GOODMORNING

New product development Introduction In market the product is the most tangible

and important single component of the marketing programme. The development of new product means to find out whether the new concept can b implemented in practical or not from technical and commercial point of view.

DEFINITION “ A new product is a product that opens up

an entirely new market,replaces an existing product,or significantly broadens the market for an existing product”.

ARCH PATON

Challenges in New-Product Development

A company can add new products through acquisition or develoment.

The acquisition route can take three forms:-

1) It can acquire patents from other companies.

2) It can buy a license or franchise from other company.

3) The company can buy other companies.

The development route can take two forms:-

• The company can develop new products in its own town laboratories.

• It can contract with independent researchers or new product development firms to develop specific new products.

Six Categories of New Product1) New -to-the –world products:- new

products that create an entirely new market.

2) New product lines:- new products that allow a company to enter an established market for the first time.

3) Additions to existing product lines:- new products that supplement established product lines (package sizes, flavour etc).

4) Improvements and revisions of existing products:- new products that provide improved performance or greater perceived value and replace existing products.

5) Repositionings:- existing products that are targeted to new markets or market segments.

6)Cost reductions: new products that provide similar performance at lower cost.

poor design

Wrong price

High cost

Competit-ors

Reasons for failure of new

products

Ineffective advertising

Ignoring market

research

Several factors which hinder new product development:-

Shortage of important ideas in certain areas:- there may be few ways left to improve some basic products.

Fragmented markets:- companies have to aim their new products at smaller market segments,means lower sales and profits for each product.

Capital shortages:- some companies with good ideas can’t raise the funds needed to research and launch them.

Shorter product life cycles:- when a new product is successful,rivals are quick to copy it.

Cost of development:- a company typically has to generate many ideas to find just one worthy of development,& faces high manufacturing, marketing cost.

Social &governmental constraints:- new products have to satisfy consumer safety and environmental concerns.

NEW PRODUCT DEVELOPMENT

PROCESS

Idea generation

D

R

O

P

Business analysisProduct

designing&development

Product testing

REJECT

REJECT

Screening of new ideas

Product concept development&testing

Future plans

commercialization

REJECT

REJECT

REJECT

REJECT

MODIFY THE PRODUCT?

YES

NO

YES

The new product development process starts with the search for ideas. New product ideas can come from interacting with others and using creativity generating techniques.

1) Idea generation

Interacting with others Ideas for new products can come from many

sources like.

customers

scientistscompetitio

rs

employeesTop

management

After receving a number of ideas good or bad from the first stage ,the next step is to screen& evaluate the ideas which is useful for the company. The process of screening is critical evaluation of product ideas. The purpose of screening is to drop the poor ideas which is in incompitable with the company objectives.

2) Idea screening

customer satisfaction

Goodwill Profit

Market share Increase sales

Company’s objectives

In screening ideas,the company must avoid two types of errors:-

1.DROP ERROR:-when the company dismisses an otherwise good ideas.

2.GO-ERROR:-When the company permits a poor idea to move into development& commercialization.

FAILUREABSOLUTE PRODUCT FAILURE.PARTIAL PRODUCT FAILURE.RELATIVE PRODUCT FAILURE.

Concept development:- In this concept to measure the need,targets,purchase frequencyof the consumers, the gap level between new product&existing productin market.

Concept testing:-its presenting the product concept to appropriate target consumers and getting their reactions

.

3) Concept Development &Testing

If the concept testing is successful,the next step is to develop a preliminary marketing strategy plan for the introduction of the new.

The plan consists of three parts. FIRST PART:- it describes the target

market’s size,structure and behavior ;product positioning ,expected sales &profits.

4) Marketing Strategy

Second part:- In this part outlines the planned price, distribution strategy and marketing budget.

Third part:- In the last part long run sales

& profit goals& marketing mix strategy over time.

In this step efforts are made to establish whether the new product will b suitable or not? In business analysis following three types of estimate are made:-

5)Business Analysis

Business analysis

Estimating future sales

Estimating future profits

Estimating future cost

1)Estimating future sales:- For business analysis, first we estimate future sales of the product.

2)Estimating future costs :- different elements of the costs are analysed, it helps measuring the profitability of a product.

3)Estimating future profits:- it is also considered whether these profits will provide desired rate of return on capital invested or not. If not,the idea is dropped.

In this stage,the company to develop product proto type so as to ascertain whether the company has the necessary technology available or procure the technology to manufacture product which staisfy the consumes ,business needs.

There are two types testing:-1)Alpha testing:- test within the firm.2)Beta testing:-test with customer.

6) Product Designing & Development

Test marketing provides important clues,weakness about the product. In this stage where the entire product and marketing programme is tried out for the first time in a small number of well chosen and sales environment.

7) Test Marketing

If the product is found to be suitable as a result of analysis &study of the result of test marketing ,it is ready to be launched in the market.

In commercializing a new product,ceratin decisions are vry crucial.

A)When timing of market entry• First entry• Parallel entry• Late entry.

8) Commercialisation

B) Where geographic strategySingle localityA regionNational marketInternational market A launching of a new product,there many

activites are to b coordinated,management can use network-planning techniques.

Therefore,efforts must be made to develop a unique,superior product marketed at a reasonable price in an effective manner.

CONCLUSION