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Marketing Chapter 1:-
New Product Development
Definition
1. New product development (NPD) is theterm used to describe the complete process ofbringing a new product to market
2. NPD is the complete process of bringing a new product to the market till its consumption & feedback from the end user of the business chain through the systematic procedure & parameter.
3.
NDP is a process which designed to develop, test
and consider the viability of products which are new to the market in order to
ensure the Growth or survival of the organisation.
4.to obtain new products Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product.
5. New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.
6. finding new ways to solve customer problems and create more customer satisfying experiences
7
A product that opens an
entirely new market
A product that adopts or
replaces an existing product
A product that significantly
broadens the market for an existing product
An old product introduced in
a new market
An old product packaged in a
different way
An old product marketed in a
different way
Examples of new products
New to the world – high definition TV, ipod, flat screen TV, Probiotic Ice Cream
Product improvement &
replacement :SPEED by BPCL
Cost reduction new product:
Moser Baer.
Introduction:
New product development is essential to any business that must keep up with market trends and changes.
Approximately one-third of
the revenue a business generates is coming from products they did not sell five
years ago
Changing environment creates
new demands and needs
Creates an
innovation-oriented culture • Yields a large number of new-product ideas
New Product development
challenges
fall into three major
categories:-
1. Definition of product specifications
2. Time and resources issues
3. Interactions of the Product Development group with the rest of the
company
4.
New product
can be used to•
Increase/defend market share by offering more choice or updating older products•
Appeal to
new segments•
Diversify
into new markets•
Improve relationship
with distributors•
Maintain
the firm’s reputation a leading edge company•
Even out
peaks and troughs in demand•
Make
better use of the organizations resources
Why NPD
may be done to develop an item to compete with a particular product or may be done to improve an already established product.
A way of getting new and keeping old customers
Effective way of obtaining a competitive advantage
Source of growth and excitement
Why develop New Product
To create stars and cash cows for the future•
To replace declining product•
To take advantage of new technology•
To defeat rivals•
To maintain/increase market share•
To keep up with rivals•
To maintain competitive advantage•
To fill gap in the market
New Product Importance
Company .
. .
Societal .
.
Sales
Revenue
Create
jobs
Replace
“fading products”
Increase
standard of living
Spread
Risk
Increase
competition
Innovate
or Die
New Product Ideas Source
Company sources other than R&D 36.2%
Analysis of the competition
27.0%
Research & Development
24.3%
Product users
15.8%
Supplier suggestions
12.5%
Product user research
10.5%
Published information
7.9%
New Product Categories
New to the world products
New product lines
Product line extensions
Improvements and revisions to existing products
Repositioning
Cost reductions
A new product can be categorize into :
Truly new product.
Innovated product from the existing one.
How 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
Product Development Process
Opportunity scan
Market research
Concept Testing
Prototype Development
Test Marketing
Product Launch
Idea Generation
Where do ideas come from
Internal sources:- – Company employees at all levels:
“Intrapraneuring”•
External sources :-
Customers
Competitors
Distributors
Suppliers
Outsourcing partners
Idea Screening
Keep the good ideas and drop the poor ones.
Criteria :-
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
ideas R-W-W Screening Framework: 1. Is it real? 2. Can we win? 3.
Is it worth doing?
Product image is the way consumers perceive an actual or
potential product.
Concept Testing
Concept testing is the process of usingquantitative methods and qualitative methods to evaluate consumer response to a productidea prior to the introduction of a product to the market.
Marketing Strategy Development:
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two -
Short-Term:
Product’s Planned Price Distribution Marketing Budget
Part Three -
Long-Term: Sales & Profit Goals
Marketing Mix Strategy
Prototype Development
Prototype development is the process of preparing a device, technique or system that demonstrates the feasibility of a solution to a problem.
Business Analysis-
Assess economic viability of the concept.
Business Analysis Review of Product Sales, Costs, and Profits
Projections to See if They Meet Company Objectives If No,
Eliminate Product Concept If Yes, Move to Product Development
Product Development
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.
Test Marketing:
Standard Test Market
Controlled Test Market
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”
Reasons For New Product Failures?
Only 10% of new consumer products succeed in the long run.•
Poor marketing research
Technical problems
Insufficient marketing effort
Bad timing
The wrong group was targeted.
Unrealistic forecast.
Insufficient level of awareness.
Why New Products Fail ?
No discernible benefits ?
Poor match between features and customer
desires ?
Overestimation of market size ?
Incorrect positioning ?
Price too high or too low ?
Inadequate distribution ?
Poor promotion ?
Inferior product
Why do most products fail? –
Don’t fulfill a real need or want –
Overestimation of market size –
Design problems that compromise functionality –
Incorrectly positioned, priced or promoted (4 P’s) –
Pushed despite poor marketing research findings –
Development costs go over budget –
Competitive response
Summary
New product development drives growth
Market research is critical to the success of a new product launch.
Market research is a continuous process as customer needs, your
business and the environment changes.
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