2. Contents:
W h a t is new product development??
Challenges in NPD
Overcoming these challenges
N P D Strategies
N e w product failures
Stages in NPD
Conclusion
3. New product development (NPD) is the term
used to describe the complete process of bringing a
new product to market.
A Product is a set of benefits offered for
exchange and can be tangible (that is,
something physical you can touch) or
intangible (like a service,experience, or
belief).
4. NewProductDevelopment
Strategy
H o w do companies develop and market new
products?
Come up with own ideas.
Brand new products
Product improvements &modifications
Acquire companies, patents, licenses.
Eg: Tata nano car, RATAN TATA
Conceived of an idea of a small
Cheapest car when he saw families of
Four and five people travelling by their
Bikes.
5. New-ProductFailures
• Only 10% of new consumer products succeed in the
long run.
• Why do most productsfail?
– Don’t fulfill a real need orwant
– Overestimation of market size
– Design problems that compromise functionality
– Incorrectly positioned, priced or promoted (4 P’s)
– Pushed despite poor marketing researchfindings
– Development costs go over budget
– Competitive response
6. STAGES IN NPD
• Project Development does not just happens, It has to
be planned.
• Dynamic firm plan their innovations for five to ten
years in advanced.
• Product Development involes a number of decisions
namely what to manufacture or buy, how to have its
packaging, how to fix its prices and how to sell it.
7.
8. Idea Generation
Where do ideas come from?
• Internal sources:-
– Company employees at all levels: “Intrapraneuring”
- R&D Cell Employees feed backs
• External sources :-
Customers
Competitors
Distributors
Suppliers
Outsourcing partners
9. Idea Screening
: I n t h i s s t e p o n e i d e a i s
s e l e c t e d f r o m t h e a l t e r n a t i v e
i d e a o f t h e f i r s t s t a g e .
: W h i c h t y p e , q u a l i t y a n d a t
w h i c h p r i c e t h a t r e s o u r c e s w i l l
b e a v a i l a b l e .
Criteria :-
Market Size
Product Price
Development Time &Costs
Manufacturing Costs
Rate of Return
10. I
An idea benefits to customers.
An Idea shoud be taken by customers
1.Develop a working descriptionandd
visualization of the product idea and
concept.
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One
11. For example- An Auto Company has developed
a practical battery powered electric car and it
may work on the following concepts:
Concept 1 : AN AFFORDABLE COMPACT
CAR FOR A SMALL FAMILY
Concept 2: A GREEN CAR MEAN FOR LOW
POLLUTING TRANSPORTATION.
Concept 3 : A MID SIZE UTILITY VEHICLE
FOR COST EFFECTIVE
TRANSPORTATION.
13. Business Analysis
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept
Assess economic viability of the concept.
14. Under business analysis, the company finds out...
1. Whether the new product is commercially profitable or
not?
2. What will be the cost of the new product?
3. Is there any demand for the new product?
4. Whether this demand is regular or seasonal?
5. Are there any competitors of the new product?
6. How the total sales of the new product be?
7. What will be the expenses on advertising, sales
promotion, etc.?
8. How much profit the new product will earn?
9. So, the company studies the new product from the
business point of view. If the new product is profitable,
it will be accepted else it will be rejected.
15. ProductDevelopment
Develop concept into physical product
prototype.
• Large jump in investment – “point of no
return”.
• Test and refine prototype until
product passes consumer and legal
scrutiny.
16. TestMarketing:
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Simulated
Test Market
Test in a simulated
shopping environm ent
to a sample of
consumers.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
After testmarketing the “GoActive”
meal (an adult happy meal) in 150
marketsin Indiana, McDonald’sdecided
to sell itacross theU.S.
17. • Test marketing means to introduce the new
product on a very small scale in a very small
market.
• If the new product is successful in this market, then
it is introduced on a large scale
• However, if the product fails in the test market,
then the company finds out the reasons for its
failure.
• Test marketing reduces the risk of large-scale
marketing. It is a safety device.
18. Commercialization:
• Broad launch of product if market test results are
positive.
• Timing of launch is important.
• Potential Rollout plans
– Local
– Regional
– National
– International
– “Wider Test Market”
After commercialization Stage then that product's life
cycle ( PLC) begin.
19. Implementation of a NPD process with stages
has helped businesses focus their New Product
investment on the most potentially rewarding
projects.
It has shortened the time between idea and
revenue by orchestrating the complex set of
activities required for thecommercial success of
new products.