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Unit No 1 New Product Development-1

The document outlines the factors limiting new product development, including idea shortages and cost constraints, and categorizes new products into six types. It details the new product development process, consisting of eight steps from idea generation to commercialization, emphasizing the importance of market testing and strategic planning. Examples from companies like Pillsbury and Google illustrate successful idea generation and innovation practices.

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Nilesh Patil
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15 views19 pages

Unit No 1 New Product Development-1

The document outlines the factors limiting new product development, including idea shortages and cost constraints, and categorizes new products into six types. It details the new product development process, consisting of eight steps from idea generation to commercialization, emphasizing the importance of market testing and strategic planning. Examples from companies like Pillsbury and Google illustrate successful idea generation and innovation practices.

Uploaded by

Nilesh Patil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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NEW PRODUCT DEVELOPMENT

Factors that Limits New Product development

• Shortage of ideas
• Fragmented markets
• Social and governmental constraints
• Cost of development
• Capital shortages
• Faster required development time
• Shorter product life cycles
Booz, Allen and Hamilton have identified six categories of new
product

New to the World


Repositionings

New product lines

Cost reductions
Additions to existing
product lines

Improvements
New Product Development Process
Step
Step 1.
1. Idea
Idea Generation
Generation
Stages in new product development.

I. Idea generation –
a. Sources of new product ideas –
- Customer needs & wants, lead users.
- Scientists, designers & other employees.
- Competitors.
- Sales representatives & middle-men.
- Top management.
Drawing Ideas

• Example- Pillsbury gets promising new products from


its annual Bake-off. One of Pillsbury’s four cake mix
lines and several variations of another came directly
from Bake-Off winners’ recipes.

• Companies like 3M and Toyota have put in special


incentive programs for their employees to come up
with workable ideas.
Example Google

• In the policy the company has been encouraging its employee to


dedicate 20% of their time to side projects which is the primary
reasons why it remains one of the most innovative company in
world.
• Its intended to give employees to give employee one full day peer
week to work on a Google related passion projects of their choice.
• Results are been unbelievable & revolutionizing & their exhibits
are Gmail, Google maps, started as side projects.
Step 2.
2. Idea
StepStep Idea Screening
Screening
Step 2. Idea Screening
2. Idea Screening
The purpose of this stage is to pare these down to those that are genuinely worth
pursuing.

 Companies have different methods for doing this from product review
committees to formal market research.
 this stage to have a checklist that can be used to rate each idea based on the
factors required for successfully launching the product in the marketplace
and their relative importance.
 Management can assess how well the idea fits with the company’s
marketing skills and experience and other capabilities.
 Process to spot good ideas and drop poor ones as soon as possible
II. Idea screening –
• Companies needs to asses Market Size, Product Price,
Development Time & Costs Manufacturing Costs, Rate of
Return.

• Company should avoid two errors


 Drop error.
 Go error
Step
Step 33 Concept
Concept Development
Development &
& Testing
Testing
Step 3 Concept Development &
An attractive idea has to be developed into a Product concept.

Product idea – is a possible product that company might offer to the market.

Product concept – is an elaborated version of idea expressed in meaningful


consumer terms.
 Once the concepts are developed, these need to be tested with consumers
either symbolically or physically.

 For some concept tests, a word or a picture may be sufficient, however, a


physical presentation will increase the reliability of the concept test.

 After being exposed to the concept, consumers are asked to respond to it by


answering a set of questions designed to help the company decide which
concept has the strongest appeal
Step 3 Concept Development & Testing

Example.
A Fitness Center could be Product Idea. But a product
concept would be more of a fitness center that focuses on
giving yoga sessions to working women's offline in the
morning and online in the evening.
Step
Step 44 Marketing
Marketing Strategy
Strategy

1 2 3

•
Step 4 Marketing Strategy
The first part
describes the size,
structure & The second part The third part
behavior of the outlines the describes the long
target market, product’s price, run sales & profit
planned product distribution & goals & marketing
positioning, the marketing budget mix strategies over
sales market share for the first year. time.
& profit goals in
first few years
Step
Step 55 Business
Business Analysis
Analysis
After product concept marketing strategy is developed, company can
evaluate proposal’s business attractiveness.

Expenses
Incurred in
manufacturing , Projected
marketing & Projected sales Profits
selling

These are matched with company’s objectives. If there is a match, the new product
concept moves to product development stage.
Step
Step 66 Product
Product Development
Development

The product at this stage only existed as a word description, a drawing or a


prototype

• Product may take days weeks, months to develop the final product as it goes
sequence of testing phases.( Alpha& Beta Testing)

• Alpha Testing is examining the product inside the firm to ensure it meets the set
standards.

• Beta Testing means launching a minimum Viable product(MVP) or a test version


in the market to verify the product -market fit.
Samsung Note 7 Failure
• Product Launches: An Analysis of the Samsung Galaxy Note 7
— An Explosive Launch

• Samsung Note 7 Failure is one example of improper product


development. The faculty batteries cost the customer electronic
giant $14.3 billion losses in 2016.
Step
Step 77 Test
Test Marketing
Marketing
.
After the product development stage segment as a pilot the product is
then given a brand identity& introduced in a selected market for testing

Standard Simulated
Control
Test Test
Test
Market Market
Market

These are
These Artificial events of
comprise of Testing Venues shopping
Small likes panels of Enviornment
Markets store created by
firm.
Revolution is coming': Ola CEO test rides
upcoming electric scooter
Test Market Decisions
• How many test cities?
• Which cities?
• Length of test?
• What information to collect?
• What action to take?
Step 8 Commercialization –

After successful market testing, new product moves to


commercialization stage.
Various important decisions are made during the
commercialization stage such as
 Introduction time: What is the best time to launch the
product.
First Entry Parallel entry , late entry

 Introduction Place: Should the product launched in a single


market or simultaneously in multiple markets.

 Future Strategies: What should be the strategies once the


product is launched.

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