New Product Management

BY: MUKESH MISHRA

NewNew-product Options
1) 
 

Make or Buy a company can add new product through acquisition or development. The acquisition rout can take three forms. The company can buy other companies or it can buy licsence or francise from other company E.g. coca-cola Thums Up Fritolay ±Uncle Chips

NewNew-product Options
2 Types of New-to-the-world New Product
Additions Improvements Repositionings Cost reductions New product lines

Moser Baer has moved from making optical storage media to selling home entertainment

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.New.product Success  Most established company focus on incremental innovation. New product continue to fail at disturbing rate.Product Failure  New product development can be quite risky. It allow companies to enter new markets by tweaking products for new customers. use variations on core product to stay one step ahead of the market 2.New.Challenges in new product Development 1.

Challenges in new product Development New product can fail for many reasons  ignored or misinterpreted market research  Over estimate of market size  High development cost  Poor design  Incorrect positioning  Inefficient advertising  Inefficient distribution support  Competitors who fight back hard .

Ltd. 20-7 .The New Product Development Decision Process Copyright © 2009 Dorling Kindersley (India) Pvt.

  Idea Generation Marketing experts believe that greatest opportunities and highest leverage with new product are found by uncovering the best possible set of unmet customer needs or technological innovation Encouraged by open innovation movement. . many firms are increasingly going outside the company to tap external resources.New Product development 1. P&G connect-anddevelopment approach to innovation.g.e.

Idea screening  In screening idea company must avoid two types of errors  A DROP-error occurs when the company dismisses a good idea.  A Go-error occurs when the company permits a poor idea to move into development and commercialization .New Product development 2. it is extremely easy to find fault with other peoples ideas.

sales growth and profit? .New Product development       The executive committee then reviews each idea against a set of criteria Does the product meet a need? Would it offer superior value? Can it be distinctively advertised? Does the company have the necessary know how and capital? Will the new product deliver the expected sales volume.

Concept development and testing  Suppose a large food processing company gets the idea of producing a powder to add to milk to increase its nutritional value and taste  A product idea can be developed into several concepts.An instant breakfast drink for adults who want a quick nutritious breakfast without preparation. .a health supplement for older adults to drink in the late evening before they go to bed.  concept 1.New Product development 3.  Concept 2-a tasty snack for children to drink as a midday refreshment  Concept 3.

A tasty snack drink would compete against soft drinks. . fruit juices. and other home made items.New Product development   Each concept represents a category concepts that defines the product competition. An instant breakfast drink would compete against hot milk. and other thirst quenchers. sports drinks. cornflakes with cold milk.

symbolically or physically. Concept Testing  It means presenting the product concept. new.world products .New Product development 3.  The more the tested concepts resembles the final product or experience. to target consumers and getting their reactions. the more dependable concept testing is.to-the. but it may be especially challenging with radically different.  Concept testing of prototypes can help to avoid costly mistakes.

and strawberry) and would come in individual packs. ten to a box. vanilla. The product comes in three flavors( chocolate.`  .New Product development Concept testing presents consumer with an elaborated version of concept ` Our product is powdered mixture added to milk to make an instant breakfast that gives the person all the days needed nutrition along with good taste and high convenience. at Rs 110 a box.

Do u see this product solving a problem or filling a need for you? 3Gap level-Do the products currently meet this need and satisfy u? the greater the gap.Need level. high score means the consumer sees the product as filling a strong need not satisfied by available alternatives . Communicability and believability. researchers measure product dimensions by having consumers respond to following type of questions: 1. 2. the concept must be refined or revised. the higher the expected consumer interest. Marketers can multiply the need level by the gap level to produce a need ±gap score.New Product development After receiving this information.Are the benefits clear to you and believable? If the score are low.

Perceived Value-Is the price reasonable in relationship to the value? The higher the perceived value.Purchase Intention-Would you(definitely. . probably. definitely not)buy the products? Consumers who answered the first three question positively should answer `definitely` here. 5. probably not.New Product development 4. the higher is expected consumer interest.

User targets. when. and how often?  Respondents answers indicate whether the concepts has a broad and strong consumer appeal. purchase occasions. what product it compete against. and which consumer are the best targets .New Product development 6. purchasing frequencywho would use this product.

structure. and profit goals sought in first few years . a new product manager will develop a preliminary three part strategy plan for introducing the new product into the market  The first part describe the target market size. and behavior: the planed product positioning. market share. and sales .Marketing Strategy Development  Following a successful concept test.New Product development 4.

Business Analysis  After management develops the product concept and marketing strategy. the concept can move to the development stage. replacement sales.New Product development 5. cost and profit projection to determine whether they satisfy company objectives. infrequently or often . Sales estimation methods depend on whether the product is purchased once. it can evaluate the proposal business attractiveness.  Management need to prepare sales.  Total estimated sales are sum of estimated first time sales. If they do. and repeat sales.

New Product development 6.  The methodology takes the list of desired customer attributes(CAs) generated by market research and turns them into a list of engineering attributes(E As) that engineers can use. .Product Development  The job of translating target customer requirement into a working prototype is helped by a set of method known as Quality function deployment(QFD).

Alpha testing is testing the product within the firm to see how it performs in different applications. and that the firm can produce within budgeted manufacturing cost. . that performs safely under normal use and conditions. it goals is to find a prototype that embodies the key attributes described in the product-concept statement. When prototype are ready.New Product development    The R&D department will develop one or more physical versions of the product concept. they must be put through rigorous functional tests and customer tests befor they enter the market place.

New Product development    After refining the prototype further. the company move to beta testing with customers Consumer testing can take several forms. from bringing customers into a laboratory to giving them samples to use in their homes. P&G has on site labs such as diaper testing centre where dozens of mothers bring their babies to be studied .

the product is ready to be dressed up with a brand name and packaging and put into market test. and repurchasing the product.  In a authentic setting marketers can learn how large the market is and how consumers and dealers react handling.Market Testing  After management is satisfied with functional and psychological performance.New Product development 7. using . .

the company notes how many consumers buy the new brand and competing brands.  Consumer receive a small amount of money an are invited into a store where they may buy any item. This provides a measure of ads relative effectiveness against competition ads in stimulating trial.New Product development Method of consumer goods market testing a) Simulated Test marketing  It calls for finding 30 qualified shoppers and questioning them about brand familiarity and preferences in a specific product category  These consumers attend a brief screening of both well -known and new TV aids. . once ad advertises the new product but is not singled out for attention.

 The research firm delivers the product to the participating stores and control shelf position. displays.  Electronic scanners measure sales at checkout. and POP and pricing. The company with the new product specifies the number of stores and geographic locations it want to test.the company can also evaluate the impact of local advertising and promotions .New Product development b) Controlled Test Marketing  In this a research firm manages panel of stores that will carry new products for a fee. number of facings.

.  The company puts on a full advertising and promotion campaign similar to the one it would use in national marketing  Test marketing also measures the impact of alternative marketing plans by varying the marketing program in different cities. and the sales f forece tries to sell the trade on carrying the product and giving it good self exposure.New Product development c) Test Markets  The ultimate way to test consumer product is to put it into full blown test markets. The company choose a few representative cities.

First Entry 2.New Product development 8) Commercialization  In this process company will face its largest cost to date.it will need to conract for manufacture or build or rent a full scale manufacturing facility.Late Entry . a) When(Timing) 1.Parallel Entry 3.

New Product development b) Where(Geographic Strategy)  The company must decide whether to launch the new product in a single locality. a region. Most will develop a planned market rollout overtime company size is also an important factor. the company must target initial distribution and promotion to best prospect groups . the national market. or the international market. several regions. c) Whom(Target market Prospects)  Within the rollout markets.

Stages of New Product Management 1. 4. The Product and Business Plan Justifying a Program: The Accounting Viewpoint . 5. The Business Objective The Market Opportunity Refinement of the Product Concept into a New Product and Business. 3. 2.

The Launch .The Starting Out 7.Stages of New Product Management 6. The Prelaunch Checklist: Setting Up The Organization 10. Executing The Plan 8. Manufacturing Development 9.

Selecting the new product opportunity a) Desired result -The challenge is to select and focus on the one that will yield the desired result . THE FIT 1. and the competition to determine how the new product opportunity will fit into the overall strategy. the market place.The Business Objective  It is looking at the company.

b) Evaluating the Opportunity-All the opportunities are not truly opportunities for a company. . strategic positioning .The Business Objective  Desired result may be revenue generation. long term growth for the company.Altough some of them represent good prospects from a pure market perspective. they may not fit with the company. and operational requirement.

Channel. the current and anticipated capabilities in development engineering. but also within the firm to determine its fitability with the sales organization. . Manufacturing. and Technology  A new product opportunity must easily fit into the operational culture and temperament of the firm.Understanding the Companies Fitability to the product.The Business Objective 2. marketing organization.  The new product idea must be tested not only in the marketplace.

The Business Objective 3. How does this opportunity fit into goals and agendas of the company?  Corporate Brand Identity  Target growth rates  Ownership issues .

The Business Objective THE STRATEGY 1. What is the company`s strategy in pursuing this Market± One time hit or Steady pursuit?  Overall product Strategy  Structure of Company .

 Why will it be successful?  What is unique about the product or technology that will be desired and accepted by the marketplace at this particular juncture in time and space? .The Business Objective 2. What makes the development team think this opportunity will take off?  Development team must make the case for the development program.

The Business Objective
3. Where is the marketing hook?  Very few product s are accepted that are µme to¶in nature, so there must be a clear marketing advantage at introduction.  The marketing advantage is generally, but not limited to, the integration of features within the product that differentiates it in market place.  Longer, lower, wider, less expensive, more functional, and easier to use are all product design tactics designed to make a product more marketable.

The Business Objective
4. Contingency Planning  Each new product have a vision of how it will play out in the marketplace.  The scenarios of success and for failure must be thought through, and recovery procedure for each work out.  E.g. if a new product is introduced and has existing competition you are invader, and the competitor will attempt to defend its territory.  If the market is worthwhile, the competitors will enter the race with an offering of its own.

The Business Objective
5. The benefits of Strategic Planning

The Strategic Planning Gap

Intensive growth Current Product New product Current Market New Market 1.Market Penetration 2. Product development Diversification .Assessing Growth Opportunities 1.Market development 3.

Line Extension Name 3. Brand Extension 4.Multiple New Branding Brand 2.New Product Planning Existing Category New Category Existing brand 1. New Offering .

The framework of planning A. . Analyze and draw initial conclusions from the obtained data. Where we are 1.The Business Objective 6. in addition to product related performance. Review trends in sales engineering. Initiate a search of records to create a 5 years history of the company`s performance. manufacturing expenses.

general and administrative expenses since cost may not be allocated on the activity. benefits. . features. Create as detailed as possible a product line analysis to describe the performance of individuals products. It is important to include the sales.The Business Objective 2. trends and driving force for each product.based cost basis. Examine the costs.

Mission Statement Narrative of the dream Narrative of how the plan and reality will fit together 5 year product line catalogue Product scope definition Specific market segments Industry trend . 5. Where are we going? 1. 2.The Business Objective B. 3. 6. 7. 4.

Requirement 5. Segment strategy 2. Investment/ Return 4. Implementation 3.The Business Objective C. Recommendation 6. How will we get there? 1. Action plan .

The Market Opportunity .

Category Attractiveness Analysis Category size Market growth rate Product life cycle Sales cyclity seasonality profit .

Product as a servant of business not conversely . profit. and value 2.How does it use and generate cash.Product as a Business 1.

Competitive Game
1 . Upsetting the playing field to your advantage 2. Faster, more informed solving of customer problem 3. The playing field is in application of specific need

Idea evaluation within the framework of business
1. 2. 3. 4.

Setting up criteria Testing each idea Consistency Measuring of ongoing effectiveness

Playing the Game well
Identifying those opportunities in which small incremental changes mean a big advantage 2. Determine latent opportunity for competitive advantage and incorporate it within the product
1.

NPD as a competitive weapon
1. 2. 3. 4. 5.

NPD as a survival means in the market Leapfrogging the account and industry Attacking your entrenched position Raising the barrier to entry Raising the expectations of the customer

7. 3. 6. 2. new versus existing Internal requirement. 4. 5. Identifying the opportunities that contribute to the vision Mix of product or service offering Contribution to revenue and profit Product mix analysis.The Product evolution flow chart 1. external requirement Projection of competition Optimize and maximize benefit for money spent .

Refinement of the Product Concept in a New Product and Business .

the new product developer breaks ground on several fronts: pricing. route to the market.  Throughout the process of new product development. costs. and manufacturing value.Refinement of the Product Concept in a New Product and Business It is the consideration to the details throughout the project. features.  It is the new product manager`s job to keep pressure on all of these fronts and manage them to an optimal amount. functionality. to generate the desired result.  . and the new product program.

Direct consumer survey II. . Suggestion systems and communication from customers IV.The Idea Generating the Idea A. Customer needs and wants I. Focused group discussions III. Customer complaints 1.

C. Scientific research  This method occurs generally as a result of scientific breakthrough of totally new technology. Competitors  Watch what the competitors are doing in the way of NPD.They are yardstick measurement of marketplace activity as an indication of how your company measures up to the marketplace. .The Idea B. or more often from applied research in the improvement of product.

The Idea D. E. Top Management  Top management has the largest bat to drive a new product development throughout the otganization.Company dealers and representatives  These sales channels can feedback customer ideas and also generate ideas of their own. However. . this medium must be evaluated in light of any individual agenda that may exist.

. Miscellaneous Sources  Some of these sources are inventors. marketing research firms.The Idea F. govt. industrial consultants. patent counsel. university laboratories. and periodical digests relating to an industry. licensing offices.

Attribute listing± this method requires generating a detailed list of the major attributes of the existing product and envisioning modifying each attributes by maximizing. minimizing. e. .. electric screwdriver was a result of studying a basic screwdriver and modifying the attribute of manual rotatory motion. substituting or rearranging.g.The Idea Techniques for generating new product idea I. and generating new combination to improve the product .

g. Industry convergence. examines the interrelationship of these products with each other in the group. and examines the interrelationship of these products with each other in the group. . Forced relationships  This method considers several products simultaneously.The Idea II.  E. and generate alternatives that combine functionality into a single new product.

magnetic wagon IV . rail electric . Generally limited to 6 people and 1h. Type of Vehicle Medium of travel Power source Cart. then singling out the most important dimensions of problem and analyzing the interrelationships among them. . a session consists of leader defining the problem to be solved specifically as practical and encouraging idea generating with a rule of no criticism.The Idea III. chair air. water. Morphological Analysis  This technique involves creative problem solving by examining a problem or objective. Brainstorming  This method is oriented to generating idea primarily in free flow fashion.

so too with new product ideas and their translation into new business. the venue of consideration. .  Rome was not built in a day.  Ideas become refined with three major factors influencing their refinement: the passage of time. A new product concept must be tested to be refined.The Idea 2. and frequency of review.

Third Party influence and feedback is Key  The key to value feedback is to get informed responses as distant as possible from the source of idea generated.The Idea 3. . and also allow the new product manager to draft the promotional material and present it to see if the story work.  This will result in an unbiased assessment of the concept.

. manufacturing. Primary customer contact has big payoffs  It provides direct product feedback in terms of features.The Idea 4.  It provides feedback on how the customer perceives your firm in designing. pricing an configuration. and marketing this product.

Evaluate the competition prior to product definition  The comprehensive competitive comparison chart should be done at project inception. and another one done at the time of product launch.  The one done at the inception will be required to define the product. The updated one at product launch will update the file and yield fresh information to sales team ..Competitive AnalysisAnalysisStructuring the Advantage 1.

Competitive AnalysisAnalysisStructuring the Advantage  There are 4 major types of competitive players in the market place and are easily recognizable.  It is important to categorize the individual competitors posture on the competitive comparison chart and understand their strategy .

   Defensive Orientation posture is based on the market leader position whereby the major market share is already controlled and objective is to prevent abdication of the share to anyone else.Competitive AnalysisAnalysisStructuring the Advantage A. main Their salient point of operation are that only the market leader can play a defensive game. The need is to maintain the market share by attacking themselves as other one would attack them. only doing it first and establishing countermeasures to maintain the share .

They are interested in growing market share by taking it from leader`s share .  Their main consideration is the strength of leader`s position.Competitive AnalysisAnalysisStructuring the Advantage B direct Pursuit Orientation posture  Is based on competitors that are generally number 2 or 3 in the marketplace. They are most successful when they find the inherent weakness in the leader`s strength and attack at that point .

the pursuit of business is as important as the attack itself  Many of these launches are manifested by developing functional alternatives to solving the problem.Competitive AnalysisAnalysisStructuring the Advantage C. . Since it is a surprise initiative. Its major tactic is surprise. Oblique Pursuit Orientation  Is designed to seek out an uncontested area. currently solved by the defensive player.

They should also never forget that no matter how successful they are in specific niche. they are to never act like a leader. . If the playing field for that niche becomes hotly contested. they must be prepared to bug out at a moment`s notice.Opportunistic Pursuit Orientation Posture  It is generally a small. company orientation and is manifested by ability to mobilize and serve market needs with originality and speed.  The player need to find a segment small enough to stake out and defend.Competitive AnalysisAnalysisStructuring the Advantage D.

 A properly prepared chart outline feature. .perciived strategy. target segment. costs.Competitive AnalysisAnalysisStructuring the Advantage 2. effectively of channel. specification items. relative standing and overall aggregate rating. pricing . channel to market. List of competitors and attributes  The competitive comparison chart is an invaluable tool in positioning the new product in the market place.

The primary driver in the sales transaction is satisfaction of customer need. Functional alternatives to solve the problem  An entrenched competitor need not be invincible.Competitive AnalysisAnalysisStructuring the Advantage 3.  If there is an alternative way to solve the need. this can allow participation in markets that otherwise would be inaccessible . new market niche may be created by those market constituents who accept the alternative.

 To successfully beat the competition. . and a delicate balance must be struck in adding features to keep ahead and . a watchful eye must be kept on them during the development process. Engineer The Competitive Advantage  The competitive advantage cannot be added o at the end of a program. Added features or other inducement to invoke market acceptance.Competitive AnalysisAnalysisStructuring the Advantage 4.

Are they company owned store? . 1. resellers .distributor. or agent? Each channel exists for a purpose and each one has benefits and drawbacks  Effectiveness of channel plays a vital role in new product success.The Route to Market What is the Route?  Every company needs to have a sales channel. .

Where lies its strength and Weakness? 3. 5. Determine Motivation at each step in the chain. Where does the money flow? 4.The Route to Market 2. Test the Route . Keep as close to the customer as possible while maintaining coverage and leverage.

 What makes your firm think it is the firm of choice to develop and introduce this to the marketplace? 1.Strategy and Tactics in Operational Planning How the new product will be presented to the market place  How to prepare your organization to tell the new product story in the marketplace. .

it is easy to visualize the corporate shortfalls and how they can negatively impact the program.Strategy and Tactics in Operational Planning 2. What must be done within the organization to prepare for the new venture 3. What prerequisite are to be implemented  While visualizing future of product. .

service. . What tactics will be used to introduce and shift loyalties  As a part of new product development. and of higher value to the customer base launch with this and keep the pace difficult for the competition to catch up. special.  What will these tactics be.price. quality. the loyalitis must be changed by your organization`s action. availability?  Bring some exciting.Strategy and Tactics in Operational Planning 4. knowledge.

Are the same presumption still true today? IV. What type of programs have historically failed. Trace successful programs and cite their contributions to the success 1.Background/Format Track Record of the Business I. and why? III. . What has the company traditionally been good at? II.

What is the measure of acceptance of program within the corporation? Who are the negative participants and what is their influence base? .Background/Format 2. Preparing an operational plan for the new product 3. How achievable is the program. chance of success? C. Integration of Tactics to execute a workable plan 4. Determine Risk A.Investment B. The Scope of program.

Act quickly to mitigate any damage that may have already occurred. Managing Risk A. Be attentive to negative trends. Look for the possible issues that have their origins in today's activities and could fester into tomorrow problem C. issues. and problems that start out small and grow B. Manage today and look ahead to tomorrow.Background/Format 6. .

The Product and Business Plan .

.The product and business plan  It deals with the planning of the new product opportunity within the framework of business. its time to find out its capability of generating revenue and capturing market share.  After getting a new product concept and refining it into a product opportunity.

1. in addition to serving as a road map for the development of the business. .  The business plan needs to be written such that it can initiate the appropriation of sufficient funding to execute a program.The Plan Elements of a business plan  The business is a mean of obtaining the funds.

and the contingencies into a cohesive. it is in factoring in objectives. and planning. executable plan and sticking to it through completion.  If there is a formula of success in preparing a business plan. . Formula of Success  Each product opportunity will require different treatment. the opportunities. analysis.The Plan 2.

otherwise. 4. Review the Plan Elements . Touch all areas of business initially so as to integrate. new product development will not be absorbed by the business.The Plan 3.

General market information III. Brief statement about competition IV. Business mission statement II.The Plan Executive Summary I. . Critical factors of success A.

The Plan B. State of business a) External review perspective b) Internal review perspective c) Corporate objectives d) Management team description . State of the company I.

Market members/segments VI. Industry trend III. Introduction II. Market description IV.The Plan C. Market growth and stability . The market and its need I. Market trends V.

The Plan vii. Competition analysis a) Domestic/ Global b) Functional displacement c) Sensitivity to external partnerships .

The Plan D. boundary.  What are the product description?  Define the scope.  How you go from an opportunity to profitable product. The Products  The plan must contain description of how you will develop these products on time and on budget. and use of products in this description  What is the cost structure of the products and will they generate profit? .

and timeline b) Fund expenditure with timeline c) Critical factors for success d) technology basis for the product.  . develop and present a detailed product development schedule and timeline showing expected progress and measurable milestone.  The development plan should include a) Schedule with dates.The Plan Finally .

Manufacturing a) Describe who will manufacture the product. b) Describe what manufacturing systems will be used. . c) Describe how the labor force will be trained.The Plan E.

The Plan F. from the introduction to the acceptance of the product c) who will market and sell the product . Marketing and sales a) rout to market and its cost b) how the customers will be targeted and include a typical expected timeline for sale.

The Plan G.  Develop and present countermeasure plans to sustain momentum  Describe the expectations of the channel participants and their expected performance for the company . Product Launch  How and when the product launch will take place  Cite expected initial sale and forecasted demand  Project how the competition will react to the product launch.

Development budget requirement II. Manufacturing budget requirement III. Profit projections VII. Risk analysis .The Plan H) Program financial specifics I.ROI IX. Marketing budget requirement IV. Sales forecast V. Balance sheet impact VIII. Revenue projections VI.

Contingencies J. After market plans .The Plan I.

Margin Planning and Enhancement . How will the product will broken out( cost.Product Mix/ offering 1. line completers. modules. structure. sizes) 2.

. or what it is worth to the customer? pricing is a fundamental component to the successful execution of the business plan.  Pricing should reflect the perceived value in the eyes of the consumer.Pricing Policy Background of Pricing  So what`s it worth to you? 1.

Pricing Policy 2. External/ Internal structure   Internal requirement/ external limits Objective of pricing a) Sales objective b) Profit objective c) Competitive objective .

Pricing Policy 3. Pricing strategies a) cost.based strategies b) Demand based strategies c) competiton .

Testing the Market 1. . and timing Update competitive analysis and extrapolate changes. 2. Constantly assess your new product position Test the marketability. pricing. project competition at launch 3.

.The customer is part of the plan 1. Depending on the product. involve customers early in the process A good customer will tell you things you can`t learn elsewhere 2.

. Getting the audience Generating enthusiasm Trial balloning 2.Selling the plan 1. 3.

4. 3. Overview Opportunity Product Description Strategy and Implementation Call to action . 5. 2.Presentation 1.

Justifying a program: The Accounting Viewpoint .

Introduction  The accounting viewpoint is quite different from the new product developer viewpoint. adopting the stance of the accountant. you must address all the nuts and bolts of financial analysis and understand the financial perspective of decision making  When .

Accounting perception of new product development Formulas. Expectations 2. not Adversaries 1. result. Narrative of Similar Programs .Accounting and finance as partners. 3.

Accounting and finance as partners.Zero tolerance for failure or delay 5. not Adversaries 4. Product development`s role: Facilitate understanding . Technology advantaged / Disadvantaged personnel 6.

. 2. 3.Generating Cash and Profit 1. 4. Impact of Route to Market Impact of Economic Cycles Read Management well to see how fast it reacts Watch the health of the business.

Cost. Break-Even Analysis Single ± product company/ contribution to profit model in larger companies Inventory: The hidden cost 2. and breakbreak-even 1. Volume. . profit. 3.

Direct sales Model Representative sales model Distributor or value-added reseller sales model 2. 3. .Financial Models for Sales Transactions 1.

Starting Out .

 . Now it is good time to select the team. laterally within the organization. as it is people who generate progress and results.  The other crucial elements are team management and communications-including communication within the development team.Introduction You have secured funding for the new product development program and are ready to start out.  The development team is highly important element of the development process. and externally to the organization.

1. in which the objective focuses the actions of individuals  In a team . the needs of the corporation outweigh the needs of the individual. .A statement about teamwork Teamwork  A team is a work in progress.  A team is a forum for individual contribution to an aggregate goal.

A statement about teamwork 2. 3. Most managers don`t understand the concept of a team  They give the `teamwork speech` and expect to have a disjointed group of people with differing agenda suddenly perform as a cohesive unit.Only the leader is to blame . Team work doesn`t happen naturally 4.

and when will they required?  Is there a learning curve for the capital? All of these essentials must be sequenced and coordinated. .Identify the Resources  What are resource required to initiate and complete the program?  What is the mix of internal and external expertise that will be needed?  What are the capital resources needed.Identifying The Requirements 1.

Identifying The Requirements 2. Organize the PERT chart Task 1 Task 2 Task 3 Resources Personnel Resources Resources Personnel Equipment Personnel Equipment Equipment .

Review Process questions for planning A. and assign responsibility .Identifying The Requirements 3. identify timing. Write the planning statement  What are the desired result or outcome?  What are the measurements of success? B List the action step in the plan.

Identify and list likely causes of key potential problems  what are the specific influences or events that can cause these potential problems? E. Develop preventative action .Identifying The Requirements C. Review each step in the plan and identify the critical areas D.

Design contingent actions G. Identify and list contingency points .Identifying The Requirements F.

Assembling the team Members Makeup of the team  Certain personalities can enhance success or contribute to failure. .  Members with exceptionally strong personalities can undermine the team leader  Each team needs a blend of creative people and pure implementers 1.

Aligning the team 3.Assembling the team Members 2. Obtain team member with drive . Get required Talent 4.

Line or functional Organizational format  In line or functional form. Types of organizational formats 1.  Benefit of this method is that one manager for all the projects directly applies the the resources to the program . a group of projects is assigned to the functional manager in the standard hierarchical structure.Organizational Form A.

 This is probably the most efficient form for executing a program. It focuses the development horsepower directly on the task at hand with no compromise  There is a single mind focus. which helps a team be highly effective.  Member don¶t work on anything other than the project. .Organizational Form 2. Pure project form  In this form of organization each project is self contained and resources are assigned to a single project for execution.

and talent is assigned on availability.  This form is most comfortable for senior management to support throughout a program because the ratio of projects to people seems better. .Organizational Form 3.Matrix form  Development personnel are located in a resource pool. Assignments are given to the pool.

Meet the program needs. Making do with existing organizational formats C. not organizational preferences A. . Making do with existing organization formats E.Organizational Form Selecting the right form B. Meet the program needs. not organizational preferences D.

Management of the team System for program management  Gant Chart  PERT Chart 2. Model for Program management  Market assessment and internal assesment  Prototyping  Core development and testing  Industrialization  Commercialization  optimization 1. .

timing progress. external and combination resource management 4. Dynamics of schedules.Management of the team 3. and slippage .Internal. Managing uncertainty in a program 5.

Management of the team 6. Managing for result  What are the practices that the group and company need to follow to become an effective development team?  Development and use of common methodologies for evaluations and decision making  Establishing and supporting a process for determining priorities .

Follow-up System  Item no.Management of the team 7.  Description  Action required  Assignment date  Responsibility  Completion date  Running status .

. 3. Set the pace.Culture of the group 1.senior management and team Watch the first obstacle Variable work effort applied to variable workload 2.

Recognition of Players 4.Culture of the group Incentives  Personal/Professional 1. We win or loss together . 2. Relate time and quality of work to incentive 3.

Set a good accurate.Management Reporting 1. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . easy to use reporting system Lay out program in detail Funding Logic Timing Resources Equipment Technology deliverables 2.

Management Reporting 3. Regular status meeting  It establishes consistency in progress assessment  It establishes accountability for the individuals team members  It assists in identifying upcoming issues  It provides a forum for discussion on resolving problems .

Management Reporting 4. Product maintenance versus development 5. Periodic management report a) Product status report b) c) Project status report General business condition .

5. . 2. Establish the start and end date Make use of training as part of program One step at a time Have Fun Lets go 3.The Program Initiation 1. 4.

Executing the plan .

functionality and product cost. it involves an interdisciplinary watch over timing.Introduction  Time for planning is at an end. the effort is now focused on the execution  Once the program is in motion.  Problems will befall the development if the program demands the new ground to be covered .

but this omission often comes back to haunt the team in some way or other. .  Documentation is often overlooked.Introduction  It is in the best interest of the program to deal with them effectively to enable on-time delivery of successful product.

Mechanics of product development 1. Flowchart Development Timing resource and creativity to meet the objective 3. Program Management  Inner Loop  Outer Loop 2. .

Managing People 1. . 3. Project management is people management The unpredictability factor in personnel Managing Technological risk 2.

Product development phases ‡ ‡ ‡ ‡ ‡ ‡ Stage 0: Market assessment and internal assessment Stage1: Prototyping Stage2: Core development and testing Stage3: Industrialization Stage4: Commercialization Stage5: Optimization ‡ .

Product development phases Stage 0: Market assessment and internal assessment 1. Feasibility study 5.Company Strategy .Product concept 4. Market Opportunity Analysis 2. Competition Analysis 3.

Timing 9. Fitability Study 7. Timing 8.Market dynamics Asssessment 10.Product development phases 6. Go or no-go decision 11. Market requirement specification .

Product development phases Stage1: Prototyping  It is the physical embodiment of a product concept as a starting point.  This is the stage at which the product concept evolves into a piece of hardware that is functional .

.Preliminary design specification  It is development`s response to functional specification.Intellectual property review  To prepare patent review to determine whether there are an patent issues outstanding or whether there is potential conflict with existing patents.Product development phases 1. which represents the voice of customer 2.

Test strategy  It is a plan for how the new product will be tested. as both are technology dependent. . It correlates closely with the design strategy. product reliability needs and cost. 4. Design Strategy  It deals with issues such as selection of technology.Product development phases 3. degree of risk.

.Product development phases 5.Quality Plan  It is plan for the quality claims of the product throughout its life cycle.  The quality of a product is strictly a measure of how accurate and repeatable the final product is coming off the production line.

Reliability Requirement  It is a measure of how long and how accurate a product will perform its intended function. .  This is a measure of the value in use that the consumer will obtain from the product.Product development phases 6.

It may be made in a lab.Final design specification 10. .Product development phases 7. Cost analysis 8. Capital requirement plan 9. Alpha unit developed  Alpha is designation for the engineering prototype. without tooling or specialized parts.

Criticality analysis  it is an exercise in determining the degree to which one failure in the product could prove critical.Product development phases Stage2: Core development and testing 1. 2. Safety review .

Beta Unit 5. Pilot run plan  It is the first practice production run of the product . Preliminary Forecast  ROI  Commitment perspective 4.Product development phases 3.

Final test strategy 10. 7. Pilot run results 8. Final production strategy 9. Final quality Plan .Product development phases 6. Design review results  This is a formal design review process in which all of the plan and certification efforts undergoes a peer review.

Field test data and feedback . Manufacturing setup 3. Tooling and equipment qualification 4. Product certification 6.Product development phases Stage 3: Industrialization 1. Final pilot run 5. Capital Equipment and setup 2.

Product development phases 7.Final cost evaluation 8. Finalize marketing strategy 9. Initial stock in place . Prepare launch Plan 10.

Final competitive assessment 2. Forecast for product 4. Customer visit schedule 6.Product development phases Stage 4: Commercialization 1. New product release . Final literature 3. Sales channel initiation and training 5.

Product evaluation analysis 5. Product obsolescence . Cost reduction 6. Field feedback plan 2. Manufacturing feedback 3. Value management 4.Product development phases Stage 5: Optimization 1.

Problem solving categories  Issue review  Cause assessment  Decision management  Planning architecture  .Problem Solving The ability to employ effective problem solving skills is a major requirement for the group 1.The goal: focus on short term and long term simultaneously 2.

Examine the process and observe the broad or complex concern. . Separate the concern into distinct issue  How does the collection of concern relate to each other and to the higher-level issues  Is there more than one issue involved  Will one action resolve or cause explain the issue 1. b.Problem Solving Issue review a.

Categorize and break down larger issues into root issues  What is the relative importance of each single issue?  What is the impact/ seriousness/urgency of the effect of each issue  How is each issue changing as the time progresses  Based on impact.Problem Solving What evidence surrounds the issue  How can you be more specific 3. and trend. what is the hierarchical order of the concern  . urgency.

Quantify how much of the context is defective. Quantify how many issues are occuring? What are trends? .Cause Assessment 1.        Describe the problem In what context issue is observed? What exactly is wrong? When in the life cycle of the context was the first issue observed? State any correlations in the examined issue.

Cause Assessment What are the similar circumstance might we expect to see this issue. but do not?  What similar issues might we expect to see but do not?  At what other locations might we expect to see but do not?  .

Manufacturing Development .

it must also include the development of the manufacturing system.Introduction  The development of the product is not only limited to the design of the product.  The efficiency of the manufacturing system is a measure of how well the organization can capitalize on the new product development. g .

Introduction
Manufacturing- The forgotten development?  Manufacturing development is an integral part of the new product development process.  Often, development occurs in a manufacturing vacuum, with the result that the new product might suffer lower than expected gross margin, might fail to capitalize on the market opportunity entirely.
1.

Introduction
2. Manufacturing as part of the product development  The importance of integrating the manufacturing process into the product development process can not be overstated.  There are tradeoffs between design and manufacturing that must be reconciled as part of development project, rather than in in production, where cost usually increases.

Integration of multiple disciplines into the development process
1.

Diagram flow of multiple disciplines into the development process. Give and take between manufacturing and development Manufacturing can`t fix what development doesn`t provide for

2.

3.

Integration of multiple disciplines into the development process
5. Considering the diverse and fast changing workforce. 6. Manufacturing as a competitive weapon.

Design for manufacturing 1. 4. 3. 2. Philosophy Minimization of parts Take advantage of gravity Refine processes to reduce per-unit resource consumption. .

6.Design for manufacturing 5. Create a mindset of minimization through the manufacturing pipeline. Create a process to build and ship rapidly rather storing inventory. .

a) b) c) d) e) The solution depends on the product Review Industry Practices Processes Yields Cost structure Product life cycle Redesign frequency . Layout 1. Process. 2.Manufacturing.

The importance of materials. and labour. sales marketing and manufacturing discipline 2. 3. Requirement for accuracy. The link between the customer . .Forecasting 1.

Prelaunch Checklist-Setting Checklistup the Organization .

.  Each of the elements is discussed to ensure a completed program at launch. with entire organization prepared and motivated to achieve success with the new product.Introduction  This phase of the product development activity deals with all of the preparation just before product launch.

2. .Confirming agency certification 1. Agency certifications are an integral part of the development process. Modifications after BETA sites test program.

Pilot run manufacturing
1. 2. 3. 4. 5.

Purpose of the pilot run Perspective on the size of the pilot run Degree of variability allowance Measure of Performance Corrective action

BETA testing Program
1. 2. 
   

This is the report card on the entire effort. Checking all elements of the planned process Customer selection Demographics of selection Documentation of feedback Deposition of feedback information Recommendations

BETA testing Program
3. Modification as a result of BETA testing

4. Be Specific about what you are looking for.

Literature
a) b)

Information to make a purchase decision

Information to familiarize the user about the product c) Information to use the product d) Information to train about the product e) Information about warranty

Training for Personnel 1. Is the organization set up to handle the new business? Pricing/ Quotas. and parts. service. . sales order entry. 2.

What are the dynamics for selling and servicing? .Field organization set-up set1. Review the type of field organization in place 2. 3. Sales team provides follow through on launch.

Field organization set-up set4. . Sales motivation and compensation. don`t launch without the sales team`s support 5.

Final Pricing 1. Field feedbacks help set pricing Verify your position in the Marketplace Is your product strategy still valid? 4. Do you have a low volume. standard price product? 3. . specialized or a high-volume. 2. Rerun ROI calculation 5.

Sales reports .Tying in sales order entry systems 1. Quotas 3.Tracking the sales progress 2.

The Launch .

its time for the major thrust in getting the new product business off the ground.  . planning and execution in place.Introduction Product launch is the culmination of all the efforts and work new product development team has invested  It is the decisive point in which the market must respond to the total effort. with all of the development.  Now.

or introduction.  . is the formal mean to launch the new product.  The rollout formally launches the product The product rollout.Product Rollout 1. and consists of the certain features and benefits. It is specially designed to get the word out to the customers and marketplace that the new product is available for sale.

Establishing momentum 5. Incentives g .Product Rollout 2. Telling the new product story 4. Media uses is critical to launch 3.

. 4. 3. Models for new product rollout Monthly monitoring Making the strategy work Checking the price/value matrix 2.Initial Monitoring of Results 1.

Initial Monitoring of Results 5. Is the story getting out? 6. Energy is the only weapon at launch.use it . Overcoming obstacle 7.

4. Need and value of customer visit Participation in initial sales transaction Correct sales activities as required 2.Product Promotion and customer visits 1. 3. g .

2. Networking the sale force to your advantages Model for a prospected sales transaction Pick a sales examples and drive it to success Utilize publicity to promote the new product 3. 4. .Tools 1.

5.Measurements 1. Establish launch goal Qualitative evaluation of product sold Price protection and margin retention Balanced selling Preventing product cannibalism . 4. 3. 2.

with resulting gross margin. completion date. Launch incentives Ease of conducting business Action items.Sales channel and launch objectives 1. 3. follow up. Clearly identify the direct objective  Achieve x amount of sales in the following time frame. and results 4. while maintaining the existing product sale base . 2.

Product life-cycle Marketing lifeStrategies .

manufacturing purchasing. A company`s positioning and differentiation strategy must change as the product. each posing different challenges. Profit rise and fall at different stage of PLC. 4. 2. market and competitors change over the period the PLC PLC asserts four things Product have a limited life. and problem to the seller.PLC Marketing Strategies   1. financial. Product sales pass through distinct stages. 3. and human resource strategies in each life cycle stage . opportunities. Products require different marketing.

Product life Cycles .

Maturity  A slow down in sales growth because the product has achieved acceptance by most buyers  Profits stabilize or decline because of increased competitions 4.Decline  Sales shows a downward drift and profit erode 1.Product life Cycles Introduction A period of slow sales growth as the product is introduced in the market.  . profit are non existence because of heavy expenses of product introduction. 2.Growth  A period of rapid market acceptance and substantial profit improvement 3.

induce product trial. 1.Marketing strategies at different stages of PLC Introduction Stage  Since it takes time to roll out a new product. sales growth tends to be slow in the introduction stage. and secure distribution in retail outlets. work out the technical problems.  Profits are negative or low. . fill dealer pipelines. and gain consumer acceptance. and promotional expenditures are at their highest ratio to the sale because the need to inform potential customers.

Companies that plan to introduce a new product must decide when to enter the market.income groups.Marketing strategies at different stages of PLC    Firms focus on those buyers who are most ready to buy. To come in later makes sense if the firm can bring superior technology. To be the first can be rewarding. Price tends to high because cost are high. quality. . but risky and expensive. or brand strength. usually in higher.

 New competitors enter.  Companies maintain their promotional expenditures at the same or at the slightly increased level to meet competition and to continue to educate the market. Early adopters like the product.  Prices remain where they are or fall slightly. and additional consumer start buying it.Marketing strategies at different stages of PLC 2. attracted by the opportunities. Growth stage  The growth stage is marked by a rapid climb in sales. depending on how fast demand increases. . They introduce new product features and expand distribution.

 .g. Men Cosmetic market in India . causing a welcome decline in the promotional ±sales ratio.  Firms must watch for a change from an accelerating to a decelerating rate of growth in order to prepare new strategies.  Profit increased during this stage as the promotion costs are spread over a larger volume and unit manufacturing costs falls faster than price decline.Marketing strategies at different stages of PLC Sales rise much faster than promotional expenditures.  E.

e product of different sizes. the firm uses several strategies to sustain rapid market growth  It improves product quality and adds new product features and improve styling. and so forth to protect the main product) . flavor.  It adds new model and flanker products(i.Marketing strategies at different stages of PLC During the growth stage.

 It lowers price to attracts the next layer of price-sensitive buyers  .  It shifts from product awareness advertising to product preference advertising.Marketing strategies at different stages of PLC It enters into new market segments  It increases its distribution coverage and enters new distribution channels.

the rate of sales growth will slow. .  This stage normally lasts longer than the previous stages and posses a big challenges to marketing. Most product are in the maturity stage of the life cycle. Maturity stage  At some point. and the product will enter a stage of relative maturity.Marketing strategies at different stages of PLC 3.

most potential customers have tried the product and the future sales are goverened by population growth and replacement demand.Marketing strategies at different stages of PLC The maturity stage divides into three phases: growth.  .  In the second phase . There are no new distribution channel to fill. stable and decaying maturity.  In the first phase the sales growth rate start to decline. sales flatten on a per capita basis because of market saturation.

Competitors scramble to find niches They engage in frequent markdown. the absolute level of sales start to decline. decaying maturity.Marketing strategies at different stages of PLC    In the third phase. which leads to intensified competition. the sales slowdown create over capacity in industry. This phase poses the most challenges. they increase ad and trade and consumer promotion . and customer begin switching to other products.

Dominating the industry are a few giant firmperhaps a market leader. and a cost leader. The industry eventually consists of wellentrenched competitors whose basic drive is to gain or maintain market share.Marketing strategies at different stages of PLC     They increase R&D budgets to develop product improvements and line extensions. a service leader.that serve the whole market and make their profit mainly through high volume and lower costs . A shakeout begins. and weaker competitors withdraw.

including market specialists. product specialists.  The issue facing a firm in a mature market is whether to struggle to become on of the big three and achieve profit through high volume and low cost. and customizing firms.Marketing strategies at different stages of PLC Surrounding these dominant firm is a multitude of market nichers. or to pursue a niching strategy and achieve profit through low volume and high margin  .

and the firm in middle see their market share steadily erode.Marketing strategies at different stages of PLC Sometimes market will become polarized between low.g.and high end segments. Strategies  Three potentially useful ways to change the course for a brand are market. product and marketing program modification  . Electrolux. E.

Market Modification  A company might try to expand the market for its mature brand by working with the two factors that make up sales volume Volume = no. of brand user a) Convert non user.small sachet shampoo market in India . of brand users x usage rate A No.Marketing strategies at different stages of PLC 1.

Marketing strategies at different stages of PLC b) Enter new market segment  J&J successfully promoting its baby shampoo to adult user.  Pears soap has introduced a pink soap specially targeted at children c) Attract competitors customer .

b) Use more of the product on each occasion  E.g.Marketing strategies at different stages of PLC B. . Increase the Usage Rates Among Users a) Use the product on more occasion  e. milkmaid(Nestle) for making variety of dessert preparations at home. drink a large glass of orange juice.g. C ) Use the product in new ways  Use aspirin daily as a medicine for reducing chances of a stroke.

. or style improvement. good for family heart. a) Quality Improvement  Pillsbury Chakki fresh atta. rich in fiber. Product Modification  Managers also try to stimulate sales by modifying the product characteristics through quality improvement. more hygienic. feature improvement.Marketing strategies at different stages of PLC 2.

. additives. weight. . E.Marketing strategies at different stages of PLC b) Feature improvement  Adding new feature such as size. materials. c) Style improvement  It aims at increasing product esthetic appeal.  A style change usually reuires discontinuing of old style and the company risks losing customer. A style strategy might give the product a unique market identity. New Coke.g. and accessories.  It isdificult to predict whether people and which people will like a new style. yet style competition has problem.

should we lower the prices through prices through price specials.Marketing strategies at different stages of PLC 3. freight cost absorption or easiest credit terms? Or would it be better to raise the price. volume or early purchase discounts. to signal higher quality? . Marketing Program Modification a) Price  Would a price cut attract new buyers? If so.

or size of ads? . frequency.Marketing strategies at different stages of PLC b) Distribution  Can the company obtain more product support and display in existing outlet? Can it penetrate more outlets? Can the company introduce the product into new distribution channels? c) Advertising  Should we increase advertising expenditure? Change the message or ad copy? The media mix? What about the timing.

or quality of salesperson? Should we change the basis for sales force specialization? Revise sales territories of sales force incentive? Can we improve sale call planning? f) Service  Can the company speed up delivery/ can we extend more technical assistance to customers? More credit? . price-off coupons.up sale promotion-trade deals. warranties.Marketing strategies at different stages of PLC d) Sales promotion  Should the company step. gifts and contests? e) Personal selling  Should we increase the no. rebates.

including technical advances. of reason. Decline Stage  Sales decline for a no. increased price cutting and profit errosion. some firm withdraw from market.  All can lead to over capacity. shifts in consumer tastes and increased domestic and foreign competition.Marketing strategies at different stages of PLC 4.  As sales and profit decline. . and they may cut their promotional budgets and reduce prices further. Those remaining may reduce the no.. of products they offer  They may withdraw from small market segments and weaker trade channels.

Product Portfolio Analysis and Management .

Product Mix A product mix is the set of all products and items a particular seller offers for sale Product width  The width of a product mix refers to how many different product lines the company carries. If Lux comes in 4 variant and 2 size then product depth is 8 . HUL is having 12 lines Product Length  The length of the product mix refers to the total no of item in the mix (28 items in HUL) Product Depth  The depth of the product mix refers to how many variants are offered of each product in line.

Product Mix Width Home and Personal Care personal Laundry Skin wash Product Line Care Hair Care Oral Care Deo Ayurved Color Tea ic Cosmeti personal c & Health Care Foods Coffee Foods Ice Cream Length Lux Surf Excel F&L Ponds Vaseline Pepsoden Sunsilk t Axe Clinic Close-Up Rexona Ayush Lakme Brook Bond Lipton Bru Kissan Knoor Kwality Wall`s Lifebuoy Rin Liril Hamam Breeze Dove Pears Rexona Wheel Annapurna .

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