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Product development is a broad field of endeavor dealing with the design, creation, and marketing of new products. Sometimes referred to as new product development (NPD), the discipline is focused on developing systematic methods for guiding all the processes involved in getting a new product to market. There are a number of organizations dedicated to supporting product development professionals, such as the Product Development and Management Association (PDMA) and the Product Development Institute (PDI). According to the PDMA, the organization's mission is "to improve the effectiveness of people engaged in developing and managing new products - both new manufactured goods and new services. This mission includes facilitating the generation of new information, helping convert this information into knowledge which is in a usable format, and making this new knowledge broadly available to those who might benefit from it." A company has to be good at developing and managing new product. Each product seems to go through a life cycle it is born, goes through several phases, and eventually dies as newer product comes along that better serve consumer needs. The product life cycle faces two major challenges(1) All products eventually decline; the firm must find new products to replace aging ones (the problem of new product development). (2) The firm must understand how its products age and adapt its marketing strategies as products pass through life cycle stage. The company must manage their new products in the face of changing tastes, technologies and competition.
Factors responsible for product development A properly co ordinate and well panned product development activity stabilizes the developmental advantages of an enterprise. The successful implementation of product development plan leads to rise in living standards of the society as a whole and provides several other benefits to producers and consumers. He utility and effectiveness of product development strategy effort can be judged by getting the answer to a series of question. Product development effort is an expensive phenomenon and organization should satisfy about the feasibility of development effort by asking question about the related factors and there solution/answer.
Durability of the products and chances of its spoilage till it reaches to a consumer. Can the organization ensure stable supply of the product? Purchasing power of the consumer and the price of the product.The factors can be: Are the consumers satisfied with the size. shape and other characteristics of the product? Can the organization achiever economy in production costs so that the price of the product may be suitable to the consumer. . In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g. While some companies may not follow a deliberate step-bystep approach.. marketers in charge of product decisions often follow set procedures for bringing products to market. Swift and satisfactory. New Product Development Process Because introducing new products on a consistent basis is important to the future success of many organizations. In this section we present a 7-step process comprising the key elements of new product development. Are the manufacturing and distribution facilities available with the organization easily adjustable to the product? Is the product convention to stock and can be effectively displayed? The answers of these quarries should be assessed relatively in terms of utility and effectiveness before starting the product development process. Chances an scope for product protection Effect of product development programmer on other products in line. Capability of the product to make purchasing easy. The process also shows the importance market research plays in developing products. medicines) while less scientific companies may pull together resources for product development on a less structured timetable. colors. Is the demand of the product is likely to increase due to improvement in quality? It the product easy to handle during transportation or when in use? Scope of using waste or other raw material left during the production process to same other by-product of utility. the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products.
(2)Only about 40% of new products are around after five years. (4)A new product may have been pushed though in spite of poor marketing research finding. (3)The product may have been incorrectly positioned in the market. the marketer should exercise caution when interpreting the results New product Development Strategy: Given the rapid change in consumer tastes. and new brands through the firms own R&D effort Innovation can be very risky. . (6)Sometimes competitors fight back harder than expected. a patent. product improvements. The main reason lies in the inability of the target market to provide sufficient feedback on advanced product concepts since they often find it difficult to understand radically different ideas. (1)One study estimated that as many as 80% of new product failed. (2) The other way is through new product development which is the development of original products. (2)The actual product may have not been designed as well as it should have been. product modifications. So while many of these steps are used to research breakthrough ideas. technology and competition must develop a steady stream of new product and service. A firm can obtain new products in two ways: (1) One way is by acquisition where the firms buy a whole company. or license to product someone else’s product. priced too high or advertised poorly.We should note that while the 7-step process works for most industries. (5)The cost of producing the product may have been higher than expected. Among the reasons that so many new product fail are: (1)Market size may have been overestimated. it is less effective in developing radically new products.
the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products. In this section we present a 7-step process comprising the key elements of new product development. competitors and develop products that deliver superior customer. A smoothly functioning new product development process.One way to overcome these difficulties and pitfalls is to identify successful new products and fine out why and how they succeeded.g. (4)In all to create successful new product a company must understand its consumer. marketers in charge of product decisions often follow set procedures for bringing products to market. . In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e. The process also shows the importance market research plays in developing products. medicines) while less scientific companies may pull together resources for product development on a less structured timetable. market. Relentless innovation c. While some companies may not follow a deliberate step-bystep approach.. Why New Products Fail • • • • • • Lack of differentiating advantage Poor marketing plan Poor timing Target market too small Poor product quality No access to market New Product Development Process Because introducing new products on a consistent basis is important to the future success of many organizations. Senior management commitment b. Success factors are thought tube: (1) Unique superior product (2) A well defined product concept 3) Others factors includea.
where one idea often sparks another idea. service. Weaknesses. or store concepts . corporate spies. the marketer should exercise caution when interpreting the results Step1. and the company’s sales force. IDEA GENERATION The first step of new product development requires gathering ideas to be evaluated as potential product options. For many companies idea generation is an ongoing process with contributions from inside and outside the organization. Many market research techniques are used to encourage ideas including: running focus groups with consumers. One important research technique used to generate ideas is brainstorming where open-minded. trade shows. The main reason lies in the inability of the target market to provide sufficient feedback on advanced product concepts since they often find it difficult to understand radically different ideas. can yield a wide range of possible products that can be further pursued. creative thinkers from inside and outside the company gather and share ideas. Idea Generation or Brainstorming of new product. and gaining insight on competitive product developments through secondary data sources.We should note that while the 7-step process works for most industries. Market and consumer trends. encouraging customer comments and suggestions via toll-free telephone numbers and website forms. competitors. employees. company's R&D department. . or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. o o Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths. salespeople. it is less effective in developing radically new products. The dynamic nature of group members floating ideas. So while many of these steps are used to research breakthrough ideas. channel members.idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step). focus groups. Opportunities & Threats).
Acceptable ideas move on to the next step. o o The object is to eliminate unsound concepts prior to devoting resources to them. focus groups are convened where the ideas are presented to a group.. In some cases focus groups are exposed to a mock-up of the ideas. and competitors’ response if the product is introduced. Generally. screening may be done in rounds with the first round involving company executives judging the feasibility of ideas while successive rounds may utilize more advanced research techniques. For instance. . distributors and its own employees. During focus groups with customers the marketer seeks information that may include: likes and dislike of the concept.e. customers may be shown a concept board displaying drawings of a product idea or even an advertisement featuring the product. profit potential. often in the form of concept board presentations (i. SCREENING In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to isolate the most attractive options. production costs. which is a physical but generally non-functional version of product idea. level of interest in purchasing the product. and price points to determine how much customers are willing to spend to acquire the product.Step2. Depending on the number of ideas. frequency of purchase (used to help forecast demand). The screeners should ask several questions: Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Step3. storyboards) and not in actual working form. As the ideas are whittled down to a few attractive options. CONCEPT DEVELOPMENT AND TESTING With a few ideas in hand the marketer now attempts to obtain initial feedback from customers. rough estimates are made of an idea’s potential in terms of sales.
o Develop the marketing and engineering details Investigate intellectual property issues and search patent data bases Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering. secondary research. Usually via Choice Modeling Step4. and rapid prototyping What will it cost to produce it? Testing the Concept by asking a sample of prospective customers what they think of the idea. Much effort is directed at both internal research..) The key objective at this stage is to obtain useful forecasts of market size (e. and competitor analysis.. such as customer and distributor surveys.g. sales and profits). and external marketing research. operational costs (e. (Note.g.g. the organization must determine if the product will fit within the company’s overall mission and strategy. overall demand). Additionally. o o o Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation Estimate profitability and breakeven point . Now in Step 4 the process becomes very dependent on market research as efforts are made to analyze the viability of the product ideas.. production costs) and financial projections (e. BUSINESS ANALYSIS At this point in the new product development process the marketer has reduced a potentially large number of ideas down to one or two options. such as discussions with production and purchasing personnel. in many cases the product has not been produced and still remains only an idea.
In some cases the marketer accepts what was learned from concept testing and skips over market testing to launch the idea as a fully marketed product. In some cases. PRODUCT AND MARKETING MIX DEVELOPMENT Ideas passing through business analysis are given serious consideration for development.Step5. and distribution options (e. In more controlled test markets distributors may be paid a fee if they agree to place the product on . etc. o o o o Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance Step6. retail store. pricing. which is exposed to the full marketing effort as they would be to any product they could purchase. Favorable customer reaction helps solidify the marketer’s decision to introduce the product and also provides other valuable information such as estimated purchase rates and understanding how the product will be used by the customer. Marketers also begin to construct a marketing plan for the product. Companies direct their research and development teams to construct an initial design or prototype of the idea. MARKET TESTING Products surviving to Step 6 are ready to be tested as real products.). In addition to gaining customer feedback. in this step the customer gets to experience the real product as well as other aspects of the marketing mix. Reaction that is less favorable may suggest the need for adjustments to elements of the marketing mix. one city). However. the marketer must work hard to get the product into the test market by convincing distributors to agree to purchase and place the product on their store shelves. this step is used to gauge the feasibility of large-scale. especially with consumer products sold at retail stores.. such as advertising. Once these are made the marketer may again have the customer test the product. unlike the concept testing stage where customers were only exposed to the idea. The most common type of market testing makes the product available to a selective small segment of the target market (e. But other companies may seek more input from a larger group before moving to commercialization. direct from company. cost effective production for manufactured products. Once the prototype is ready the marketer seeks customer input.g..g.
This allows the company to ramp up production in a more controlled way and to fine tune the marketing mix as the product is distributed to new areas. there are several high-tech approaches to market testing including virtual reality and computer simulations. With virtual reality testing customers are exposed to a computer-projected environment. Product interest can then be measured based on customer’s shopping response. Some firms introduce or roll-out the product in waves with parts of the market receiving the product on different schedules. Finally. and are asked to locate and select products. With computer simulations customers may not be directly involved at all. Instead certain variables are entered into a sophisticated computer program and estimates of a target market’s response are calculated. COMMERCIALIZATION If market testing displays promising results the product is ready to be introduced to a wider market. o o o o o o o o o o o o New program initiation Finalize Quality management system Resource estimation Requirement publication Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication Program review and monitoring Contingencies .their shelves to allow for testing.what-if planning Step7. Another form of market testing found with consumer products is even more controlled with customers recruited to a “laboratory” store where they are given shopping instructions. o o o o Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage . such as a store.
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