New Product Development

Presented by Roll no.

Rudra Desai 12

Submitted to

Prof. G.M. Subba Rao

• New product development
– The development of new brands, original products,
product improvements or modifications, through the
efforts of the firm’s R&D.
 Introduction: New products

• All products have a finite life span and this is influenced

by the type of product, its innovativeness, the
management of the product through its life cycle, as well
as the markets in which it is sold.
• All products will eventually decline and need to be
replaced by new ones and companies need to be adept at
adapting marketing strategies to respond to the dynamics
of the environment, so as to manage the product through
its life cycle effectively.
 Introduction: New products

• New products are the lifeblood of the organisation

but they are extremely vulnerable and the majority
never reach commercialisation.
• In competitive markets, the best and strongest firms
sustain growth through the introduction of new
products and services to meet the changing needs
of the consumers.
 Six Categories of new product
development
• 1. New-to the-world products
• 2. New product lines
• 3. Additions to existing product lines
• 4. Improvements and revisions of existing
products
• 5. Repositioning
• 6. Cost reductions
New product development decision process
1. Idea Generation
Yes No

2. Idea Screening
No
Yes
3.Concept development and testing
Yes No
4. Marketing Strategy development Drop
Yes No
5. Business Analysis

Yes No

6. Product development
Yes
Yes Send the
7. Market testing
Product back No
Yes No
8. Commercialisation No Modify the
Yes product No
Risks and returns in new-product
development
• About 90% of new products developed fail.
• Only 40% of new consumer products that are
brought to market will be around 5 years later.
• Risk management essential.
• Research indicates that success depends
primarily upon the amount of time and effort a
company is prepared to invest in making sure
the new product fits its market.
 Factors hindering new product
development
• Shortage of important ideas in certain
areas
• Fragmented markets
• Social and governmental constraints
• Cost of development
• Capital shortages
• Faster required development time
• Shorter product life cycles
 Why do new products fail?
• New product development is too expensive
• Unexpected delays and time to market too long
• Idea good but market overestimated
• Insufficient demand for the product or service
• Not as well designed as it should have been
• Incorrectly positioned
• Incorrectly priced
• Competitors fight back more aggressively than
expected.
 New-Product Failures
• Only 10% of new products still on the market and
profitable after 3 years.
• Failure rate for industrial products as high as 30%.
• Why?
– Overestimation of market size
– Design problems
– Incorrectly positioned, priced, or advertised
– Pushed despite poor marketing research findings
– Development costs
– Competition
 What influences new product
success?
• Development of a unique superior product
– Better quality, new features and greater value
• Clearly defined market and product concept
• Meeting market needs
• Senior management commitment
• Relentless pursuit of innovation
• New product planning
• Systematic new product development process
 Criteria for New Products
• there must be adequate market demand: necessary
but not sufficient for success
• must satisfy key financial criteria
• must be compatible with environmental standards
• must fit with the company’s marketing structure
• should also be compatible with production
capabilities, satisfy legal requirements, and fit with
corporate goals and objectives