept development and testingMarketing strategyBusiness analysisProduct developmentTest MarketingCommercialization
New Product Development Process
1-Idea Generation:It is the systematic search for new- product ideasMajor sources of new product ideas include Internal source and External sourcesInternal Sources– Formal research in the company– Brains of executives, scientists, engineers,
manufacturing staff, sales people– Development of entrepreneurial programs for employees
within the company– 3M’s well known “15 percent Rule” allows employees to
work on projects of their own interest External Sources– Watching and listening customers– Competitors– Distributors– Suppliers
New Product Development Process
2-Idea Screening:
Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible
The purpose of the idea screening is to reduce the number of ideas
Product development costs rise greatly in later stages, so the company wants to go ahead only with the product ideas that will turn into profitable products
New Product Development Process
3-Concept Development and TestingIn includes product idea, product concept and product imageA Product Idea is an idea for a possible product that the company can see itself offering to the marketA Product concept is a detailed version of the
idea stated in meaningful consumer termsA Product image is the way consumers perceive an actual or potential productConcept Testing refers to testing new-product concepts with a group pf target consumers to find out if the concepts have strong consumer appealVirtual reality is used as a tool to test the product concept
New Product Development Process
4-Marketing Strategy Development
In this stage, an initial marketing strategy is designed for the new product based on the product conceptMarketing strategy statement includes there parts First part of the marketing strategy focuses on – Target market– Planned product positioning– Sales– Market share– Profit goals for next three or five years
New Product Development Process
Second part of the marketing strategy focuses on – Products planned price– Distribution channels– Marketing budget
Third part of the marketing strategy focuses on – Planned long-run sales– Profit goals– Marketing mix strategy
New Product Development Process
5-Business AnalysisIn this stage, main focus is on the review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives
Minimum sales and maximum sales, nature of the risksManagement takes decisions about the new product on the basis of sales and cost figures, degree of risk and new products financial attractiveness
New Product Development Process
6-Product DevelopmentDeveloping the product concept into a physical product in order to ensure that the product idea can be turned into a workable product
In this stage , product concept is shaped up into the physical form
R&D and engineers work on the new product to bring it into the physical form
New Product Development Process
7-Test Marketing
After the functional and customer test, a new product comes in the stage of test marketingTest Marketing is the stage of the new-product development in which product marketing programare tested in more realistic market settingsTest Marketing gives the marketer experience with marketing the product before going to the great expense of full introductionIt lets the company test the product and its entire marketing program e.g positioning strategy, advertising, distribution, pricing, branding and packages, and budget levels
New Product Development Process
Approaches used in the Test Marketingare – Standard Test Marketing– Simulated Test Markets
In Standard Test Marketing, company selects– A small number of representative cities– Conducts full marketing campaigns in these
cities– Uses store audits– Distributor surveys
And the results are used to- Forecast national sales and profits– Discover potential product problems– Fine-tune the marketing campaigns
New Product Development Process
In Simulated Test Markets , companies or research firms (like ACNielson) – Show adds and promotions for a variety of
products including the new product– A sample of customers is selected and they are
given some money and are invited in the laboratory or real store where they use the money to buy items
– The researcher notes down how many customers bought new products and competing brands
– Researcher asks questions to the customers about their purchases and non purchases
New Product Development Process
8-Commercialization
In the new product development process, commercialization is the final stage in which the new product is introduced in the real market.
New Product Development Process
Time
ProductDevelop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments ($)
Sales andProfits ($)
Product Life Cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low sales Low sales
High cost per customerHigh cost per customer
NegativeNegativeCreate product awareness
and trialCreate product awareness
and trialOffer a basic productOffer a basic product
Use cost-plus Use cost-plus
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build product awareness among early adopters and dealers
Build product awareness among early adopters and dealers
Introduction stage of the product life cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising sales Rapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market shareOffer product extensions,
service, warrantyOffer product extensions,
service, warrantyPrice to penetrate marketPrice to penetrate market
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness and interest in the mass market
Build awareness and interest in the mass market
Growth stage of Product life cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profitsMaximize profit while defending
market shareMaximize profit while defending
market shareDiversify brand and modelsDiversify brand and models
Price to match or best competitors
Price to match or best competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and benefits
Stress brand differences and benefits
Maturity stage of Product life cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profitsReduce expenditure and milk the
brandReduce expenditure and milk the
brandPhase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out unprofitable outlets
Go selective: phase out unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers
Reduce to level needed to retain hard-core loyal customers
Decline stage of the Product life cycle
Causes of failure of new products
Poor managementUnexpected delays and time to market too longIdea good but market overestimatedInsufficient demand for the product or serviceNot as well designed as it should have been
Incorrectly positionedIncorrectly pricedCompetitors fight back more aggressively than
expected.
New Product Development Process
To create successful new products, the company must:
Understand it’s customers, markets and competitors Develop products that deliver superior value to
customers.
References• www.learnthat.com• www.tutor2u.net• www.management-hub.com• www.adept-plm.com• www.answer.com
New Product Development Process