PROJECT REPORT ON

Study on new product profile strategy

FOR THE PARTIAL FULLEMENT OF THE DEGREE OF
BECHLOR OF BUSINESS ADMINISTRATION

FOR THE YEAR:

SUBMITTED TO:

2016-17

SUBMITTED BY:

Mr. Chaitanya Kaushakiya

Anjali Singh

LECTURER (GUIDE)

BBA IVth SEM

Content
Preface
Acknowledgement
Certificate
Declaration
a) Hypothesis
b) Executive Summery
c) Objectives
d) Research Methodology
e) Introduction To New Product Development
f) Types Of New Products
g) The Role Of Product Development In The Enterprise
h) The Development Of New Products
i) Entrepreneurial New Product Development
j) Invention Verses Innovatio
k) New Product Development By Technology
l) Comparative Analysis Of Various Brands
m) Conclusions
n) Bibliography

Preface

I am Pleased to present the project Report on A Study On New

Product Profile Strategies before my respected readers. It is a humble
attempt from my part to judge the Profile of A study . On New Product
Profile Strategies
This study deals with a number of topics that will help the reader
understand and learn about company.
The research starts with a short introduction, history of A study On New
Product Profile Strategies, followed by the line of objectives and research
methodology.
Next chapter deals with assigned company profile followed by the data
analysis and interpretation that is based on the questionnaire.
Then comes the conclusions, suggestions and limitations of the research
reports.
Language of reports is simple lucid. Attempts have been made to arrange
the subject matter in a systematic and well-knite style. Efforts have also
been made to deal with all topics precisely and gently.

Anjali singh
BBA IVth Sem

Acknowledgement

Preparing a project of this nature is an arduous task and l was

fortunate enough to get support from large number of person. I wish to
express my deep sense of gratitude to all who generously helped in
successful completion of this project by sharing their invaluable time and
knowledge.
It is my proud and privileged to express my deep regard to respected,
DR.ANAND TIWARI, H.O.D., Department of Business Management,
Government Autonomous Girls P.G. College of Excellence, for allowing me
to undertake the project.
I feel extremely exhilarated to have completed this project under the
able and inspiring guidance of Mr. Chaitanya Kaushakiya
he rendered me all possible help and guidance while reviewing the
manuscript finalizing this report. I also extend my deep regard to my
teacher, family members, friends and all those whose encouragement has
infused courage in me to complete the work successfully.

Anjali Singh
BBA IVth sem

Certificate

The project reports titled A Study On New Product Profile

Strategies is prepared by Miss. Anjali singh under the guidance and
supervision Mr. Chaitanya Kaushakiya for partial fulfillment of the Degree
B.B.A.

Signature of Supervisor
..

Signature of Examiner
.

Signature of H.O.D.

DECLARATION
I declare that Project report titled A Study On New Product Profile
Strategies is my own work conducted under the supervision of
Mr.
Chaitanya Kaushakiya. Faculty of Govt. Autonomous Girls PG College of
Excellence, Sagar (M.P.) to the best of my knowledge the report does not
contain any work, which has been submitted for the award of any Degree
anywhere.

Anjali Singh
BBA IVth sem

Executive Summary
New product is in nature a diversified company with a large portion of its
turnover is contributed from electronics in which they manufacture wide
range of products. This evaluation emphasize about the segment of
smartphone which is the big contributor to Product profits in the USA
market.
The purpose of this audit is to find out a way to build its image out of
android its highlyn dependent operating system and only the secondary
datas were reviewed to seek out a way from darkness that Samsung will
face in the mere future. The audit modules used to audit Samsungs
performance in the US market are mostly Keller and Kapferers mainly
brand positioning, pods and pops, CBBE, Brand mapping, Brand value
chain, BAV, Brand mantra, Five dimension prism etc. The audit analysis
was based on the secondary data gathers thus supporting the modules
elaborating accordingly.it was categorized to three parts as demographical
and physiographical analysis, association analysis, profit growth,
manufacturing process analysis which will give out a clear picture to the
reader about the brands pros and cons.
The conclusion is based on the analysis and the audit modules which
clearly depicts the lack of brand image luxury effect and self-recognition
that Samsung provides although it has numbers in its accounts and ratings
in its graphs. This was due to its own fault of manufacturing various models
to grab all the segmented markets which made models unidentified when
kept alongside. Recommendation is to give away solution to increase
Samsung sale volume and to gain its brand value.

Objectives
To understand new product development strategy overview in
Samsung R&D:
To understand methodology followed by Samsung R&D in New
Product Development phase:
To study effect of Consumer behavior on New Product
Development of Product:
To challenges and problems faced by the organization in the
process.
To ascertain the main sale to cover the cost and avoid losses.
To a certain the sale volume necessary for the business to
achieve the profit.

RESEARCH METHODOLOGY
WHAT IS RESEARCH METHODOLOGY?
It is the science that tells the method of doing research. I mainly consists of
following steps:

Development research design

Determining the data collection method
Development sampling plan
Conducting field work

Research in common parlance refers to a search for knowledge one can

also define research as a specific topic.
The word research has been derived from
French word researcher means to search.
DEFINATION OF RESEARCH METHODOLOGY
Research may be defined as a careful investigation of enquiry
specially through search for new fact in any branch of knowledge in a
technical sense research comprise defining problems, formulating
hypothesis or suggested solutions; collecting ,organizing,& evaluation data;
making deduction &reaching conclusion and at last carefully testing the
conclusion to determine weather they fit the formulating hypothesis.
RESEARCH DESIGN:
Research design is the conceptual structure within which research is
conducted . It constitutes the blueprint for collection. Measurements and
analysis of data .The design use for carrying out this research is
descriptive.
RESEARCH DESIGN USED IN THE SURVEY:

Considering the objectives of the study and also the importance of the
decision it was to undertake an exploratory survey.

DATA COLLECTION:
Types of Data:
1. Primary Data-Primary data are those are fresh and collected for the
first and thus happen to be original characters.
2. Secondary Data- It is data that is already been collected by
someone else.
3. In this survey I used both primary and secondary data. All information
collected through questionnaire
DATA SOURCE:
The sources of collection of secondary data are:

Questionnaire
Books
Websites
Magazine
Brochure

Introduction
New product development is one of the most important aspects of a new enterprise start
up and is the activity that will most influence and guide the direction of the firm
throughout its life. The process of new product development and the success of the
product in the market will primarily determine how well the company will sustain itself
and be the key to developing any competitive advantage of the firm over others. The
new product development function has been neglected in entrepreneurship literature,
yet it is an extremely important key to success in the new venture and an extremely
difficult process considering new entrepreneurs may not as yet developed the all round
expertise, experience and resources of large companies. Another area of neglect in new
product development and entrepreneurship literature is the actual formulation, design,
packaging and manufacturing process development of a new product, which is the link
between technology and the market in any new venture creation.
One of the keys to successful new product and process development is the design and
production of a new product with the minimal resources possible without sacrificing any
quality of the finished and marketable article. For the entrepreneur, this process must be
undertaken in a heuristic manner (discussed later), rather than through any strict
disciplinary approaches, advocated and practiced by large companies. This is one of
the ways a new venture can gain competitive advantage over larger companies, if the
product and process can be designed and built for a fraction of the cost that more
established enterprises can achieve. Thus product development is one of the most
important processes of new venture creation. New product development is a discipline
where the technical aspects are learned as you go along the process, as most of these
aspects are not in any text books, but come from peoples lives and experiences. This is
a reality of new product development that even MNCs have to face. New product
development is both a manifestation and extension of strategy in terms of what the
company puts into the marketplace, steering the direction of the enterprise and at the
same time, an influence upon strategy or a restraint upon strategy because founder
and/or team capabilities limit the set of options available to the new venture in terms of
what can be done in the marketplace in terms of product.
The new product development process is so close to the concepts of idea, opportunity
and decision to start up a new enterprise, as well as where you will go in the
marketplace you cannot by definition have a start up without beginning the new
product development process.

One can observe in the marketplace that some new companies almost seem
immediately to make a high impact on the market. Others enter the marketplace and
seem to go nowhere, while others grow gradually over a long period of time. The
difference in these companies comes back to the initial new product development
process, where some are able to quickly develop a new product and make profits
despite of high costs and design flaws through generating high revenues. Others do the
same but fail to generate profits and revenues to sustain their venture, while yet others
can internally sustain themselves while their idea manifested into a product slowly
develops recognition, distribution and sales in the marketplace, where revenues
eventually flow over the breakeven point to generate profits to sustain the venture. New
product success depends on many factors which will influence the destiny of the new
venture. In later venture life the decisions about future investment of profits and the
strategic soundness of those decisions will determine long term sustainability of the
firm. New product development is one of the most important aspects of long term
sustainability.
In the early life of the new venture the conventional rules of management and strategy
are discarded in a scramble to develop a product and get it quickly into the marketplace
to generate enough sales to survive. This is a very haphazard time where best practices
and production efficiencies are almost irrelevant in the minds of any founder, particularly
in the SME. The jump is made with primarily intuition backing the strategy and it is the
faith in this strategy that keeps the founder and the firm going forward. This adds great
risk and pressure of which statistics of new product failures lend support. This chapter
will look into the issues involved in new product development and the strategies
underlying the process to assist the new venture creator develop some form of roadmap
across this critical period in the new venture and following periods of growth and
development of the enterprise.

New Product Development in the Malaysian

Perspective
There are many estimates and statistics presented by various authors about new
product failure rates in the marketplace. Robert Calvin in his book Entrepreneurial
Management claims that 80% of new products fail after being launched i. Observing new
product launches here in Malaysia tends to confirm this, even those launched by MNCs.
Failures take slightly longer to acknowledge in Malaysia due to the distribution driven
approach to the market in the consumer products arena, where products are pushed to
consumers from the shelves to customers through the heavy use of in-store promotions
and promoters. This figure of 80% would be accurate in the cosmetic sector, slightly
less in the household product sector and even less in the agriculture sector, as

competing products tend to have similar functions and benefits to what is already in the
market and market fragmentation and distribution gaps influence sales very heavily. In
Malaysia, the perceived risk of launching radical new products tends to stifle innovation,
where many companies tend to prefer being product followers, allowing others to
innovate to reduce risk.
This mental encapsulation prevents companies coming out and differentiating
themselves from the competition and expanding their position in the market as a trend
setter, wherethey resign themselves to being trend followers. This attitude and
perception makes the Malaysian market less innovative than perhaps some other
countries in the region, which has to change if Malaysia is going to take its rightful
position in the global market as an innovative country. This situation if skilfully studied
can potentially lead to numerous new product opportunities for a new venture. If
differentiation can be developed and accepted by consumers, then there is plenty of
room for new ventures in this country. Likewise, due to the emphasis by companies on
being followers, there is plenty of opportunity to develop new brands, which can be
protected by creating a source of competitive advantage that has barriers developed to
prevent competitors emulating the product quickly. This is of course very easy to say,
but with the right perspectives, it is possible to exploit the strategy of product
differentiation and enhance a position in the market through the correct use of branding.
This originates in the new product development process.
New product development is approached differently by firms. In Malaysia, larger firms
tend to either develop a very bureaucratic and formal procedure or act upon the whim of
the managing director, or more so combine the above, which leads to a less than
effective process. In a discipline which is talking about the need for faster new product
development processesii, Malaysian companies still lag behind, which opens up even
more opportunities for SMEs.
SMEs in Malaysia, at least those in consumer products lack potential exit strategies or
contingencies for failed products that SMEs in many Western countries have available
to them; that of a channel of discontinued stock (i.e., $2 or 1 shops), where failed
products can be disposed of at a heavy discount. The cost of new product failure in
Malaysia is writing off inventory completely, along with the development costs, customer
ill-feeling and almost certain closure with a deep sense of failure. Secondly, if the
product is successful, it will most likely lead to copying by competitors, some of which
will be much larger firms with greater resources, brand image, salesforce, larger
promotional budgets and greater distribution capability. The advantage that being the
innovator has and incumbency in the marketplace is lost due to a wide gap in market
power (based on distribution ability) between small and large companies. These are
central issues that the new venture founder must consider before start up.

While looking at the Malaysian perspective, one other issue provides the SME or the
new venture with an opportunity. As many commentators see globalism as one of the
largest influences on markets in this new century, especially with MNCs developing and
launching products for the Malaysian market based on extensions of international
brands with slight modifications, more reflective upon that MNCs history in the
Malaysian market rather than modifications made to suit the Malaysian market, the
Malaysian market remains very complex and heterogeneous, often very difficult to
understand. Malaysia is one of a number of few countries with a significant makeup of a
number of racial groups. The complexity does not stop there, as within each racial
group there is great diversity. The Malays are far from a homogeneous consumer
group, with different influences upon their histories iii, thus providing them with different
orientations and consumer tastes. The Chinese are also diverse, some coming to
Malaysia long ago, adopting Malay customs (the Babas), while others migrated from
various regions in China to Malaysia and primarily maintain their Chinese culture iv.
Some live partly integrated into the Malaysian culture, while another group rarely mix
from school through their working careers with other ethnic groups. Some are English
educated, while others are Chinese educated, thus the Chinese cannot be seen as one
coherent groupv or market.. There is also a vast difference between urban markets and
rural marketsvi where consumer tastes and preferences vary significantly. Even with the
rapid development of the new middle class in Malaysia, it still remains divided along
ethnic linesvii, thus developing into two distinct markets in many product areas, ethnically
segregated shops, banking, entertainment, pop music, food, fashion, reading materials,
etc. This is reinforced by the segregation in education and careers of the various ethnic
groupsviii.
Thus Malaysia within the context described above can be seen as a number of submarkets within the Malaysian market as a whole. This runs contrary to the concept of
the cosmopolitan man and agrees with Crawfords observation that there is little market
homogeneity, even within a nationix. Even with the increasing number of foreign
competitors launching into the Malaysian market, local SMEs still have great
opportunities if they are able to understand the various consumer needs and wants of
each ethnic group and find these niches to be large enough to sustain a new business.
The downside of this issue however is that targeting specific ethnic niches may not
provide a market large enough to develop any economies of scale and the firm will not
be able to grow past a certain point.

Types of New Products

Amongst the large number of products coming out onto the market each year, it is
sometimes very difficult to distinguish what is really a new product. One could not claim
that a new chilli sauce or sambalbalacan launched into the market to be a new product
unless there is some form of differentiation from what already exists in the market. Even
if there was some differentiation, this must be recognised by consumers. What is
important according to Rogers and Shoemaker is that the product is perceived to be
new by consumersx, i.e., the product is perceivably different, relative to what is already
on the market. The overwhelming majority of products launched onto the market are
usually variations of existing products, with changes in either the brand, level of service,
technology, features, packaging, price, or quality dimensions, or a combination of them.
Only about 10% of new products introduced are both new to the company and the
market an item not sold by that company before or an item not sold in the market
beforexi. Thus there are many ways of classifying new products, given the many forms
they can take.

New to the world products are the first of their kind in the market. They are
usually something invented or enhanced by a significant change or advance in
technology, such as a new discovery or different method utilising modified
processes, materials or methods in producing a product. These products would
revolutionise the market segment or even create a new market, which may
require significant consumer learning to become familiar with the new product.
Examples of this would be the new micro-chip processors, Intel has just
announced, which will make computers more energy efficient, light weight and
smallerxii, the progression from land line based telephones to mobile phones and
now hand phones, the progression from typewriters to electric typewriters to word
processors and personal computers, the change from wood, to gas to electric
and microwave cooking and the Sony walkman and Ipods. New to the world
products make up only a small proportion of new products and they are
perceived as the riskiest types of new products to launch as manufacturers have
to deal with consumers inexperience with the new concepts and incompatibilities
with their prior consuming experiences, which act as barriers to consumer
adoptionxiii.

New Product Lines (New to the Firm) are not new to the market but new to the firm
launching them into the market. This is where a company would enter a market for the
first time, where success and profitability will depend upon the timing they entered the
market, i.e., as a pioneer, early follower, early or late majority or as a late follower. The
later the company enters the market, the less

will be the concept risk taking, but the greater will be the competitive risk.
Intellectual property value decreases as more firms enter the market with similar
competitive products, leaving little room for product differentiation. Figure 6.3.
below pictorially shows the situation in-terms of competition, potential profitability
and IP value in relation to the time a firm enters a new market for that company.

Figure 1.3. Competition, potential profitability and IP value in relation to the time
a firm enters a new market for that company

Additions to Existing Product Lines are products that extend a range

marketed by a firm. The product is different from existing products either in
function or consumer application or as a variant of an existing product, such as a
different pack size, flavour or fragrance, etc. Companies usually introduce
additions to existing product lines to enhance their position in the market they are
competing in, consolidate their position, to fill a perceived gap where consumers
arent served well or to react to competitors.
Improvements and Changes to Existing Products are undertaken to improve
quality or make the product more convenient to use by the consumer. This is
often a continuous process by companies, but when the product has been
overhauled substantially, companies may undertake a relaunch or promotional
campaign to inform consumers about the change. Sometimes products are
phased out with a replacement product to maintain their competitive position in

the market. This happens continually in the mobile phone market, sometimes a
number of times each year.
Product Repositioning are products that are retargeted at new consumer
groups or a larger proportion of consumers sharing the same wants. For
example, a detergent may be repositioned in a new pack size to attract new
consumers, or aspirin was repositioned as a remedy for blood clots and
prevention of strokes and heart attacks from an analgesic, which was under
attack for health reasons and heavy competition from paracetamol based
product.

About 10% of new products launched are new to the world products, which increases to
around 18% in moderate to high tech industries. New product lines are about 26% of
new products, but much higher at 37.6% in moderate to high tech industries. Additions
to product lines are around 26%, but dropping to 18% in high tech industries. Product
changes and improvements are around 26% of new products, 19.8% in moderate to
high tech industries and product repositionings are 7%, but almost non existent in
moderate to high tech industriesxiv. Thus, the majority of new products are developments
and variations based on existing products.
Products can be either goods or services. The primary goal of a product is to fulfil a
service that enhances human experiencexv, which both goods and services can do. Both
have tangible components for example, a facsimile machine is a good providing a
service, cars must be serviced after purchase, a haircut provides something tangible, a
written insurance policy is something tangible, providing assistance in time of need,
people will buy a cup of coffee at the Coffee Bean, even though they could purchase a
cup of coffee much cheaper at a kedai kopi along the side of the road and a university
education produces something tangible. Looking another way, just because something
can be stored in a warehouse as inventory doesnt mean that it doesnt need a
distribution systemxvi, such as insurance industry.

The Role of Product Development in the

Enterprise
As mentioned in the introduction, new product development is the manifestation of the
idea to exploit the chosen opportunity. It is the centre of all strategies and the vehicle
that will get the enterprise going in the market. New product development is the chosen
basis of growth for companies like Siemens, Nokia, Sony, Apple and Glaxo of which
they have completely relied upon as a strategy. These companies are what they are
today because of new product development. The place of new product development in
the web of company strategies and operations is shown in figure 1.1.
Figure 1.1. The Relationship of New Product Development to the Enterprise

Whether an enterprise is a home based industry, a manufacturing operation or a service

business, the new product development process is paramount to developing the overall
direction of the company. In most cases, it will be the only source of revenue for the
venture and total means of survival, as new product development will set the whole
future scenario for the enterprise. If the new product fails to reflect a need in the

marketplace, it is most likely to fail, beginning heavy consequences to the enterprise. If

the new product is not differentiated from competitors products, this will lead to tough
competition and price cutting, which will erode potential enterprise revenues and make it
very difficult for the new enterprise to survive in an industry of stronger and larger firms.
Conversely, if the product is highly differentiated from competitors products in the
marketplace, the new venture will have to take enormous efforts to establish it in the
marketplace, requiring a lot of time and resources to do so.
Growth to a sustainable size and direction are two of the early primary objectives of the
new enterprise. These early on override profitability, organisation and efficiency in the
early part of new enterprise development. Gibb and Scott developed a strategic small
business model which shows the factors which influence growth of the enterprise xvii.
This model provides a framework for SME development that incorporates most of the
strategic issues involved in the top down corporate planning models of Ansoff, Porter
and Steiner, from a micro perspective. The model has been developed on the
assumption that growth is extremely important to the SME to reach minimum economies
of scale, growth is synonymous with success and growth is regarded as economically
desirable because SMEs are regarded as the basis of future large firms and generators
of employmentxviii. Gibb and Scotts model assists the enterprise determine how to
change, accounting for the dynamic environment the new enterprise must face in
developing its strategic direction, with consideration of its internal capabilities.
Gibb and Scotts model is broken down into five components. The performance base
represents a profile of the existing business which can be broken down into subcomponents like market trends, which would include product and marketing mix and
competition, production trends, which would include measures of utilisation, efficiency
and quality, etc. and financial and management trends, which would include issues like
net worth, liquidity and gearing. This would be very similar to the position audit in the
conventional strategic planning process as is espoused by writers like Steiner.
The base potential for development is the overall strength of the business and its
capabilities. This would include many parameters that would influence the firm to
change and grow, such as the firms liquidity, technology, physical assets, human
resources, accumulated experience of markets, customers, product development,
financial and networking, the personal objectives of the founder and influence of family
and peers, his or her personal capacities, visions and attitudes and the ideas base of
the new venture or existing enterprise for the development of existing and future
products, entry into what markets and ambitions for growth. This would equate to the
resource audit in conventional strategic planning.

The key internal and external influences on development is very similar to the strengths,
weaknesses, opportunities and threats (SWOT) analysis found in most strategic
planning text books. The Gibb and Scott model is shown in figure 1.2. below;

Figure 1.2. A Model of Growth Through Product/Market Development

Gibb and Scott (1985)

The above model was developed on the basis of researching how 16 SMEs approached
the issue of product/market development, from where the following assumptions of how
SMEs undertake this activity were derived;
1. Planning takes place around a specific project or number of small projects,
2. Strategic planning in any formal way is unlikely to exist, but through the
development of a specific project a certain degree of strategic awareness will
develop, without it the firm will run into blind alleys,
3. The absence of formal plans may not reflect on the capability of the SME,

4. The product/market development is highly dynamic characterised by a great deal

of learning during the process by the founder/owner manager of the SME they
will usually take the approach of coming up against problems and solving them,
5. The development process will not necessarily reflect itself in traditional indicators
like increased revenue and employment,
6. Lack of growth in the SME may not necessarily reflect a lack of ideas for
development, growth is heavily dependent upon the founder/owner manager
having time and resources available, which is an important factor in taking a
proactive approach to development,
7. External information is more likely to be acquired by the founder/owner manager
through friends and networks rather than from secondary data and information
and how dependable this information is will depend upon the quality and variety
of the network, and
8. Strengths and weaknesses of the base will be an important factor in the eventual
success of the new development.
9.
The Gibb and Scott model allows SMEs to fully take account of administrative and
institutional blocks and hindrances, such as red tape and bureaucracy and incentives
and other assistance available. Internal factors such as capabilities and resources can
be matched against constraints and opportunities in the external environment to
determine a way forward for the enterprise. The model more accurately reflects the
development of an SME where the influence and attitudes of the founder/owner
manager are strongly reflected in the process.
Fundamentally the new product development process is very similar between large,
very large, SMEs and even micro-enterprises. There is very little difference in the
information required to undertake the process and the steps that need to be taken. In
the new venture however the new product development process is haphazard, flexible
and almost completely informal, while still achieving the same end result as much larger
companies. Although many academics and practitioners advocate a formal new product
development process, there is little evidence to suggest that any formal process is more
effective than the way a new venture/entrepreneur undertakes new product
development. In fact many corporate organisations are looking for ways to make their
organisations more entrepreneurial.

The Development of New Products

Companies have a number of options to grow. A company can expand its geographical
area, i.e., launch its products in new markets, acquire new businesses and their
products, or develop their own new products. Without new product development, the
option of geographical expansion is limited because in todays international markets,
companies usually face either the same competitors or different competitors with similar
products. Even a company with a product based on a new breakthrough technology
cannot maintain its competitive advantage forever and must continue to develop or
acquire new products in order to keep in front of its competitors who will eventually
catch up with them.
Products have a limited life and new products must be created to replace those near the
end of their lifecycle. Markets and technologies are changing quickly even in the most
stable markets, which is leading to shorter product lifecycles. If one observes the market
brands have long lives but the products under the brand umbrella are continually
changed and updated almost in a seasonally fashion. Thus companies which dont
continue to introduce new products run the risk of becoming irrelevant to the
marketplace. Markets and industries are changing so rapidly that 40% of the Fortune
500 companies that existed in 1975 do not exist todayxix.
New product development is an important aspect of the competitive environment. If
existing companies dont launch new products, it is most likely their competitors will gain
advantage in the marketplace, which will eventually erode the companys position in the
marketplace and later effect revenues, profitability and survival. New products are a
strategy that companies use to introduce enhancements into the market so they can
claim benefits over their competitors. Today on average, new products (those
introduced into the market within the last 5 years) represent 33% of a companys
salesxx. In some markets, mobile phones, televisions, white goods, automobiles, etc.,
this figure is 100%.
While new product development is one of the most important aspects of competitive
strategy, it is also one of the riskiest. New product failure rates have risen from 45.6% in
1961 to over 80% todayxxi. Coopers definition of the new product development process
underlies its strategic importance to a firm as a defined product strategy for the

business goals and objectives clearly communicated to all, there are clearly defined
users of strategy focuses to give direction of the business total new product effort, i.e.,
where you want to go. The basic new product effort has a long term thrust and
focus,xxii.Trotts definition the actual development of new products is the process of
transforming business opportunities into tangible products xxiii links new product
development to the process of exploiting opportunities in the entrepreneurial process.
Finally, companies in the same industries, with similar products, have basically the
same strategy choices and generic themes to pursue win similar groups of customers,
thus product development is one of the major ways a firm can differentiate itself from
the its competitors.

Entrepreneurial New Product Development

No standard set of procedures or processes exist in new product development. There
are department stage, activity stage, cross functional, decision stage (stage-gate) and
process models espoused in the literature. Different industries take different orientations
towards new product development, where for example pharmaceutical companies will
be dominated by scientific, technological and regulatory issues, while food companies
are dominated by consumer research that leads to minor product changes. Yet some
industries still take a craftsman approach in the joinery, furniture, dcor and kitchen
refurbishing industries. Even the moderately high tech fragrance business creates
products through more an artistic approach, rather than a scientific approach, which has
as much to do with psychology, consumer tastes, blending just as an artist on canvass
would do as it does with chemistryxxiv.
In reality, new product development has as much to do with making assumptions, short
cutting the logic process through the use of heuristics, which are little rules of thumb
that firms with experience in the industry have grown to believe in xxv, such as 30% of
people who hear about a new brand will try it. Hunches, gut feeling and intuition are
heavily relied upon to progress products, contrary to what most of the literature about
new product development advocates.
Successful new product development comes from experience and with it, the individual
discipline and maturity to know when they are biased in their thinking of potential
success or failure of a product. Industry knowledge is very important, but it must be
used objectively without emotional baggage, i.e., we have a long history in that market
and it is ours, or we have always been successful with new products in this market,
etc. These are cognitive biases that can lead to failure, that some would call market
arrogance. As MNCs employ more graduate executives to fulfil managerial roles in
companies without climbing the corporate ladder so as to speak, the insider industry
advantage is getting less and less. Marketing executives without grass root industry

experience, passion for the industry and a tangible feel of it, relying primarily on data
for decisions, potentially lay open some opportunity for the entrepreneur who has
passion, diligence and sound intuition. The new executives, often surrounded with
market research and advertising consultants with the power to sign check books, so
often get things wrong and wonder why a champaka fragrance as beautiful as it is, is
not accepted by consumers who associate the fragrance with grave yards and jasmine
is rejected by 80% of the consumers. The facts are, agreed by the majority of all
literature in new product development is that;

Less than 5% of new products launched on the market are successful,

Out of 100 new ideas, less than 2 become a commercial reality,
Most companies are followers in the market and not innovators,
Very few really novel innovations are ever launched commercially, and
Most new products are actually only incremental steps in enhancement of
products, rather than something completely new.

Although new product development is one of the most important strategies for
sustainability of a company, too many companies turn away from innovation and cut
costs and expenses as a reaction to declining performance, without looking into the root
causes, which may be product life-cycle based or competitive based, which require a
new product development solution. Usually a panic response further stifling innovation
of the company. The new product development option is often seen as a more difficult
alternative, as under pressure, the following problems arise;

Finding the right opportunities and appropriate innovation necessary to develop

them,
Reducing development times without reducing quality and innovation,
Building and maintaining brand equity through a strong product,
Integrating market, design engineering and production processes to produce,
and products that are considered useful and desirable by consumers.

The above is the trap for those who do not view new product development as a
continuous process, even if it is an implicit and background process, within the company
and the minds of those who manage it.
The entrepreneur, especially after start up and turning into an SME can be trapped by
the scenario above, lending support to Druckers postulation that entrepreneurship is
only a stage in the development of a firm and the entrepreneurial state can be grown
out ofxxvi. This is compounded by the small firms lack of resources, time, technology and
expertise to research new ideas and innovations to develop the business xxvii. SMEs are
even more limited in their strategic options because of their inability to influence the
environment and marketplace, due to their size like larger companies xxviii. Cupelled with

lack of knowledgexxix, the entrepreneur requires specific strategies and processes to

take account of these weaknesses and navigate its birth and growth in a very focused
way, that adapt to rather than change the environment and marketplace.
Strategy is the action a company takes to achieve one or more of its goals and the
strategic management process is the way in which managers develop these
strategiesxxx. New product development as discussed in the introduction is the
manifestation of strategy and will dictate how the company interacts with its
environment and how successful and sustainable the company will be in the future. Due
to size and age of a start-up or SME, the development process will differ greatly from
large firms and will take place bottom up or by the founder him or herself xxxi and
primarily involve the skilfulutilisation of assets, skills and resources, to take advantage
of their best competences in developing new products and entering the marketplace.
Thus the entrepreneur or SME will have a set of competences that are relatively unique
to him or herxxxii, which will provide the basis of future action. This is the nexus of
creativity, innovation and selected strategy, discussed in chapter 2 that the entrepreneur
uses to create a market niche or position with some form of competitive advantage,
utilising what he or she has in terms of ideas, competences and resources. How these
factors are integrated together will determine the entrepreneurs capability and
performance in the marketplace. To achieve this, the most important resource is skill
and knowledge possessed by the entrepreneur. To a great degree this skill can only be
learned through experience and difficult to imitate from other firms xxxiii. This is not
different from large firms which learn as they go in the new product development
process, as each product/market is unique, how to exploit opportunities and neutralise
threats. Though intangible, this is a core aspect of competitive advantage,
unmeasurable in any conventional sense, but written about heavily by Peter Senge and
Chris Argyris, outlined previously in chapter 1.
Following the above arguments and problems firms face in new product development,
the most important aspects of entrepreneurial new product development is a continual
strategic awareness of the environment by the entrepreneur and his or her capabilities
in innovation, production and management to see through the selected opportunity into
an operational reality. From the point of view of a start-up or small firm, these activities
do not require the specialist skills advocated in many strategic planningxxxiv and new
product development processes. There is little evidence to suggest that these
processes create more success than the way a new entrepreneur does things.

Figure 1.4. Entrepreneurial New Product Development, Competencies and

Competitive Advantage
Ideas

Opportunities

Solutions

Realisation

Performance

Management
Capability
Spots

Evaluates

Selects

Creativity

Innovation

Strategic
Thinking

Targets

Differentiation

Competitive
Advantage
Capabilities Governing Competitive
Costs:to customers
Scope
Knowledge:
Industry/market/technical/
process
Relationships:
Competencies
Customers/suppliers/
Entrepreneurial, Identification, Network, Conceptual, Organisational, Strategic, Technology,
Commitment, Resource
distributors/relative power
Structure: Ability

Figure 1.4 above shows the importance of personal competencies in the entrepreneurial
process, where product development is the key to developing the strategy to realise
opportunities. Performance and growth depends upon a number of factors, which are
governed by the core competencies of the entrepreneur or organisation xxxv. This would
suggest that success and growth has a lot to do with these competencies and
investment in the development of these competencies is important in establishing,
maintaining or increasing the lead over competitors, as it is competencies that enable
one to exploit opportunities. Competencies influence the ability to develop ideas and
screen them for opportunities and select the ones that can be best realised.
Competencies also influence the ability to develop competitive advantage, which

ultimately differentiates the product and venture from others in the market. Selection of
the correct solution to identified opportunities, the ability to understand and create some
form of competitive advantage and the ability to manage or organise the enterprise
efforts are the factors that influence performance. Through competencies local
companies are able to fight international companies entering the market xxxvi due to their
better knowledge of the local situation.

Creativity, Innovation and Strategic Thinking in

the New Product Development Process
The initial process of contemplating the development of a new product is perhaps the
most important aspect of the whole process. It is here where new ideas are spotted,
evaluated as to their opportunity potential, the technology and competencies required
considered, various strategy scenarios mentally extrapolated out to evaluate their effect
and benefit to the enterprise, so that the best strategy solution can be realised. This is
the most fluid and unstructured part of the process where all these possibilities are
sorted and evaluated in a way that does not resemble real and tangible work xxxvii. The
quality of information used (market data, knowledge of customers, technology costs,
etc) has great bearing on the outcome and final result of the product development
process.
This is a creative process (explained previously in chapter 3) to seek some type of
innovation to warrant the effort to launch a new product onto the market that will have
some competitive advantage over potential competition, whether it be through lower
costs, utilisation of better knowledge of the marketplace, better relationships and ability
to utilise a channel of distribution, a better ability to organize the delivery of product or
service or operation in the market, which will lead to product differentiation from those
competitors to provide some market advantage. Innovation is thus the source of new
products, strategy and competitive advantage of which Drucker postulates there are
seven primary sourcesxxxviii, outlined in table 6.1. below;
Table 2.1. Druckers Sources of Innovation
Source
The
unexpected
success,
failure or

Explanation
Success of a revolutionary product
or the application of technology

from one industry to another,

sudden or unnoticed demographic

Examples
Apple computer
Rapid decline of
Protons market share

external
occurrence

changes caused by wars,

insurgencies, migration, etc.

An
incongruity
between
reality as it
actually is
and what it
ought to be

A change that is already occurring

or can be made to occur within an
industry. It may be visible to those
inside the industry, often

overlooked or taken for granted.

Inadequacy
of an
existing
technology
or business
process

An improvement in process that

makes consumers more satisfied
based on an improvement or
change in technology.

Changes in
industry or
market
structure

New ways and means of

undertaking business based on
identified opportunities or gradual
shifting of the nature of the
industry.

Perceptual
changes

Changes in peoples awareness

founded on new knowledge and/or

values or growing affluence
leading to new fashions and tastes

Demographi
c changes
New
knowledge

Gradual shift of demographics in

population by age, income groups
or ethnic groups, etc

Sugar free products

and sugar
replacements due to
concern for health
Increasing demand
for travel and holidays
due to increasing
incomes and leisure
time
Caffeine free products
Microwave ovens
Mobile phones

Health care industry

Education industry
private education

Leisure and exercise

industry aerobics &
gyms
Establishment of
more retirement
homes

New knowledge or application of

Video and VCD industry
existing theoretical knowledge into Robotics
an existing industry that can create Biotechnology
new products not previously in
existence

Drucker further postulates that the seven sources of innovation can be manifested into
four types of product/strategy development as summarised xxxix in table 2.2. below;

Table 2.2. Druckers Four Types of Innovation for Product/Strategy Development

Type
Invention

Description
Totally new product

Examples
Wright Brothers airplane
Edison light bulb
Bell telephone

Extension

New use or different application of

an already existing product

Kroc McDonalds
Wilson Holiday Inn

Duplicatio
n

Creative replication of an existing

concept

Wal Mart Dept. Stores

Synthesis

Combination of existing concepts

and factors into new use

Smith FedEX

Pizza Hut Pizza

Restaurant

Merryil Lynch Home

equity financing

Product and strategy innovation is the means by which markets develop. Schumpeter
termed this process creative destruction, where the market evolves through a process
of new products being launched by firms which supersede those already in the
marketplacexl. Outdated products will disappear and overtime the market will be
represented by a range of completely new products. This can be very easily seen in the
automobile and mobile phone industries very quickly. This happens in all markets, which
can be seen in Figure 1.5. showing the product evolution of the laundry detergents.

Figure 1.5. The Evolution of the Laundry Detergent

Product evolution occurs primarily through incremental product benefit improvements by

firms launching products into the market to gain advantage over competitors. This is
mostly predictable following changing consumer tastes and lifestyles. Most new
products come out of this process and firms introduce these products in other
international markets, thus intensifying competition across the globe. Then from time to
time a firm develops a new innovation based either upon a new technology or by picking
up some technology from one area and transferring it to their target market to create a
completely new form of product in that market. In the evolution of the laundry detergent
the development of the liquid laundry detergent in the late 1970s is an example of later
and the switch from soaps to synthetic surfactants is an example of a completely new
technology influencing the form of the product. The key factors influencing the process
of product evolution in a market segment can be best illustrated by the SET diagram
developed by Cagan and Vogelxli.

Figure 1.6. The Product Opportunity Gap

Social
Social and cultural trends and drivers.
Reviving historical trends

Economic
State of the economy
Shift in focus on where to spend money
Level ofProduct
disposable income
Gap
Technology
State of the art and emerging technology
Re-evaluating existing technology

The rapidly rising levels of affluence in Malaysian consumers, along with most of the
rest of the world, the opening up of the ASEAN economies to open foreign competition
and exponential improvements in technology are rapidly decreasing the life cycle of

products in the market place. Malaysian consumer tastes are very different from a
decade ago and over the next decade will undergo further change as consumers
respond to health, leisure and lifestyle issues. Coupled with the improvements in
products that technology, it will no longer be able to be assumed that product lifecycles
will last more than five years as products will quickly be superseded with new models,
versions and complete new designs based on newer technologies. Advances in ICT and
biotechnology will bring many new products and even allow for the development of
whole new industries, as we have seen with the development of ipods, mobile phones,
new medicines based on biotechnology and the likeInnovation will also affect the ways
products and services are presented to consumers by making products more accessible
and more convenient to use like the development of prepaid mobile phone services
where accounts can be topped up at provision stores, convenience stores and petrol
kiosks. Re-organising how existing businesses are run has brought low cost air travel to
the region through Air Asia.
Products and services will be also greatly affected by Government regulation. Carbon
credits will force the development of green engines and the increased use of bio-fuels in
the transport industry. Materials used in the manufacture of products will be more
heavily scrutinized like cosmetics forcing in some cases the reformulation and even
complete rethinking of products and their redevelopment. Occupational health and
safety issues will force more consideration about safety issues. Technology
development will also create new materials that will perform better and be more cost
effective than existing ones. All the above scenarios are factors for product evolution,
which will be driven through innovation. The trends towards shorter product lifecycles
over the last 50 yearsxlii is shown in figure 1.7. below;

10

15

20

25

30

Length of Life Cycle (Years)

Rapid technology development, the ability of strong firms to exercise some degree of
control over the channels of distribution and increasing internationalization of the market
is creating greater market concentration. This can be clearly seen in the Malaysian retail
sector where chains like Giant, Carrefour and Tesco are quickly increasing their market
share over more traditional retail outlets. The effect of market concentration on
manufacturers and suppliers is to reduce their numbers and force some product
rationalization where products cater for the large consumer groups. Increasing market
concentration defines the market into more rigidity and initially creates focus on the
major market segments.
At some stage market concentration will reach a point where smaller market segments
are failed to be satisfied by the smaller number of firms operating in the market. If these
unsatisfied market segments are large enough, opportunities develop for smaller firms
to move in and exploit these segments. The market will eventually see a renaissance of
smaller firms offering niche products to unsatisfied consumers sometimes through
alternative channels of distribution. An example of this is the growing number of herbal
products and cosmetics marketed through direct marketing channels.
New opportunities occur when a market becomes concentrated, as further growth in
sales by larger firms doesnt correlate with increased profits as the cost to service small
segments is high. Smaller firms are able to achieve better profits without direct
competition in these unmet segments by focusing on the most profitable customer
niches and keeping costs low. Companies who are able to scale down the size and

capital costs of routine technology used in the industry, may be able to develop new
sources of competitive advantagexliii. Figure 1.8. shows diagrammatically the relationship
between
market concentration and level of opportunities in a marke

Invention Verses Innovation

Many people relate new product development to invention. However invention only
makes up a small part of new products and less than 2% of all patents are actually
commercialized. Inventors are usually good at developing ideas into concepts and
tangible items, but not all inventions satisfy consumer wants and needs. It is particularly
difficult for an inventor to successfully develop a product in the market by themselves
because of the tremendous resources needed to develop the market to make
consumers aware and educate them about the new product. Many inventions, although

novel, fail to solve any real consumer needs, or fail to satisfy them effectively and thus
fail to gain much interest from consumers.
An invention will remain a conceptual idea without innovation. It is only really a starting
point in the innovation process which is concerned about turning the idea into a practical
and commercial application. Inventions involve creativity, which is only part of the whole
product development process as explained by Myers and Marquis xliv .Innovation is
not a single action but a total process of interrelated sub processes. It is not just the
conception of a new idea, nor the invention of a new device, nor the development of a
new market. The process is all these things acting in an integrated fashion.
Some innovations are radical and lead to great changes in the lives we lead as did the
productsxlv listed in table 6.3. to our society. But many inventions have come by
accidentxlvi and it took innovation to determine potential commercial applications. These
examples show that the majority of these innovations are developed by organizations
rather than individuals due to the need of large resources and technical knowledge.
Technical and product innovation often leads to other forms of innovation such as
organizational change to effectively implement the firms strategies based on new
products developed into the market place, as can be seen in the communications and
air transport industries.
Table 2.3. Breakthrough Innovations That Changed Our Lives
1. Personal Computers 2. Microwave oven

3. Photocopier

4. Pocket Calculator

5. Fax machine

6. Birth Control Pill

7. Home VCR

8. Communication

9. Bar Coding

Satellite
10. Integrated Circuit

11. Automatic Teller

12. Answering
Machine

13. Velcro Fastener

14. Touch-Tone

15. Laser Surgery

Telephone
16. Apollo Lunar

17. Computer Disk

Drive

18. Organ
Transplanting

19. Fiber-Optic
Systems

20. Disposable Diaper

21. MS-DOS

22. Magnetic

23. Gene-Splicing

24. Microsurgery

Spacecraft

Resonance

Technique

Imaging
25. Camcorder

26. Space Shuttle

27. Home Smoke

Alarm

28. CAT Scan

29. Liquid Crystal

Display

30. CAD/CAM

Table 2.4. Accidents That Innovation Turned Into Successful Products

A Raytheon engineer working on experimental radar noticed that a
chocolate bar in his shirt pocket melted. He then cooked some
popcorn. The firm developed the first commercial microwave oven.
A chemist at G. D. Searle licked his finger to turn a page of a book and
got a sweet taste. Remembering that he had spilled some experimental
fluid, he checked it out and produced aspartame (Nutrasweet).
A 3M researcher dropped a beaker of industrial compound and later
noticed that where her beakers had been splashed, they stayed clean.
ScotchGard fabric protector resulted.
A Dupont chemist was bothered by an experimental refrigerant that
didnt dissolve in conventional solvents or react to extreme
temperatures. So the firm took time to identify what later became Teflon.
Another scientist couldnt get plastic to mix evenly when cast into
automobile parts. Disgusted, he threw a steel wool scouring pad into
one batch as he quit for the night. Later, he noticed that the steel fibers
conducted the heat out of the liquid quickly, letting it cool more evenly
and stay mixed better. Bendix made many things from the new material,
including brake linings.

Product Life Cycles

As mentioned throughout this chapter, products have a life cycle. The product lifecycle
of products is a reason why companies must continue to develop new products to
replace those in the market place that have come to the end of their useful life. It is
extremely difficult to develop strategy according to the product lifecycle because

identifying its various stages is complexxlvii. Strategy can be both a cause and effect of
each stage and thus it is difficult to forecast sales for each stage in the cycle. However,
understanding a products position in the cycle and the factors that can influence stage,
consumer tastes, technology and competition can greatly assist in strategy
development.
Products take a predictable sales and profit path over a limited lifetime, which five
stages are clearly definesxlviii, as shown in figure 1.9.

1. The product development stage where an idea is evaluated and developed

into a commercial product. This is where time is spent on developing the product
without any sales revenue at all with increasing costs as time goes on. For an
entrepreneur, especially during start up this can be a very straining upon
personal resources, especially if full time is being devoted to the project without
any other source of income.
2. The introduction stage is where the product is first introduced into the market.
Usually this period takes time, especially during a new enterprise start up as
gaining access to distribution channels is also a learning experience with much
trial and error being undertaken with potential buyers. Established companies
with strong relationships with customers may be able to gain much quicker
distribution. However once distribution is established there is a period where the
product moves very slowly and sales growth is slow while potential customers
evaluate the product for potential purchase and use. The length of this period
depends upon many factors, for example how brand conscious consumers are if

the product is similar to others, etc. Table 6.4. Below shows the expected slow
sales growth time for various types of new products. Profits will be negative or
very low during this period because of the high costs of introduction and
necessary promotion required. In the introduction stage a percentage of sales
cannot be used through fund accrual, and thus must be part of the initial
investment. Many products fail due to firms not reserving funds for this purpose.
In most Malaysian cases, especially through retail channels, the firm will have to
finance the movement of stock into the channel for a long period of time, 30-180
days.
Table 2.4. Expected Sales Growth Time Scenarios for New Products
Type of New Product

Situation/Scenario

Expected Sales
growth Time

New concept products

like ultra concentrated
dishwashing liquid,
coffee creamer and
instant coffee.

Consumers will take

time to become exposed
to the concept and
benefit of using the
products. Distribution
will take time to gain into
the more conservative
channels.

Products will for a

period of time move
very slowly off the shelf
before rapid sales
growth will occur. This
could take up to a year
in some circumstances.

Industrial Products
and Business to
Business Products

The introduction stage is the time when focus must be put into persuading
consumers to switch brands or in the case of a new to the world product or a
significant innovation from existing products invest in educational promotional
activities. Pioneering products although have the first to the market advantage as
an incumbent product are very susceptible to followers who gain some
advantage through learning from the pioneers mistakes, especially if they can
exercise stronger influence over the channels of distribution. The pioneer to
maintain market leadership must develop a comprehensive defensive marketing
strategy (pricing & promotion, etc) to fend off challenges xlix from future
competitors.

3. The growth stage will be entered into if consumers accept the new product and
continue to repurchase it on a regular basis. If this becomes the case then sales
will begin to rapidly rise from faster shelf off-take and gaining new distribution
points from conservative channel outlets that held of on initial purchase and
support of the new product. New competitors will be likely to enter the market
and existing competitors likely to retaliate through discounting and more vigorous
merchandising at store level to maintain their market-share.
As the Malaysian retail sector is a supplier driven market relying on continuous in-store
activity (promotion & merchandising) the new product must be continually promoted
during the growth stage. On an initial low sales base up to 40% of gross sales are
needed for in-store (below the line) activities. The potential strain this can cause on
funding should be underestimated as these costs will be deducted from invoice
revenue. However as sales increase and promotional costs can be allocated across a
larger revenue, the percentage required on in-store funding will lower to somewhere
between 10-20%. The funding effect on a firm during the growth stage of a product is
shown in the example in Table 1.5.
Table 1.5. Effect on Sales Growth on a Firms Funding During the growth Stage of
a Consumer Product.
On the manufacturing side, increasing sales volumes allow the firm to purchase larger
quantities of raw materials and packaging and negotiate lower prices leading to
higher manufacturing margins and profits. The time/experience gained also
allows fine tuning of the manufacturing process to make savings through
increases in efficiency through process and labour experience. It is not unusual
for direct manufacturing costs to come down 30% during this period. Likewise the
time/experience factor allows improvement of product quality where the usual
unexpected manufacturing and packaging compatibility problems are ironed out.
The primary objective of the firm during the growth stage is to maintain steady
sales growth until the cost of increasing sales is higher than the extra profit
gained. Shelf off-take velocity, distribution and competition are the three major
factors that the firm needs to consider during the later period of the growth stage.
Shelf off-take velocity is influenced by advertising and in-store promotion and is
usually manipulated and maximized through coordinated promotional campaigns
with corresponding in-store activities, utilizing purchased shelf space from stores,
participation in gondola or block promotions along the aisles and providing
discounts at strategic seasonal times, i.e., food items leading up to major
festivals. Gaining extra distribution points in the existing channel and looking for
distribution points outside the existing channel increases marginal sales of the
product, i.e., moving to the hotel trade to gain extra customers. Competitor

activity will influence sales growth according to the effort and activity they
undertake in the market-place to counter the new product and promote their
product. Competitors can be countered to some extend by adding new product
benefits and variants to gain further competitive advantage over the competition,
hence the importance of holding back on some potential product benefits that
could have been incorporated into the original product, for some future time when
those features can be utilized for market leverage over competitors when
needed. This is a common strategy used by firms in the telecommunications,
electronic, automobile and other consumer good industries. Figure 6.10. shows
the relationship between sales, profits, shelf velocity, extra distribution and
competition during the growth stage.
4. The maturity stage is where sales slow down and plateau. Products usually
enter this stage when there are a number of competing products in the market.
During this period, competitors will use promotion and discounting to maintain
sales levels and target erosion of competitors sales to gain market-share.
Competitors will also launch new product variants with added features and
benefits to switch consumer loyalty towards their brands. During the maturity
stage, where competition is at its peak, profitability will begin to decline as extra
promotion is needed and firms begin discounting and lowering prices. In markets
where the channels of distribution are concentrated, i.e., international retailers,
some of the smaller brands will be dropped from product ranges and even a
category rationalization can take place, leaving only a small number of brands.
Firms need to employ strategies to maintain their market-share and sales level,
which mentioned above will erode profitability. Competitors will attempt to vary
and segment the market with new products with added features and benefits and
seek new customers through developing new market segments, i.e.,
development of a special bleach for washing, rather than general purpose.
Failure to do this would normally result in loss of market-share in an competitive
environment and relegation to marginality and almost total forced withdrawal
from the market.
5. Eventually the product falls into the decline stage where sales begin to go do
almost steadily. This can be a very gradual process in stable technology markets
like food and household products or be extremely rapid in technology based
products like media and communications. The speed of the decline stage is
usually governed by the velocity that consumers change their preferences away
from the product towards another. In food and household products this is
normally gradual, as is with insecticides, or rapid when VCRs where replaced
with VCDs and later DVDs in the home media industry, with the arrival of new
technologies.
When the cost of managing the product in the market becomes high in
comparison with the returns or the marginal utility of focusing on a new product

with higher potential returns is better, most medium and large companies with
large product portfolios will usually drop the product off. Smaller companies tend
to hold onto a product until low sales make the product uneconomic to further
produce the product.
Sometimes when all brands have been withdrawn from the market, a small
company can hold on to a minimum level of sales for a number of years without
needing to support the product with promotion and discounts. The shoes polish
market would be a good example of this situation.
The product lifecycle can be used as a tool to understand how products develop,
maintain their position and decline in markets. However it can only provide a conceptual
understanding or guide, rather than a specific basis to develop marketing strategies l, as
it is in reality very difficult to actually determine what part of the cycle a product is
actually at and which strategies should be utilized accordingly.
The product lifecycle can be used to examine product categories, which include classes
of products like petroleum and automobiles, product forms, which would define the type
of products, i.e., in the case of automobiles, sedans, vans and four wheel drives and
brands, which are a specific or group of products marketed by a specific firm or group of
firms.
Different product categories will exhibit different life cycles. For example, petroleum
products have an extremely long product life cycle because alternative technology and
feed-stocks from renewable resources have not challenged the product category to
date, even with all the publicity and debate about renewable resource alternatives. This
can be compared to the life cycle of a brand of air freshener which is very short.
However the product form it competes in will have a longer cycle than the individual
brands marketed within the form, i.e., a liquid, aerosol or gel type or household room,
cupboard or automobile air freshener. Figure 6.10. below Shows the difference in
lifecycles between product categories, forms and brands in the recording media industry

New Product Development By Technology

Intellectual Property
Intellectual property can be defined as a legal entitlement which sometimes attaches to
the expressed form of an idea, or to some other intangible subject matter. This legal
entitlement generally enables its holder to exercise exclusive rights of use in relation to
the subject matter of the IP. The term intellectual property reflects the idea that this
subject matter is the product of the mind or the intellect, and that IP rights may be
protected at law in the same way as any other form of property.li One of the keys to

intellectual property is the concept of novelty which is something that has not been
publicly disclosed in any form, anywhere in the world The basic forms of intellectual
property of listed in the table below:
Table 1.x. Basic Forms of Intellectual Property
Term

Definition

Commercialisation

Commercialisation of intellectual
property is simply about planning how
you will take your good idea to the
marketplace. It involves working the
idea into your business plan,
consideration of protection options
and considering how to market and
distribute the finished product.

Patent

Is an exclusive right granted for an

invention, which is a product or a
process that provides a new way of
doing something, or offers a new
technical solution to a problem.

Manner of manufacture

A legal term used to distinguish

inventions which are patentable from
those which are not. Artistic creations,
mathematical methods, plans,
schemes or other purely mental
processes usually cannot be
patented.

Plant Breeders Rights

Are used to protect new varieties of

plants by giving exclusive commercial
rights to market a new variety or its
reproductive material.

Industrial Design

An industrial design - or simply a

design - is the ornamental or
aesthetic aspect of an article
produced by industry or handicraft

Trademark

is a distinctive sign which identifies

certain goods or services as those
produced or provided by a specific

person or enterprise.
Copyright and Related Rights

a legal term describing rights given to

creators for their literary and artistic
works (including computer software).
Related rights are granted to
performing artists, producers of
sound recordings and broadcasting
organizations in their radio and
television programmes.

Trade Secrets/Undisclosed
Information

is protected information which is not

generally known among, or readily
accessible to, persons that normally
deal with the kind of information in
question, has commercial value
because it is secret, and has been
subject to reasonable steps to keep it
secret by the person lawfully in
control of the information.

Intellectual property must be defined widely to include trade secrets and commercially
confidential information, which can also be called proprietary technology. Patents as a
form of intellectual property rights have issues related to their scope of protection, are
sometimes hard to justify in terms of costs due to the small market the novelty will
serve, are expensive to gain registration and take a long period of time before they are
accepted through process and review procedureslii. Jaffe and Van Wijk state that in
many jurisdictions patent enforcement is very difficult due to slow court systems, bias
against foreign plaintiffs, lack of technical competence and a general inability to enforce
judgementsliii. A survey undertaken by Lessor found that companies tended not to
patent their innovations in many cases, due to the fear that waiting would allow other
companies to copy and counterfeit the product first in developing countries that had
markets too small to justify the cost of registering a patent liv. Grubb argues that in
biotechnology, patents as a form of intellectual property rights do not serve the same
purpose as in the electronics industry, where patents are used as bargaining chips in
cross licensing agreements and patent pooling as there are common product standards
imposed by necessity and regulationlv.
There are other alternative forms of intellectual property protection used by companies
that maintain trade secrecy and advantage over competitors. Trade secrets can be
guarded and protected within an organisation by maintaining employment contracts with

secrecy agreements that can be enforced through contractual remedies. These include
specifically tailored production processes, mode and control of reactions and
formulations used in the production of products by a company. Under legal license
agreements, this technology, although unpatented can be protected as proprietary
knowledge under contract law. The rapid changing nature of technology and continual
improvement upon processes and product, is itself a mode of protection, as long as the
company maintains pro-active R&D in process and product development. Patents
applications can often become redundant before the application is even reviewed by the
patent office in an environment of continual technology change.

Comparative Analysis Of Various Brands

Landscap Samsung
e
Electronic
s
Product
Consumer
Offered
Electronics
(LCD TVs,
Microwave
Ovens,
PCs etc.)

Innovation

Apple
Computer
Inc.
PCs,
portable
music
players,
Mobile
communicati
on
devices
etc.

Focuses on Occupies

LG
Electronics

Nokia Corp.

Sony
Corp.

Motorola
Inc.

Consumer
Electronics
(Mobile
handsets,
Front
loading
washing
machines,
ACs etc.)
Concentrate

Leading
Mobile
Comm.
Company
(started
as
wood
pulp
producers)

Electronic
games,
Motion
pictures,
Financial
services
etc.

Mobility
solutions,
mobile
services,
cellular
comm.
Devices etc.

Adopted

Creates

Focus on two

and
Design

Marketing

Reason
and feeling
to create a
design and
used global
localization
strategy to
establish
as a first
class
consumer
(user
centric)

feeling zone
and
emphasis on
the simplicity
of products in
terms
of
design
and
instability

d
on
5
areas:
Mobile
comm.,
Digital
appliances,
digital
displays,
digital
media and
home
networking
and design
their
products by
using
4
values:
Theme,
Style,
interface
and finish
Digital
Improvement Originally
convergenc in design and produces
e using E- product
electronics
Processes features
for
mass
and efforts
consumptio
in
n but later
improving
transformed
design by
to produce
investing in
premium
R&D
consumer
products for
attracting
premium
customers
and to gain
brand
image

telecom as its
core
business and
designing
was
based
on
3
principles:
Simplicity,
Relevance
and
Experience

Value
added
products by
doping
4
principles
of design:
Originality,
Lifestyle,
Functionalit
y
and
Usability

criterias for
products for
their
consumers:
personalizati
on
and
socialization

Product
categorizatio
n is done by:
Explore Live
classic,
classic,
achieve and
entry
and
communicati
ng
brand
value to the
customers

Do not rely
on
customer
surveys
and create
value
added user
experience
through
feature
design,
concept
developme
nt and ecofriendly
sustainable
design

Paid attention
on
development
of
new
revenue
generating
services and
technologies
and enabling
customers to
experience
media
mobility.

Findings:
o Internal memos presented as evidence during the Apple-Samsung lawsuit
dented Samsungs image asan innovator, but the lawsuit also showed
consumers Samsungs relentless pursuit and obsession to mimic and beat
Apples iPhone while creating its smartphone range.
Not content with its success in smartphones and TVs, it has also identified
several other categories in which it intends to compete aggressively, such
as appliances, cameras, health and medical equipment and printers.
o The five forces are:
Relations with suppliers: It means that it needs to improve their
relations with the suppliers. This can be done with Suppliers
relationship management and by bringing the suppliers on a single
platform.

Relations with buyers: Customer is the king. There is a need to improve

their relationships with the buyers or customers by developing
appropriate marketing strategy, timely delivery of the products and

supply chain management

New Entrants: It is important for Samsung to analyse the threats from

new entrants in the customer electronic market

Substitutes: With the emergence of Chinese products in the market
which can act as the substitutes for Samsung products. Hence, it is
important for Samsung to implement Generic technology strategies
which includes:
o Cost Leadership (e.g. Lower/cheaper material input, logistics)
o Differentiation (e.g. Enhance features, deliverability)
o Cost focus (minimum features)
o Differentiation (niche markets)

Limitations
Due to constraints of time and resources, the study is likely to suffer from certain
limitations. Some of these are mentioned here under so that the findings of the study
may be understood in a proper prospective.
The limitations of the study areThe study is based on the secondary data and the limitation of using data may affect the
results.
The secondary data was taken from the new product strategy from the market. It may
be possible that the data shown in the reports may be window dressed which does not
show the actual position of the week. .

SUGGESTIONS:1. Number of Branches should be increased covering a wider area in various states.

2. A wide publicity to be given about the organization and its products through
various means of communications to keep growth moments.
3. More number of training and educational programmers should be included in
production schedule.
4. Developing a learning culture through continuous learning process.

Conclusions
we can say that the biggest challenge for products innovation is
to serve the mass and huge market of India. Companies have
become customer centric than product centric. The better we
understand our customers, the more successful we will be in
meeting their needs. In order to mitigate above mentioned
challenges in product innovation must cut their cost of their
services. Another aspect to encounter the challenges is product
differentiation. Apart from traditional banking services, Indian
banks must adopt some product innovation so that they can
competein gamut of competition. Technology up gradation is an
inevitable aspect to face challenges. The level of consumer
awareness is significantly higher as compared to previous years.
Now-a-days they need to produce more effective and efficient
products to innovate for their customers.

References
o www.samsung.com/us/aboutsamsung/samsung_electronics/business_area/
rd_page/
o http://www.businessinsider.in/Samsung-Has-A-Totally-Different-StrategyFrom-Apple-And-Its-Working-Great/articleshow/21250813.cmso http://www.portal.euromonitor.com/portal/default.aspx
o http://www.businesskorea.co.kr/article/1505/samsung-group-marking-300trillion-won-revenue-500-trillion-total-assets
o http://articles.economictimes.indiatimes.com/2012-1130/news/35483331_1_samsung-targets-asim-warsi-samsung-electronicsindia
o http://www.engadget.com/2013/07/03/samsung-to-build-five-new-randdcenters/

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viii
ix
x
xi
xii.
xiii
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xv
xvi
xvii
xviii
xix

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xxxix.
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xli.
xlii
xliii.
xliv
xlv
xlvi.
xlvii
xlviii
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l
li
lii
liii
liv
lv