Marketing

Presentation
New Product
Development
By Nariman & Beenish
 New product

development
New product development (NPD) is the term
used to describe the complete process of
bringing a new product or service to market.
 It is a process which is designed to develop, test
and consider the viability of products that are
new to the market in order to ensure the growth
or survival of the organization.
 Product:
 A product is anything that can be offered to a
market that might satisfy a want or need.
 What is a new
A
product?
product that open ups an entirely new market
A product that adapts or replaces an existing product
A product that significantly broadens the market for
an existing market
An old product introduced in a new market
An old product packaged in a different way
An old product marketed in a different way
 Types of New

Products
There are different types of new products:

 New to the world products—innovative products

 New product lines—to allow the firm to enter an existing
market
 Additions to product line—to supplement the firm’s existing
product line
 Improvements and revisions of exisisting products-- any
additional feature, style, color, or shape that is not available
on an existing product design.
 Repositioned products—existing products targeted at new
markets
 Cost reductions—new products that provide similar
performance at lower cost
 These products can be broadly classified as
 Innovative,immitative and replacement products
 Examples of new
products:

Innovative: digital
Innovative: digital
cameras ,flat screen
Tv, Ipods,credit
cards,online banking
etc
 Digital camera.

 Ipods

 credit cards

 Online Banking
 Examples(cont)
 new product lines:
Mars ice-creams
 additions to
product lines:
weetabix launched
weetabix gold and
oatibix
 Examples(cont)
 product
improvments
&
replacements:
new car model,
PCs and laptops
etc
 Examples(cont)
 typewritter replaced by computer
and laptops
 Examples(cont)
Replacement
s: floppy
replaced by CD
and DVD
 Examples(cont)

Improve an
Existing
Product
 Why develop new
products?
 To add to product portfolio
 To create stars and cash cows for the future
 To replace declining products
 To take advantage of new technology
 To maintain/increase market share
 To defeat rivals
 To keep up with rivals
 To maintain competitive advantage
 To fill a gap in the market
 Why develop new
products?cont…
To bring in new customers
To appeal to new segments
Diversify into new markets
To maintain firm’s reputation as the leading
edge company
Even out peaks and troughs in demand
Make better use of organization’s resources
 Significant

Innovations
1840s, Telegraph.
 1870s, Telephone.
 1894 First spark transmitter (radio) by Guglielmo Marconi.
 1886, Coca Cola was invented by John Pemberton
 1886, First Yellow Pages.
 1989, Construction of the Eiffel Tower.
 1891, Vaccination against diphtheria and tetanus.
 1899, First paperclip by Johan Vaaler.
 1908, First mass production of cars
 1901, First espresso machine by Luigi Bezzera.
 1906, Vaccination against tuberculosis.
 1930, First commercial television.
 1950, First Bic Cristal Ballpoint Pen
 Significant
Innovations cont…
 1950´s, McDonald's revolution: Quality, Service,
Cleanliness and Value
 1951, First Credit Card
 1953, The first high-speed printer was developed
by Remington-Rand.
 1971, Introduction of soft contact lenses.
 2000, Google (searching engine with more
effective algorithms than Yahoo)
 2002, Wireless connection to internet (WiFi).
 2004, RFID (Radio Frequency Identification). It
gives real time visibility to entire supply chain.
 New Product
Strategy
A new product strategy is a statement
identifying the role a new product is
expected to play in achieving
corporate and marketing goals.
A firm assesses
 Its current product portfolio
 Opportunities and threats
 New Product
Strategy cont..
The firm then determines the type of
product which would best fit in with the
corporate strategy.
An effective new product development
strategy must go beyond efforts to
achieve core market growth. The
strategy must consider all possibilities
and generate growth and revenue along
several potential avenues of innovation.
 Avenues of innovation
 When it comes to formulating a new product
development strategy, there are four
potential avenues of innovation:
 core market growth:which consists of
making improvements to products and
services that already exist in order to help
customers get a job done better
 adjacent or related market
growth:which is improving existing products
and services to help customers get related
or ancillary jobs done (for example, by
adding a tongue cleaner to a tooth brush)
Avenues of innovation
cont…
(3) new market creation: which involves creating

a new product or service for customers who are
trying to get a job done but cannot because no
solutions or onlyad hoc solutions exist.

 (4) disruption:
which is defined as the creation of a technology that
enables a new set of customers to perform a job
that only specialists could previously perform. Crest
Whitestripes, for example, made it possible for
people to whiten their teeth on their own eliminating
the specialist—the dentist
 Allocation of
resources:
A well balanced new product
development strategy often
allocates resources as follows:
65% core market growth
15% adjacent or related market
growth
15% new market creation
5% disruption
 Strategy

concluded….
To implement such a new product
development strategy means that a company
must hire and train people to be responsible
for areas of growth outside the core market.

Once a company has defined its new product

development strategy, it commences the
innovation process – which is the process of
devising solutions that address the
customer's unmet needs.
 Strategy
concluded….
 Once a concept has been defined and
approved by management the concept
enters the product development process –
the process by which the concept gets
transformed into product specifications,
designed, tested and ultimately released
into manufacturing
Stages in new product
development
Idea generation:
 Idea generation

cont….
New product ideas have to come from
somewhere. But where do organizations
get their ideas for NPD? Some sources
include:
• Within the company i.e. employees
• Competitors.
• Customers
• Distributors, Supplies and others
Idea generation
cont….
Screening of ideas:
 Screening of ideas
 This
cont…
process involves shifting through the ideas generated
above and selecting ones which are feasible and workable
to develop. Pursing non feasible ideas can clearly be costly
for the company
Screening of product to spot good ideas and drop
poor one as soon as possible.
Ideas are checked for technical feasibility and
financial visibility and marketing.
The business analysis the product to evaluate its
demand marketability and profit potential.
Given ideas rating according to marketing production
and strategic factors.
 Concept
Development and
Testing
 Concept Development
and Testing
The organizationcont….
may have come across what
they believe to be a feasible idea, however,
the idea needs to be taken to the target
audience. What do they think about the idea?
Will it be practical and feasible? Will it offer
the benefit that the organization hopes it will?
or have they overlooked certain issues? Note
the idea and concept is taken to the target
audience not a working prototype at this
stage.
 Marketing Strategy
and
Development
How will the product/service idea be
launched within the market? A proposed
marketing strategy will be written laying
out the marketing mix strategy of the
product, the segmentation, targeting and
positioning strategy sales and profits that
are expected.
business analysis:
A review of the sales, costs, and
profit projection for a new product
to find out whether these factors
satisfy the firm objective.
Estimate potential sales, income
breakeven point, profit and return
on investment from new ideas.
Projecting probably costs and sales,
ll profit reach the firm targets
 product
development:
 product
development

 cont…
R and D turn the idea into a product.
Engineering and production issues are resolved.
concern with the designs,materials,production

processes, quality and satisfy
 Developing the product concept into a physical
product to ensure that the product idea can b
turned into workable product.
 Translating the ideas into reality through proto
type or simulations.
 involve the development of prototype
Test Marketing
 Test Marketing

cont
Launching a product in a small geographic area.
 a field experiment in realistic market setting
 Releasing a product in small but representative market
where consumer behavior can b assessed and the marketing
mix check and adjust.
 Aims
 To forecast likely results of national launch.
 To check the operational effectiveness of marketing plane.
 To identify possible problem
 To access customer reaction.
Commercialization
:
Commercialization
cont
introducing new product into market

 timing is critical for success
 there will be heavy promotional
expenditure at the launch
 choice of skim or penetration pricing
 The product has to well targeted and
position.
 The importance of
innovation and new product
development:
A business exists to satisfy customers while
making a profit
A company fulfills this dual purpose through
its production.
New product planning & development are
vital to an organization’s success. Thus as
emphasized by a top executive at Pillsbury,
“In the end, the company with the most new
products wins”
 Importance cont…
Requirement for growth:
Sooner or later many products become
outdated. Their sales volume and
market share drop because of
changing customer desires and
superior competing products, also
technology change is so faster that
existing technology does not remain
effective
 Importance cont…
Thus a guideline for management is “innovate
or die”
Introducing a new product at the right time can
sustain the firm.
Top firms such as Rubbermaid,Mc Donald’s
H.J.Heins,GAP and proctor Gamble have been
Successful innovators
The head of P&G therefore says:
“The core business is innovation. If we
innovate, we will ultimate win!