Product & Brand Mgt.

Sem II/2016 Chapter I

I
New product Development
A product has a great meaning to the marketer, target customers and the
society in general. Production-oriented organizations, view a product
from the organization’s perspective as a manifestation of the resources used
to produce it.
Marketing oriented organizations, however, view product from the target
customer’s perspective; how their target customers perceive the product is
their major concern-not the resources that went into producing the product.
Def. of a product
 A set of attributes assembled in identified form.
 A product is any tangible, intangible offering that might satisfy the
needs or aspirations of a consumer.
 A product is anything that can be offered to the market for attention,
acquisition, use, or consumption that might satisfy want or need.
According to the above definitions, it is obvious that a product is not only a
tangible item.
The intangible services and psychological attributes which consumers look
for and marketers provide in these tangible items are also internal parts of
the product.
In today's competitive market, the ability to offer products that meet customers'
needs and expectations has never been more important.
Customer requirements and behaviors, technology, and competition are
changing rapidly, and businesses cannot rely on existing products to stay
ahead of the market. They need to innovate, and that means to develop and
successfully launch new products.

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1.1 Def. of New product

 “New Product Development (NPD) refers to the complete process of

bringing a new product to market.”

 “The process of bringing a new product to the market”

A business may need to engage in this process due to changes in consumer

preferences, increasing competition and advances in technology or to capitalize
on a new opportunity.
This can apply to developing an entirely new product, improving an existing one
to keep it attractive and competitive, or introducing an old product to a new
market.
1.2 Types of new product categories

New product development is a risky yet very important endeavor for almost
every organization in today’s competitive business world. Many of us involved
in the field of product development have probably witnessed large amounts of
money spent on new product failures, while others have seen new products
that bring in high rewards and growth.

The Categories of New Products

1. New product lines: these products are not new to the marketplace but
are usually new to the company. Companies develop these products to
enter an already established market for the first time. Often these
products are similar to competitors’ products already available in the
market but with some level of difference. A good example of a new

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product line is Microsoft’s entry into the video gaming system market with
their Xbox.
2. Additions to existing product lines (product line extensions):

These are usually new additions to the company, but they fit under an
existing line of products that the company makes. This type of new
product can be seen in Procter and Gamble’s Tide product line which
contain many product variations of the basic Tide product.

3. Product improvements:

These products offer improved quality, features or performance of an

existing product. They might also act as replacements of existing
products. Crest regularly promotes "new and improved" versions of its
tooth pastes for which the fluoride formula has undergone simple
modifications.

4. Re-positioning: these are existing products targeted to new markets; it

involves introducing a new application for an existing product that is
aimed towards a new market segment. Aspirin was re-positioned as
blood thinner although it was also used to relieve headaches.
5. Cost reductions: these products offer similar benefits at a lower cost.
They are not new products to the company from the consumer point of
view, but from design and production standpoint, they usually represent
significant change.

1.3 Organizing for New Product Development

Nature of organization
The discipline of management teaches us that we need to follow a definite

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sequence of steps for the successful completion of any human endeavor

which are:

 Defining the objectives and scope of the project;

 Making the policies necessary to achieve those objectives;
 Organizing in a logical and workable manner so as to fix responsibility
and facilitate achievement of the objectives;
 Developing a plan
 Applying of techniques and skills to satisfactorily complete the
assignments
 Controlling and measuring the results.

As we examine the new product process, we see that it is the third point
above that addresses the problem of organization directly while the last
point does so obliquely. Without a proper structure there may be
duplication of effort, inadequate attention to certain functions, rivalry and
friction among personnel, and delays in decision-making.

Steps for New Product Development process

Stage 1: Idea Generation
The first and foremost aspect of new product planning stage is to generate new
ideas. It is the responsibility of the top management to decide upon major
company problems pertaining to the;
 Expansion of markets
 Technological utilization
 Earn higher profit margins
 To remain competent ,etc
The two sources of new product ideas are External and Internal sources.

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i) Internal sources

• R & D, Shareholders, Employees, Board of directors, etc.

ii) External sources

• Customers, competitors, distributors, suppliers, government,

educational institutes, consultants, on line communities,
tradeshows, seminars, etc.

Stage 2: Idea Screening

The main purpose of this stage is to select the most appropriate idea by use of
various tools and develop a full product concept. The individual or group has to
be very assertive in collecting the facts and opinions, which have a bearing on
the product idea and its relevance to business proposals.
Finally, it is essential to evaluate each idea, keeping in view of the company's
core objective.
In the screening process, the company must avoid two errors:
1) Error I (Drop- error)

Here the company dismisses good ideas in the initial stage of idea screening
This may later result in a new product failure, where competitors would apply
on idea dropped at the initial stage.
2) Error II (Go -error)

This time the company uses trial and error techniques in terms of carrying out
the poor ideas to the final stage of a New Product Development. This may result
in a costly affair and cause a product failure in the market. Again, three types
of product failures exist.
Stage 3: Concept Development and Testing
The concept development creates a detailed version of the idea stated in
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meaningful consumer terms.

Concept testing asks target consumers to evaluate product concepts.
Stage 4: Marketing Strategy Development
 The target market, product positioning, and sales, share, and profit goals
for the first few years.

 Product price, distribution, and marketing budget for the first year.

 Long-run sales and profit goals and the marketing mix strategy.

Stage 5: Business Analysis

 It associates with sales, cost, and profit projections

Stage 6: Product Development

 Prototype development and testing

Stage 7: Test Marketing

It refers to testing the new product and marketing plan on a miniature (small)
basis by introducing the product into a few selected markets.
This is done before the product is finally launched for the purpose of
commercialization.

Stage 8: Commercialization
The earlier stage enables the company to decide on the issue of the launch
proposal.
i) When to launch (Timings)
In short, it is referred as;
First entry: -Making a first move.
Parallel entry: -Enter with the competitors.
Late entry: -Wait until the competitors launch, then later make an entry.
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ii) Where to launch (Geographical)

The company, once it has decided the timings, later has to plan where to
launch. The options are:
 Single locality
 A region
 Many regions
 The national market
 International market
iii) To whom to launch (Target Group)
The next question is how to decide regarding the target group. This requires
study of the Consumer Adoption Process. Anyhow, it is necessary to decide
whether to target early adaptors, early majority, heavy users or opinion
leaders. The company, as far as possible, must identify the future prospect.
iv) How to launch (Marketing Strategy)
The company must develop an effective marketing strategy with scope to
change for introducing the new product. This requires preparation of market
budget, develop effective marketing mix tool.
Causes for new product failures
 Inadequate product superiority
 Inappropriate forecasting
 Lack of allocation of adequate resources
 Poor entry timing
 Inaccurate findings of market research.
 Product design over-looked.
 Failure to study the competitor's strength and weakness.
 Incorrect positioning of the product.
 Not much concerned with promotional aspects.
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 Customer's dissonance.
 Lack of sufficient marketing activities.
 Production cost increased than estimated
 Not focused on consumer's preferences
 Lack of forecasting
 Technical problems
 Lack of effective control techniques to monitor the situation (markets).
 Failure to study the demand analysis.
 Poor packaging.
 Inappropriate branding (not able to pronounce)
 Poor marketing strategies.

1.5 Factors for successful innovation

Innovation

Innovation is the creation and subsequent introduction of a good or services that is

either new or an improved version of a good or services. Here are the key points
that lead to success

 Strategic orientation
 Clear responsibility
 Collaboration
 Integration of all employees
 Diversity
 Creativity
 Adjustment

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