1. New Product Development

2. What is New Product Development?
 New Product Development (NPD) is a process which
is designed to develop, test and consider the viability
of products which are new to the market in order to
ensure growth or survival of the organization.
 The overall process of strategy, organization, concept
generation, product and marketing plan creation and
evaluation and commercialization of a new product.
Also frequently referred to just as "product
development."

3. New Product Development Strategy
 New Products suffer from high failure
rates.
 New Products can be obtained via
acquisition or development.
 Several reasons account for failure.

4. Examples of New Products
 New to the consumer – High definition
Plasma/LCD Television, iPod,
 New product lines – Mars ice-cream
 Replacement and product improvement
– new car model

5. New Product Development Process
– Stage 1
Idea Generation
 From Internal sources:
- R&D in a organization, employees, trade
shows, sales team etc.
 From External sources:
- Customers, competitors, distributors, suppliers,
vendors etc.

6. New Product Development Process
– Stage 2
Idea Screening
 Ideas are evaluated against criteria; most
are eliminated prior to devoting resources
on them.
 Product development cost increase
substantially in later stages.

7. New Product Development Process
– Stage 3
Concept Development and Testing
 Develop the engineering and marketing details.
 Product concepts provide detailed version of
new product ideas in meaningful consumer
terms.
 Test the concept by asking target customers to
evaluate product concepts.
 Turning ideas into tangible products that
consumers perceive as being valuable.

8. New Product Development Process
– Stage 4
Marketing Strategy Development
Designing an initial marketing strategy
for a new product based on the product
concept
Market Research is carried out to
assess the product’s market potential

9. New Product Development Process
– Stage 5
Business Analysis
 A review of the sales, cost and profit projections for
the new product is carried out to find out if this
matches with the organizations goals
 Estimate potential sales, income, break-even point,
profit and return on investment from the new product.
 Projecting probable costs and sales; will profit reach
the organization’s targets?

10. New Product Development Process
– Stage 6
Beta Testing/Market Testing & Product Development

Create a physical prototype and test the product in
typical usage situations

Conduct focus group customer interviews or introduce
the new product in Trade shows

Releasing the product into a small but representative
market where consumer reactions/marketing mix can
be assessed and checked.

Make adjustments where necessary

Produce an initial run of the product and sell it in a test
market area to check the customer acceptance

11. Commercialization/Product Launch
 Timing is critical for success.
 Introducing of a new product into the market.
 Heavy promotional expenditure at the launch.
 Pricing of the product should be skim or
penetration pricing.
 The product has to be well targeted and
positioned in the market.
New Product Development Process
– Stage 7

12. Stages in a New Product
Development (NPD)
 Idea Generation
 Idea Screening
 Concept Development and Testing
 Marketing Strategy Development
 Business Analysis
 Beta Testing/Market Testing & Product
Development
 Commercialization and Product Launch

13. Thank you