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Lecture 3. New Product Development Need of New Product Development

The document discusses the need for new product development and reasons why products fail in the market. It outlines several reasons for developing new products, including diversifying risk, catering to changing consumer needs and tastes, and gaining competitive advantages. Common causes of product failure are also summarized, such as problems with the product itself, distribution, promotion, pricing, timing of launch, and competitive pressures. The document then explains the typical stages in a product's lifecycle from introduction to growth, maturity, and eventual decline.

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24 views19 pages

Lecture 3. New Product Development Need of New Product Development

The document discusses the need for new product development and reasons why products fail in the market. It outlines several reasons for developing new products, including diversifying risk, catering to changing consumer needs and tastes, and gaining competitive advantages. Common causes of product failure are also summarized, such as problems with the product itself, distribution, promotion, pricing, timing of launch, and competitive pressures. The document then explains the typical stages in a product's lifecycle from introduction to growth, maturity, and eventual decline.

Uploaded by

DARK MATTER
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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New Product Development

– Need of New Product


Development
Lorriane Faye D. Cahatol
Instructor
Mindanao State University
The need for new product development
on various counts described below:
a. Putting All Eggs in One Basket
If an organization depends on only one product to get all the business
and profits, it faces the danger of losing everything in one stroke.

b. Creating New Avenues for Growth


The market is always evolving itself and newer consumer needs and
demands are created. To take care of such situations, organizations
must come out with new products that will create new avenues for the
growth of organizations. Organizations that are slow in creating new
avenues fall behind others in business.
c. Giving Choice to Consumers for Selection
The consumer needs and demands keep changing and
upgrading/downgrading and organizations should create
products in both upward and downward changes.

d. Multiple Attacks on Competition


hen competition is the market leader, organizations introduce
multiple products to corner small portions of the competitor’s
market share and collectively win a larger market share
e. Cater to New Tastes of Consumers
Consumers keep changing their expectations and the
organization needs to give them newer products to take care of
new needs. E.g. Introduction of dish washers and food processors
in India by most of the electronics companies.
Why New Products Fail?
• Product Problems
• Distribution and Channel Problems
• Promotional Problems
• Pricing Problems
• Timing Problems
• Competitive Problems
1. Product Problems
• Products fail in the market due to certain problems with the
product itself as neglect of market needs or ignorance of market
preferences, defects in product function, poor technical design
or external appearance, poor packaging or inappropriate sizes,
undependable performance or too high a variation in quality,
etc.
2. Distribution and Channel Problems
• Products fail due to certain problems in distribution such as
inappropriate channels or outlets, lack of cooperation from
middlemen, poor system of physical distribution, etc.
3. Promotional Problems
• Promotional problems that contribute to the product failure are:
1. Inadequate or ineffective promotion, advertising directed
towards wrong market segments, use of wrong appeals, failure to
co-ordinate adequately with distribution system, improper training
to sales force, etc.
4. Pricing Problems
• Pricing problems such as bad forecast of price that buyers
would pay, price not on par with product quality, poor cost
estimates caused asking price to be too high, inadequate
margins for the middlemen, etc. also responsible for sometimes
for product failure.
5. Timing Problems
• Timing of product introduction is very important. If product is
introduced too soon or too late, it may fail.
6. Competitive Problems
• Competitor’s aggressive strategies with respect to product,
distribution, promotion and price may cause serious set back to
the product in the market. The company had to react
defensively rather than pursuing aggressive strategies.
Product Life Cycle
• refers to the stages a product goes through from its
introduction, through its growth and maturity, to its eventual
decline and death (withdrawal from the market)
PLC Stages are:
1. Introduction
2. Growth
3. Maturity
4. Decline and Obsolescence
1. Introduction
• Stage arrangements for full scale production are made
• Marketing programmed is finalized
• Product is offered to the market
• But the rate of growth is quite low
• Product being new and has been first made available for
purchase
• It may not face competition in the market
2. Growth Stage
• Product gains acceptance in the market
• Demand of the product grows rapidly, generally outpacing
supply
• Increased sales volume
• Profits also increase
• Effective promotional and distribution are considered as key
factors
3. Maturity Stage
• Competitors more become active
• Incase your product is a novel one, by now competition would
have come out with similar product in the market to compete
with you.
• Sales pushed downward
• Promotional efforts must be the key
• Sales reach the plateau stage that is very difficult to push sales
up
• Profit starts to decline
4. Decline or Obsolescence
• Sales are likely to decline
• Steps must be taken to avoid this stage
• Retaining such a product after this stage is risky, certainly not
profitable to the company
Reasons:
1. Changes in consumer tastes
2. Improvement in technology
3. Introduction of better substitute
4. Decline or Obsolescence
• Choices
1. Abandonment of the product
2. Continue it in a specialized limited market

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